Ramesh
Bhai J. Patel Vs. Union of India [2000] INSC 622 (6 December 2000)
Y.K.Sabhaewal,
S.P.Bharucha,, S.N.Hegde
L.I.T.J
BHARUCHA,
J.
These
are appeals against the judgment and order of a Division Bench of the High
Court of Gujarat, delivered on writ petitions. The controversy before us
relates to the correct interpretation of Section 269UA(b) of the Income Tax
Act, 1961. Section 269UA falls within Chapter XX-C of the Act, which deals with
the purchase by the Central Government of immovable properties in certain cases
of transfer.
Section
269UA is the definition section for the purposes of the Chapter. Clause (b)
thereof defines apparent consideration. So far as is relevant, `apparent
consideration means:
(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-clause (i) of clause (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 or transfer;
(ii) xxxxx
(iii) xxxxx 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;
..
The
rate of interest in this behalf is prescribed by Rule 48(i) of the Income Tax
Rules and it is eight per cent per annum.
The
contention on behalf of the appellants (assessees) was that there can be no
discount of the price mentioned in the agreement of transfer and, if there can,
the discount must relate to the period between the date of payment of the
purchase price by the Central Government and the date of the last payment under
the agreement. No argument was, however, advanced in respect of the first
contention. The only argument was based on the premise that the discount is
made because the transferor is compensated by payment earlier than scheduled
under the agreement; and that such compensation is for the period that is
saved, that is, between the date of payment by the Central Government and the
last date of payment under the agreement.
It is
relevant, before we proceed, to point out that Section 269UG provides that the
amount of the consideration payable on purchase by the Central Government must
be tendered to the person entitled thereto within a period of one month from
the end of the month in which the immovable property vests in the Central
Government. Section 269UH states that if the Central Government fails to tender
such payment within such time, the order of purchase by the Central Government
of the immovable property shall stand abrogated and the immovable property
shall stand re-vested in the transferor.
On a
plain reading of Section 269UA(b), there is no interlinking of the apparent
consideration to be determined thereunder with the payment to be made by the
Central Government on purchase under Chapter XX-C. Section 269UA(b) prescribes
how the apparent consideration under the agreement, that is, the consideration
for the agreement, is to be determined, and it states that if the consideration
under the agreement is payable on any date or dates falling after the date of
the agreement, the value of the consideration that is payable after the date of
the agreement shall be deemed to be the discounted value of such consideration
as on the date of the agreement. In other words, the apparent consideration in
such case will not be the consideration that is stated in the agreement but it
shall be the amount thereof less a discount to be calculated in the manner set
out in the definition. The period of such discount shall be the period between
the date of the agreement and the date or dates on which the consideration or
part thereof is payable.
To put
it differently, because, under the agreement, the transferor gives the
transferee time to pay the consideration, the consideration is assumed to
comprehend some element of interest for such delayed payment, and this is
ascertained and deducted to arrive at the real consideration for the agreement,
or the apparent consideration. The period of the delay necessarily starts on
the date of the agreement.
Our
attention was drawn by learned counsel for the appellants to the judgment of a
Division Bench of the High Court at Bombay in Shrichand Raheja & Anr. vs. S.C.
Prasad,
(Appropriate Authority) & Ors. [213 I.T.R. 33].
It was
argued by learned counsel for the Revenue before that High Court that, for the
purpose of discounting, the relevant date is the date of the agreement and not
the date of the payment by the Central Government and, in support of his
submission, he relied upon the expression as on the date of such agreement for
transfer in Section 269UA(b).
The
High Court did not agree because, in its view, the plain reading of the
definition of apparent consideration made it clear that the value of the
consideration payable after the date of the agreement was the discounted value
and the definition did not prescribe that the discounted value should be
ascertained with reference to the date of the agreement. In its view, the
expression as on the date of such agreement for transfer referred to the
consideration payable on that date and was not indicative of the commencement
of the period to ascertain the discounted value.
We are
unable to agree. The High Court appears to have overlooked the purpose of
Chapter XX-C and the definition of apparent consideration thereunder. The
purpose is to determine whether immovable property has been sought to be
transferred at an under-valuation. To determine whether there has been an
under-valuation, the true consideration for the transfer has to be determined
and, necessarily, it has to be determined as on the date of the agreement for
transfer. That this is so is clear from the latter part of clause (b), which we
have quoted; the phrase the discounted value of such consideration as on the
date of such agreement for transfer therein indicates the point of time from
which the period for discounting must be calculated. For these reasons, the
appeals are dismissed with costs.
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