Gujarat High Court
Shivram Vishwanath Deshmukh vs P. Saxena, Commissioner Of Income Tax ... on 12 April, 2004
Equivalent citations: (2005)193CTR(GUJ)370, [2005]277ITR363(GUJ)
Author: M.S. Shah
Bench: M.S. Shah, A.M. Kapadia
JUDGMENT M.S. Shah, J.
1. All these petitions pertain to the order of purchase dt. 13th Sept., 1996 passed by the Appropriate Authority at Ahmedabad under Section 269UD of the IT Act, 1961. Although the petitioners are not required to be decided on merits for the reasons stated hereafter, it is necessary to refer to the basic facts for the purpose of moulding the reliefs.
2.1 On 25th Jan., 1996, Shri Shivram Vishwanath Deshmukh (aged about 60 years) (Vendor No. 1) and Shri Vishvas Vishwanath Deshmukh (aged about 58 years) (Vendor No. 2) for himself and as the Karta of HUF consisting of himself and his son, Shri Ravindra Vishvas Deshmukh (aged about 30 years) (hereinafter referred to as "the vendors"), executed an agreement to sell the property bearing CTS No. 573, Final Plot No. 662 of TP Scheme No. 1, at Bhamburda, i.e., Shivajinagar in District Pune, sub-district Haveli, in favour of Shri Rasiklal Manikchand Dhariwal (aged about 56 years) and Shri Prakash Rasiklal Dhariwal (aged 31 years) (hereinafter referred to as "the purchasers"), for a consideration of RS. 240 lakhs as per the following schedule :
"The purchasers shall pay sum of Rs. 120 lakhs to vendor No. 1, and another sum of Rs. 120 lakhs to vendor No. 2 as per the following schedule :
_____________________________________________________________________________ Particulars Vendor Vendor No. 1 No. 2 ______________________________________________________________________________ Rs. Rs.
Lakhs Lakhs
Upon execution of the agreement on 25-1-1996 37.50 37.50
To be paid on or before 10-3-1996 by post-dated 25.00 25.00
cheque dt. 10-3-1996
To be paid at the time of the execution of the 57.50 57.50
conveyance on or before 30-4-1996 by post-dated
cheque dt. 30-4-1996
120.00 + 120.00
Total = Rs. 240 lakhs."
In accordance with the said agreement, the purchasers paid the following amounts to the vendors :
Payment made on Vendor Vendor
No. 1 No. 2
Rs. Rs.
Lakhs Lakhs
25-1-1996 37.50 37.50
30-3-1996 25.00 25.00
------- ------
62.50 + 62.50
------- ------
Total = Rs. 125 lakhs
2.2 The parties also agreed to sign Form No. 37-I in accordance with Section 269UC of the IT Act, 1961, as per clause (8) and (9) of the agreement.
Accordingly, on 2nd Feb., 1996, the vendors and the purchasers filed Form No. 37-I. On 24th May, 1996, the order of purchase came to be passed by the Appropriate Authority under Section 269UD, but that order came to be challenged and this Court set aside the order and remanded the matter to the Appropriate Authority. On 13th Sept., 1996, the order of purchase came to be passed by the Appropriate Authority, which is at Annex. "J" to the petition. On the same day, the Appropriate Authority called upon the vendors to hand over vacant possession of the property in question on 30th Sept., 1996.
2.3 On 30th Sept., 1996, the vendors addressed a letter to the Appropriate Authority stating that they shall hand over possession of the property to the Appropriate Authority along with the relevant documents, but the vendors also requested that the entire consideration of Rs. 240 lakhs be paid to the vendors in the ratio of 50 : 50. By letter dt. 7th Oct., 1996, the purchasers stated that they propose to challenge the validity of the purchase order by filing a writ petition, but without prejudice to the said right of the purchasers they also requested the Appropriate Authority not to disburse the entire consideration of Rs. 240 lakhs in favour of the vendors as the purchasers had already paid Rs. 125 lakhs to the vendors and the purchasers were entitled to get refund of the same. The purchasers also stated as under:
"We, therefore, hereby request you to pay us sum of Rs. 1,25,00,000, as and when and, if at all, the purchase order shall become final. We hereby request you to, at least, keep the said amount deposited with the Appropriate Authority, in accordance with Section 269UG(2) of the IT Act, 1961. We bring it to your notice that, in view of the dispute, you are under obligation to keep the amount deposited, as provided in Section 269UG of Indian IT Act, 1961. In spite hereof, if any amounts are disbursed, the Central Government shall alone be responsible for the losses and damages, as we will sustain and we shall be entitled to recover Rs. 1,25,00,000 from the Central Government, together with interest and damages, as stated hereinabove."
