Brief of the case:
In case of Unitech Ltd. Vs. UOI Hon’ble SC has set aside the order passed by Bombay HC in a writ petition filed by asseessee against the order under section 269UD. Hon’ble SC have held compulsory pre-emptive purchase illegal. Hon’ble court take note of its observation in C.B. Gautam’s case ((1993) 1 SCC 78) that unless the difference in the apparent effective consideration and the market value is more than 15%, the Appropriate Authority cannot assume jurisdiction under section 269-UD of the Act. The same does not mean that the mere fact that such difference is more than 15% will, automatically, lead to the conclusion that there has been undervaluation of property with the motive of evading tax.
Facts of the case:
- Vidarbha Engineering Industries i.e. Appellant No. 2 holds on lease, three plots of land at Nagpur, referred to as the ‘subject land’ in the judgment.
- The subject land was obtained by Vidarbha Engineering from the Nagpur Improvement Trust.
- Vidarbha Engineering decided to develop the subject land and entered into an agreement for the purpose with Unitech Ltd. For this purpose an MoU was formalized into a collaboration agreement.
- Both the parties agreed to allow Unitech to develop and construct a commercial project on the subject land.
- The parties to the agreement agreed, upon construction of shopping cum commercial complex, Unitech will retain 78% of the total constructed area and transfer 22% to the share of Vidarbha Engineering.
- By the statement in Form 37-I the consideration has been valued by the parties at Rs. 1,00,40,000/- before the appropriate authority.
- Upon the submission of the statement under Section 269UA of the Act, the Appropriate Authority issued a show cause notice dated 8.7.1994 stating that the consideration for the transaction appears to be too low and appears to be understated by more than 15%, having regard to the sale instance of a land in Hanuman Nagar, an adjoining locality.
- The appropriate authority considered the objections filed by the appellants and rejected them by an order dated 29.07.1994 passed under section 269UD of the Income Tax Act.
- It took into account the consideration of Rs. 1,00,40,000/- and deducted from it an amount of Rs. 24,09,600/- being discount calculated at the rate of 8% per annum since the consideration had been deferred for a period of three years. It therefore determined the consideration for purchase of the subject property at Rs. 76,30,400/-.
- Aggrieved from the order u/s 269UD appellant filed writ before Bombay HC.
Contention of the Appellant:
