R.C. Lahoti, J.
1. This common order shall govern the disposal of five writ petitions, namely, Civil Writ Petns. Nos. 3286 of 1987, 3287 of 1987, 3288 of 1987, 3289 of 1987 and 3290 of 1987, filed respectively, by Surinder Gupta, HUF, Surinder Gupta, Miss Neha Gupta, minor (through father Surinder Gupta), Mrs. Meenakshi Gupta and Miss Sumina Gupta, minor (through father, Surinder Gupta), respectively, all arising out of an order passed in a set of common facts. The petitioners are seeking quashing of the order dt. 6th Nov., 1987, passed under s. 269UD(1) of the IT Act, 1961, whereby the Appropriate Authority has in the exercise of the powers conferred by s. 269UD(1) of the IT Act, 1961, ordered purchase of the suit property at an amount equal to the apparent consideration for the transfer of the said property. In each of the writ petitions, the Chief CIT, the Appropriate Authority, the Union of India and the four vendors have been joined as respondents. The petitioners are the prospective purchasers.
2. The suit property is a piece of land measuring 500 sq. yards and bearing No. W/69 situated in W-Block of the residential colony of Greater Kailash-I, New Delhi, within the limits of the Delhi Municipal Corporation along with a 2-1/2 storey residential house, servants' quarters and garage standing thereon.
The relevant facts are not in controversy.
By a deed of conveyance dt. 21st March, 1964, the suit property was purchased jointly by Harbans Singh, and Jaswant Singh, both in one-half share each. Harbans Singh has expired. He is survived by two sons and two daughters, namely, Pritipal Singh, Gurcharan Singh, Gulshan Kaur and Miss Amarjeet Kaur. Consequent upon the death of Harbans Singh, his 50 per cent share in the suit property has devolved upon his four children each having acquired 12.5 per cent share in the property. However, Miss Amarjeet Kaur, the fourth daughter, has relinquished her share in favor of her brothers and sister. The three have, thereforee, become entitled each to 16.66 per cent share in the property. As amongst the heirs of Harbans Singh and Jaswant Singh an oral partition of the property effective from 17th April, 1987, has taken place. A memorandum of partition was recorded on 5th June, 1987. The house was divided by metes and bounds. The schedule annexed with the memorandum of partition sets out the specific description of the parcels which have fallen to the share of each one of the co-owners in accordance with the following shares :
Jaswant Singh 50 per cent
Pritipal Singh 16.66 per cent
Gurcharan Singh 16.67 per cent
Gulshan Kaur 16.67 per cent
On 25th Aug., 1987, the above said four owners of the property entered into an agreement to sell the same in favor of the following five purchasers :
1. Shri Surinder Gupta
2. Shri Surinder Gupta, HUF, through its Karta, Surinder Gupta
3. Mrs. Meenakshi Gupta
4. Miss Sumina Gupta, minor daughter, through her natural guardian.
5. Miss Neha Gupta, minor daughter, through her natural guardian.
There are the usual recitals in the agreement. One of the recitals goes to show that each one of the owners-vendors has transferred the property proportionate with his share to one of the purchasers. It will be useful to extract and reproduce the following few recitals from the agreement to sell :
'And whereas the vendors have agreed to sell the said property and the purchasers have agreed to purchase the same for a total consideration of Rs. 40,00,000 (rupees forty lakhs only) in the following manner :
(a) 50 per cent of Shri Jaswant Singh shall be purchased as under :
(i) 25 per cent by Shri Surinder Gupta for total consideration of Rs. 10,00,000 (rupees ten lakhs only).
(ii) 25 per cent by Smt. Minakshi Gupta for total consideration of Rs. 10,00,000 (rupees ten lakhs only).
(b) 16.66 per cent share of Shri Pritipal Singh shall be purchased by Surinder Gupta, HUF, through its Karta, Shri Surinder Gupta, for the total consideration of Rs. 6,66,400 (rupees six lakhs sixty-six thousand and four hundred only).