2.4 In view of the above dispute between the vendors and the purchasers, by letter dt. 24th Oct., 1996, the Chief CIT, Pune, informed the vendors that in view of the dispute as to the apportionment of the amount of consideration amongst the persons claiming to be entitled thereto, the consideration of Rs. 240 lakhs had been deposited with the Appropriate Authority as required under Sub-section (2) of Section 269UG.
2.5 By order dt. 13th Jan., 1997 of the Asstt. CIT on behalf of the Chief CIT, Pune, the vendors were called upon to hand over possession of the property to the Asstt. CIT at Pune.
3. The purchasers filed Special Civil Application No. 8606 of 1996 challenging the order of purchase dt. 13th Sept., 1996 and this Court issued notice on 31st Jan., 1997. The petition came to be admitted, but no interim relief was granted.
Thereafter, Special Civil Application No. 2171 of 1997 came to be filed by both the vendors challenging the orders dt. 24th Oct., 1996 and 13th Jan., 1997 and also praying in the alternative that if the petitioners are not entitled to the aforesaid prayers, then the IT authorities be directed to pay both the vendors the entire consideration of Rs. 240 lakhs with interest thereon 24 per cent p.a. from 30th April, 1996 till the date of payment.
Special Civil Application No. 3399 of 1997 came to be filed by Shri Ravindra Vishvas Deshmukh (son of vendor No. 2) challenging the said orders dt. 13th Sept., 1996, 24th Oct., 1996 and 13th Jan., 1997 and prayed for the same alternative relief that the amount of Rs. 240 lakhs with interest thereon be paid over to the vendors.
These petitions also came to be admitted, but no interim order was passed.
4. When these petitions have reached hearing, Shri Manish R. Bhatt, learned standing counsel for the Revenue, has been permitted to place on record a copy of the letter dt. 8th April, 2004 from the Dy. CIT, Appropriate Authority, Ahmedabad, stating that-
"an amount of Rs. 2,40,00,000 was initially got released and kept in fixed deposit with a scheduled bank on 30th Oct., 1996. The same was renewed periodically and lastly the amount of Rs. 5,34,81,261 has been renewed on 7th Feb., 2004 for a period of one year"
and further stating that possession of the property has not been taken, but the Appropriate Authority is still interested in purchase of the property.
5. In view of the contents of the above letter dt. 8th April, 2004, Shri K.H. Kaji, learned counsel for the vendors, and Shri S.N. Soparkar, learned counsel for the purchasers, state that their respective clients are not interested in pressing their challenge to the order of purchase dt. 13th Sept., 1996 and the subsequent consequential orders if the vendors and purchasers are paid the entire amount of consideration of Rs. 240 lakhs with interest thereon from 30th Oct., 1996, as aforesaid, in the ratio of Rs. 115 lakhs : Rs. 125 lakhs with interest on the respective amounts from 30th Oct., 1996 and that this would be in full and final settlement of their respective claims in these petitions and that they would have no claim outstanding against each other or the other parties.
Shri Kaji further states that Shri Shivram Vishwanath Deshmukh (petitioner No. 1 in Special Civil Application No. 2171 of 1997) be paid 50 per cent of the amount coming to the share of the vendors and similarly Shri Vishwas Vishwanath Deshmukh (petitioner No. 2 in the said petition) be paid over the remaining 50 per cent of the share coming to the vendors.
Similarly, Shri Soparkar for the purchasers, states that the amount coming to the share of the purchasers may also he paid equally to each of the purchasers in the ratio of 50 : 50. Shri Soparkar has been permitted to place on record a copy of the letter from the petitioners in SCA No. 8606 of 1996, instructing him to withdraw the petition if the purchasers and sellers are paid the amounts pro rata from the fixed deposit. Shri Soparkar also states that the purchasers do not claim any interest from the dates of payment of Rs. 125 lakhs to the vendors in January/March, 1996 till the Appropriate Authority invested the amount of Rs. 240 lakhs in a fixed deposit on 30th Oct., 1996.
