Gujarat H.C : All the aforesaid petitions involve a common question about the applicability of the definition of “apparent consideration” given under s. 269UA(b) for the purposes of paying the amount to the vendor when an order for purchase of the property under Chapter XX-C under s. 269UD is made.

Counsel Appeared

H.M. Talati, S.N. Soparkar & B.R. Shah, for the Petitioner : R.P. Bhatt, for the Respondents

JUDGMENT

RAJESH BALIA, J. :

All the aforesaid petitions involve a common question about the applicability of the definition of “apparent consideration” given under s. 269UA(b) for the purposes of paying the amount to the vendor when an order for purchase of the property under Chapter XX-C under s. 269UD is made. In all these cases, while making the order for purchase of the property, the appropriate authority has determined the amount payable for such purchase by applying the provisions of s. 269UA(b). In doing so from the apparent consideration stated in the agreement to sell, the sum payable on account of stamp duty by the purchaser under the agreement has been deducted so also the consideration which was payable after the date of agreement for transfer has been discounted by adopting the prescribed rate of interest for that purpose. The grievance has been raised regarding these two deductions made in the apparent consideration for the purpose of arriving at payment to be made under s. 269UF of the Act, one on account to stamp duty, etc., payable by the purchaser as cost of conveyance and, secondly, the discounted value of consideration as on the date of agreement to sell as distinguished from the discounted value of consideration payable as on the date of transfer.

2. Both learned counsel appearing for the parties have stated that the controversy raised before us has been the subject-matter of a decision of this Court in the case of Pradip Ramanlal Sheth vs. Union of India (1993) 113 CTR (Guj) 75 : (1993) 204 ITR 866 (Guj) : TC S3.166 in which while it has been held that the expenses to be borne by the purchaser for conveying the property more particularly, the expenditure of purchasing—the stamp duty, etc. cannot be deducted from apparent consideration stated in the agreement to sell for the purpose of arriving at the discounted value and for determining the consideration payable under s. 269UF. However, this Court has held that on a plain reading of the provisions of s. 269UA(b) defining the term “apparent consideration” the amount stated in the agreement to sell as consideration, if the whole or any part of it is payable after the date of the agreement then that consideration has to be discounted by applying the prescribed rate of interest. The contention that the meaning of agreement to transfer in the context of payment of consideration should relate to the document which is finally executed as sale deed before registration inasmuch as unless such duly executed sale deed is registered, the same continues to remain an agreement to transfer, else it would lead to anomalous situation that the purchaser would be getting a lesser payment than was payable to him under the agreement on the date of transfer which is neither the object of the provision nor is envisaged under the statute, was not accepted. However, in spite of the aforesaid position, learned counsel for the petitioner urged that the aforesaid decision of this Court requires reconsideration, particularly, in view of a decision of the Bombay High Court which had taken a contrary view to what has been taken by this Court. Having carefully considered the submission we are unable to accept the contention. A Bench decision of this Court is ordinarily binding on the Co-ordinate Bench unless there are compelling reasons to take a contrary view, and therefore, refer the matter to a larger Bench for reconsideration.

We may reproduce s. 269UA(a) and (b) in order to appreciate the controversy : “269UA. In this Chapter, unless the context otherwise requires,— (a) ‘agreement for transfer’ means an agreement, whether registered under the Registration Act, 1908 (16 of 1908), or not, for the transfer of any immovable property; (b) ‘apparent consideration’— (1) in relation to any immovable property in respect of which an agreement for transfer is made, being immovable property of the nature referred to in sub-cl. (i) of cl. (d), means,— (i) if the immovable property is to be transferred by way of sale, the consideration for such transfer as specified in the agreement for transfer;

(ii) if the immovable property is to be transferred by way of exchange,— (A) in a case where the consideration for the transfer consists of a thing or things only, the price that such thing or things would ordinarily fetch on sale in the open market on the date on which the agreement for transfer is made; (B) in a case where the consideration for the transfer consists of a thing or things and a sum of money, the aggregate of the price that such thing or things would ordinarily fetch on sale in the open market on the date on which the agreement for transfer is made, and such sum; (iii) if the immovable property is to be transferred by way of lease,— (A) in a case where the consideration for the transfer consists of premium only, the amount of premium as specified in the agreement for transfer; (B) in a case where the consideration for the transfer consists of rent only, the aggregate of the moneys (if any) payable by way of rent and the amounts for the service or things forming part of or constituting the rent, as specified in the agreement for transfer; (C) in a case where the consideration for the transfer consists of premium and rent, the aggregate of the amount of the premium, the moneys (if any) payable by way of rent and the amounts for the service or things forming part of or constituting the rent, as specified in the agreement for transfer; and where the whole or any part of the consideration for such transfer is payable on any date or dates falling after the date of such agreement for transfer, the value of the consideration payable after such date shall be deemed to be the discounted value of such consideration, as on the date of such agreement for transfer, determined by adopting such rate of interest as may be prescribed in this behalf; (2) in relation to any immovable property in respect of which an agreement for transfer is made, being immovable property of the nature referred to in sub-cl. (ii) of cl. (d), means,— (i) in a case where the consideration for the transfer consists of a sum of money only, such sum;