(c) 16.67 per cent share of Shri Gurcharan Singh shall be purchased by Miss Sumina Gupta, minor daughter of Shri Surinder Gupta, through her father and natural guardian, for the total consideration of Rs. 6,66,800 (rupees six lakhs sixty-six thousand and eight hundred only).'
(d) 16.67 per cent share of Miss Gulshan Kaur shall be purchased by Miss Neha Gupta, minor daughter of Shri Surinder Gupta, through her father and natural guardian, for the total consideration of Rs. 6,66,800 (rupees six lakhs sixty-six thousand and eight hundred only).'
'And whereas the vendors have agreed to sell and transfer their individual shares in the property, as specified hereinabove, in favor of the respective purchasers, by a single composite sale-deed covering all five individual and separate transactions.
Now, thereforee, it is hereby agreed between the parties as follows :
2. That the sale shall be a composite transaction relating to the respective shares of the vendors in favor of the respective purchasers as set out hereinabove.
3. That the aggregate price of the entire property comprising of all the share of the vendors is Rs. 40,00,000 (rupees forty lakhs only). The said price shall be payable as follows :
(i) Shri Surinder Gupta shall pay to Shri Jaswant Singh in respect of his 25 per cent share a sum of Rs. 10,00,000 (rupees ten lakhs only).
(ii) Mrs. Minakshi Gupta shall pay to Shri Jaswant Singh in respect of her 25 per cent share of a sum of Rs. 10,00,000 (Rs. ten lakhs only).
(iii) Surrinder Gupta, HUF, shall pay to Shri Pritipal Singh in respect of his 16.66 per cent share a sum of Rs. 6,66,400 (rupees six lakhs sixty-six thousand and four hundred only).
(iv) Miss Sumina Gupta, through her father and natural guardian, Shri Surinder Gupta, shall pay to Shri Gurcharan Singh in respect of his 16.67 per cent share a sum of Rs. 6,66,800 (rupees six lakhs sixty-six thousand and eight hundred only).
(v) Miss Neha Gupta, through her father and natural guardian, shall pay to Miss Gulshan Kaur in respect of her 16.67 per cent share a sum of Rs. 6,66,680 (rupees six lakhs sixty-six thousand and eight hundred only).
4. That an aggregate sum of Rs. 29,00,000 (rupees twenty-nine lakhs only) representing 7,25,000 of the total price consideration has been paid as earnest money by the respective purchasers to the vendors in respect of their respective shares as per details below :
(a) Shri Surinder Gupta has paid to Shri Jaswant Singh Rs. 7,25,000 vide cheque No. 118814 dt. 25th Aug., 1987, drawn on State Bank of Saurashtra, Nehru Place branch, New Delhi.
(b) Mrs. Minakshi Gupta has paid to Shri Jaswant Singh a sum of Rs. 7,25,000 vide cheque No. 032807 dt. 25th Aug., 1987, drawn on Central Bank of India, Nehru Place branch, New Delhi.
(c) Surinder Gupta, HUF, has paid to Shri Pritipal Singh a sum of Rs. 4,83,140 vide cheque No. 118833 dt. 25th Aug., 1987, drawn on State Bank of Saurashtra, Nehru Place branch, New Delhi.
(d) Miss Sumina Gupta has paid to Shri Gurcharan Singh a sum of Rs. 4,83,430 vide cheque No. 023007 dt. 25th Aug., 1987, drawn on State Bank of Saurashtra, Nehru Place branch, New Delhi.
(e) Miss Neha Gupta has paid to Miss Gulshan Kaur a sum of Rs. 4,83,430 vide cheque No. 151481 dt. 25th Aug., 1987, drawn on State Bank of Saurashtra, Nehru Place branch, New Delhi.
The receipt of the above payments is hereby acknowledged by the vendors (subject to encashment of the said cheques).