Both Shri Kaji and Shri Soparkar further state that this arrangement will also bring to an end any dispute between the purchasers and vendors and none of them will have any claim outstanding against the other.
6. Shri Kaji for the vendors, and Shri Shevade for Ravindra V. Deshmukh state that Shri Shivram Vishwanath Deshmukh and Shri Vishvas Vishwanath Deshmukh as a Karta, have title to the property and have full authority to transfer and sell the property in question and that they shall indemnify the IT Department in case of any dispute by any party.
Shri Kaji for the vendors further states that they have never refused to hand over possession of the property in question to the IT Department and that in any view of the matter, they will now hand over the possession to the Department within ten days from today.
6. Shri Shevade appearing for Shri Ravindra Vishvas Deshmukh, petitioner in SCA No. 3399 of 1997, further states that the said petitioner is desirous of withdrawing the petition in view of the aforesaid arrangement between the parties and that he has no claim outstanding against the Department or the purchasers.
7. Shri Bhatt, learned standing counsel for the Revenue submits that since a substantial amount of interest which has accrued on the amount of Rs. 115 lakhs and Rs. 125 lakhs is to be paid over to the vendors and purchasers, respectively, the Department will have to deduct the income-tax at source before paying over the amounts of interest to the respective parties.
8. In view of the above consensus between the vendors and the purchasers, all of whom are now agreeable to the order of purchase dt. 13th Sept., 1996, being operated, acted upon and implemented, the challenges raised in these petitions are not required to be examined and the petitions are accordingly disposed of in terms of the following directions :
(i) The order of purchase dt. 13th Sept., 1996 stands and it is open to the IT authorities to act upon the same without any objection from any of the parties.
(ii) The Appropriate Authority shall encash the fixed deposit of Rs. 5,34,81,261 along with the interest thereon from 7th Feb., 2004 and to pay over such amount in the following proportion :
(a) Rs. 115 lakhs with interest accrued thereon from 30th Oct., 1996, till the date of encashment of the aforesaid fixed deposit shall be paid to the vendors- out of which 50 per cent shall be paid to Shri Shivram Vishwanath Deshmukh (vendor No. 1) and the balance 50 per cent shall be paid to Shri Vishvas Vishwanath Deshmukh (vendor No. 2) as the Karta of HUF consisting of himself and his son Shri Ravindra Vishvas Deshmukh, after deducting at source, the tax payable on the interest which has accrued on the original investment made on 30th Oct., 1996.
(b) Similarly, the Appropriate Authority shall pay Rs. 125 lakhs with interest accrued thereon from 30th Oct., 1996 till the date of encashment of the aforesaid fixed deposit to the purchasers-out of the said amount, 50 per cent of the amount shall be paid to Shri Rastklal Manikchand Dhariwal, Karta of Rasiklal Maniklal Dhariwal HUF and the balance 50 per cent amount to Shri Prakash Rasiklal Dhariwal as a member of Rasiklal Maniklal Dhariwal HUF. These payments shall also be made after deducting at source the tax payable on the interest which has accrued on the original investment made on 30th Oct., 1996.
(c) The above payments shall be made within two weeks from the date of receipt of the writ of this Court or a certified copy of this order, whichever is earlier.
(d) The Appropriate Authority shall duly consider the request being made on behalf of the vendors as well as the purchasers that since the parties are residing at Pune, the aforesaid amounts may be paid to the respective parties through cheques/demand drafts payable at Pune.
(iii) Vendors Shri Shivram Vishwanath Deshmukh and Shri Vishvas Vishwanath Deshmukh shall hand over vacant possession of the property in question to the Authorised Representative of the IT Department within ten days from today and Shri Ravindra Vishvas Deshmukh shall not raise any objection thereto.
9. The petitions are accordingly disposed of in terms of the aforesaid directions and observations.
Rule is discharged in each of these petitions with no order as to costs.