(ii) in a case where the consideration for the transfer consists of a thing or things only, the price that such thing or things would ordinarily fetch on sale in the open market on the date on which the agreement for transfer is made; (iii) in a case where the consideration for the transfer consists of a thing or things and a sum of money, the aggregate of the price that such thing or things would ordinarily fetch on sale in the open market on the date on which the agreement for transfer is made, and such sum, and where the whole or any part of the consideration for such transfer is payable on any date or dates falling after the date of such agreement for transfer, the value of the consideration payable after such date shall be deemed to be the discounted value of such consideration, as on the date of such agreement for transfer, determined by adopting such rate of interest as may be prescribed in this behalf ;………… (f) ‘transfer’,— (i) in relation to any immovable property referred to in sub-cl. (i) of cl. (d), means transfer of such property by way of sale or exchange or lease for a term of not less than twelve years, and includes allowing the possession of such property to be taken or retained in part-performance of a contract of the nature referred to in s. 53A of the Transfer of Property Act, 1882 (4 of 1882). Explanation.—For the purposes of this sub-clause, a lease which provides for the extension of the term thereof by a further term or terms shall be deemed to be a lease for a term of not less than twelve years, if the aggregate of the term for which such lease is to be granted and the further term or terms for which it can be so extended is not less than twelve years; (ii) in relation to any immovable property of the nature referred to in sub-cl. (ii) of cl. (d), means the doing of anything (whether by way of admitting as a member of or by way of transfer of shares in a co-operative society or company or other AOP or by way of any agreement or arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of such property.”

5. A plain reading of the provision, in our opinion, does not lead to any such conclusion that the view taken by the earlier Division Bench is such which cannot be taken. The aforesaid provision, in our opinion cannot have reference to the date of transfer under a duly executed sale deed but not registered. The whole scheme of Chapter XX-C has been framed to place the Central Government in a position of a prospective purchaser before the stage of execution of the sale deed is reached. Under s. 269UC it is envisaged that no transfer of immovable property exceeding five lakh rupees as may be prescribed shall be effected except after an agreement for transfer is entered into between the person who intends transferring the immovable property and the person to whom it is proposed to be transferred. That is to say, no transfer by execution of a transfer deed can take place in the case of a property whose value exceeds the prescribed limit, unless, an agreement to sell in writing has been entered between the intending transferor and the proposed transferee and as soon as such an agreement to transfer comes into existence it is required to be filed before the appropriate authority so as to determine whether the Central Government is to purchase such immovable property. Therefore, the coming into existence of a duly executed transfer deed is not envisaged, until the proceedings under Chapter XX-C are complied with by issuing a “no-objection certificate” or the period in which the order of purchase can be made expires before making such order. We are unable to sustain this contention that the agreement for transfer under cl. (b) under s. 269UA could have reference to a duly executed transfer deed ready for registration. The decision relied on by learned counsel for the petitioner also does not take that view.

6. On the contrary, the Bombay High Court in the case of Shrichand Raheja vs. S.C. Prasad (Appropriate Authority) (1994) 122 CTR (Bom) 131 : (1995) 213 ITR 33 (Bom) : TC 3Ps.213 took the view that definition of apparent consideration under s. 269UA is relevant for the purpose of ascertaining the fair market value by the appropriate authority and is not related to the date of determination of discounted value. The discounted value is to be determined with reference to the date of payment and not with reference to the date of the agreement. The Court opined as under : “The appropriate authority is entitled to determine the discounted value of consideration payable to the transferors but the discounted value is to be determined for the period commencing from the date of discounted value. The discounted value is to be determined with reference to the date of payment and not with reference to the date of the agreement. The Court opined as under (p. 62) : “The appropriate authority is entitled to determine the discounted value of consideration payable to the transferors but the discounted value is to be determined for the period commencing from the date on which the payment was tendered to the transferors and ending with the date on which the balance consideration was payable under the agreement between the parties. It is not open to the appropriate authority to ascertain the discounted value from the date of the agreement, but the discounted value shall be determined only from the date of tender of the purchase price to the transferors.”