5. That the balance amount of Rs. 11,00,000 shall be paid by the purchasers to the vendors at the time of the execution and registration of the sale-deed as follows :
(a) Surinder Gupta shall pay to Shri Jaswant Singh Rs. 2,75,000 (rupees two lakhs seventy-five thousand only).
(b) Smt. Minakshi Gupta shall pay to Shri Jaswant Singh Rs. 2,75,000 (rupees two lakhs seventy-five thousand only).
(c) Surinder Gupta, HUF, shall pay to Shri Pritipal Singh Rs. 1,83,260 (rupees one lakh eighty-three thousand and two hundred sixty only).
(d) Miss Sumina Gupta shall pay to Shri Gurcharan Singh Rs. 1,83,370 (rupees one lakh eighty-three thousand three hundred and seventy only).
(e) Miss Neha Gupta shall pay to Miss Gulshan Kaur Rs. 1,83,370 (rupees one lakh eighty-three thousand and three hundred seventy only).'
The gist of the transactions, as disclosed by the agreement to sell is placed in a tabulated from as under :
----------------------------------------------------------------------
Vendor Share in property Purchaser Consideration
(Rs.)
----------------------------------------------------------------------
Jaswant Singh 25 per cent Surinder Gupta 10,00,000
Jaswant Singh 25 per cent Minakshi Gupta 10,00,000
Pritipal Singh 16.66 per cent Surinder Gupta,
HUF 6,66,400
Gurcharan Singh 16.67 per cent Sumina Gupta 6,66,800
Gulshan Kaur 16.67 per cent Neha Gupta 6,66,800
-----------
Total 100 per cent 40,00,000
-----------
The four vendors and the five vendees filed a joint statement of transfer of immovable property to be furnished to the Appropriate Authority under s. 269UC in the prescribed Form No. 37-I. Possession over the property forming the subject-matter of the agreement to sell was physically delivered by the vendors to the vendees and receipt reciting delivery of possession was executed on 25th Aug., 1987.
On the statement in Form No. 37-I having been filed the proceedings under Chapter XX-C were initiated by the respondent leading to the impugned order under s. 269UD(1) of the IT Act.
3. Though there was a challenge laid to the virus of the provisions of Chapter XX-C the same has been given up by learned counsel for the petitioner in view of the decision of the Supreme Court in C. B. Gautam's vs . Union of India & Ors. : [1993]199ITR530(SC) . The only question that survives for decision in this case is whether the transaction as evidenced by the agreement to sell and receipt of delivery of possession dt. 25th Aug., 1987, has to be treated as one transaction to sell or five transactions of sale though recorded and evidenced by a single document.
4. The point is no more rest integra. It is settled by a number of authorities from different High Courts.
The facts of this case bear a close similarity to the facts of the case in K. V. Kishore vs. Appropriate Authority : [1991]189ITR264(Mad) . A certain piece of land was allotted to one S by the City Improvement Trust Board, Bangalore. S died in 1962, leaving behind his wife, a son and three daughters. A family arrangement was entered into specifying the shares of the heirs in the land. All the heirs joined together and sold the land. The agreement of sale stated that the vendors had agreed to the execution of a single deed as a matter of convenience. The individual share of each of the vendors was less than Rs. 10 lakhs but the total value of the consideration was Rs. 20 lakhs. Acquisition proceedings were initiated under s. 269UD of the IT Act, 1961. On a writ petition to quash the proceedings, it was held :
'That the original allottee of the land died in the year 1962. He being a Hindu, governed by the Hindu Succession Act, on his death, his wife and children acquired a vested right to the definite quantified shares in the property left behind by him. As owners of their respective shares, they were competent to enter into a family arrangement which they did on 8th April, 1987, under the terms of which, each one of the respondents Nos. 4 to 8 were allotted a definite share in the property. After 8th April, 1987, they were individual owners of definite shares in the property. Each one could deal with only his respective share and he cannot deal with the share of another. The property which so falls to the share of each individual, will come definitely within the definition of the words 'immovable property'. Such a sharer was entitled to transfer his immovable property to a third person. Merely because a plurality of such individual owners joined together to enter into one single agreement to transfer their respective shares in favor of one or more persons, that would not make any difference to the main issue that what each transferred was his definite share of the property. It was not in dispute that the value of each such share was less than Rs. 10 lakhs. Sec. 269UD was not, thereforee, applicable. The order of acquisition was liable to be quashed.'