In substance, the premise on which the distinction was founded for applying the definition for the purpose of determining the fair market value and not for the purpose of payment rests on the ground that “apparent consideration” has also to be taken into account while determining whether the apparent consideration stated in the agreement is significantly understated than the fair market value. It is only for that purpose that the definition reproduced above is applicable. In the context of the payment to be made to the vendor, this definition cannot be made applicable because the same would result in penalising the vendor for no fault of his. Though the contention looks attractive at the first flush we are unable to reach the same conclusion on a reading of the entire scheme of Chapter XX-C. For the purpose of reading down the provision and conforming it to the purpose of determining the fair market value and not to the provisions relating to payment.

It is to be noticed that the concept of determining the fair market value and there being significant undervaluation of the apparent consideration, than its fair market value giving rise to the presumption about the under-statement of consideration with attempt to avoid tax is not part of the statute. The two limitations about there being significant undervaluation of the apparent consideration than the fair market value and that understatement is with an intent to avoid tax was inferred to be there by their Lordships of the Supreme Court in the case of C.B. Gautam vs. Union of India (1992) 108 CTR (SC) 304 r/w (1993) 110 CTR (SC) 179 : (1993) 199 ITR 530 (SC) : TC

3PS.87, where the provision was challenged as being arbitrary and unreasonable giving uncanalised power to the appropriate authority to acquire the property. The statute has not used anywhere the phrase “apparent consideration” in relation to the determination of the fair market value for the purpose of passing an order of purchase by the Central Government of the property which is the subject-matter of the agreement to sell. The phrase “apparent consideration” in the whole of the Chapter finds place only in two provisions, first in s. 269UD where it authorised the appropriate authority to make an order for the purchase by the Central Government of such immovable property for an amount equal to the amount of apparent consideration. Once an order under s. 269UD is made for the purchase of the property by the Central Government for the amount equal to the amount of apparent consideration, under s. 269UF, the Central Government has been put under an obligation to pay by way of consideration for such purchase an amount equal to the amount of apparent consideration for such purchase an amount equal to the amount of apparent consideration. In no other provision in any other context, the words “apparent consideration” has been used under the scheme of Chapter XX-C. Therefore, there is no room for having a different contextual meaning of the definition given for a different purpose under Chapter XX-C. As far as the legislature is concerned, it has defined “apparent consideration” for the purpose of ss. 269UD and 269UF. As under s. 269UD, the appropriate authority is to make an order for purchase of the property by the Central Government by an amount equal to the amount of apparent consideration and under s. 269UF, the Central Government is under an obligation to pay an amount equal to the apparent consideration as consideration for such purchase, there cannot be a different meaning assigned independently under the two provisions one for determining and another for paying. As the definition given by the statute has been used in the statute only for one purpose, that is to say, for determining the amount to be paid by the Central Government for the purchase of the property. The occasion for having resort to the contextual interpretation simply does not arise.

Lastly, it was urged that if the view taken by this Court in Pradip Ramanlal Sheth’s case (supra) is to be accepted, it would result in the provision itself being unconstitutional. This has been stated only to be rejected for the simple reason that the constitutional validity of the provision has not been challenged in these petitions and the only question in these petitions is the interpretation of the statute as it exists. As discussed by us, we see no reason to depart from the view taken by this Court in Pradip Ramanlal Sheth’s case (supra) for the purpose of reconsidering the same.

Accordingly, all the petitions succeed in part. So far as apparent consideration for the purpose of making payment to the same is concerned, no discount or deduction can be made from the consideration disclosed in the agreement to sell on account of registration fee, stamp duty, etc. So far as the order directs such deductions, it is concerned, is not in accordance with law and to that extent that part of the impugned order has to be quashed. However, so far as determination of discounted value in terms of the definition of apparent consideration under s. 269UA is concerned, by reducing the amount at the prescribed rate of interest, the petitions fail.

In the result, these petitions are allowed to a limited extent. Rule issued is partly made absolute by issuing a writ of mandamus for quashing and setting aside the order of pre-emptive purchase so far as it directed deduction on account of the burden of stamp duty to be borne by the vendor.

We direct the respondent to pay to each of the petitioners the sum so illegally deducted with 12 per cent interest from the date when the other amount was paid by the respondents to the date of additional payment to each of the petitioners in pursuance of this order. We may further state that if there is any calculation mistake pointed out by the petitioners regarding any deductions which have been made while arriving at an amount of apparent consideration for making payment to them, such application shall be decided and calculation mistakes, if any, found to be there shall be corrected by the respondents, provided such an application is made within a period of six weeks from the date of receipt of this order. There shall be no order as to costs.

[Citation : 249 ITR 223]