Yet another decision of the Madras High Court in N. C. Rangesh vs. Inspector-General of Registration (1991) 189 ITR 270 (Mad) has been brought to our notice. It was in the context of a circular issued by IGR to the effect that, in a case where undivided interest in immovable property is sold, a certificate under s. 230A of the IT Act, 1961, or a 'no objection certificate' under Chapter XX-C from the Appropriate Authority will have to be obtained if the value of the entire property happens to be more than Rs. 2 lakhs or Rs. 10 lakhs, as the case may be. The circular was struck down as not warranted by law and as being contrary to law. The learned judge has held :
'The criteria to obtain a certificate either under s. 230A or under Chapter XX-C should be the value of the property or the interest of the person in the property that is sought to be transferred and it is only with reference to that the income-tax clearance certificate could be insisted upon. When an undivided share is sold under a valid sale deed or a valid agreement of sale as provided in the Transfer of Property Act for a consideration which is below the limit prescribed under s. 230A or Chapter XX-C, the said provisions will not apply.'
The Madras High Court has taken the same view in R. Lokeswari vs. State of Tamil Nadu (1992) 196 ITR 501 (Mad). The Madras view has been approved and followed by the High Court of Karnataka in Appropriate Authority vs. J. S. A. Raghava Reddy (1993) 199 ITR 508 (Kar). The Andhra Pradesh High Court has also taken a similar view in Samudrala Ganesh Rao vs. State of A. P. : [1988]174ITR304(AP)
Incidentally, we may refer to two other decisions, the law propounded wherein though in a different context lends support to the view taken hereinabove.
CGT vs. R. Valsala Amma : [1971]82ITR828(SC) was a case under the GT Act, 1958. The assessed and her sister had received under the will of their mother, inter alia, a cinema theatre building with machinery and another building called 'police quarters'. Each one of them had a half share in the properties. They gifted these buildings to their brother by means of a single gift deed and the question was whether the assessed and her sister should be assessed in respect of the gift as individuals or as an association or BOI. Their Lordships have held :
'Now, the question is in what capacity the gift was made by the assessees. Did they do it as an association or as a BOI or as individuals The property received by the assessees under the will of their mother was admittedly received by them as co-tenants. Each one of them had half share in that property. The question whether they divided that property or not is not a material question. In law each one of them had half the right in the property that they gifted to their brother. They were holding that property as tenants-in-common and not as joint tenants. Hence, they made the gift as tenants-in-common and not as joint tenants. Each one must be held to have made a gift of her share of the property though the gift is made through one single document. It is surprising that the ITO or the AAC or the Tribunal should have ever thought that the gift in question was by an association or by a BOIs. The GT Act did not change the general law relating to the rights of property. It merely sought to tax a gift of the property owned by a person. As mentioned earlier, the property with which we are concerned in this case is a property owned by two persons as tenants-in-common, each one having a definite share.'
CIT vs. T. V. Suresh Chandran : [1980]121ITR985(Ker) was a case under s. 269C of the IT Act. The transferors were co-owners having inherited the property from ancestors. They transferred the property to four persons with one deed. The competent authority initiated proceedings for acquisition of the property by treating the entire property as one. It was held that each one of the four transferees had absolute right to the property so transferred to him and in the property transferred to one, the other transferees had no right. The right of each of the transferees to the property was absolute. The fact that the transferees may make common use of the property purchased by them is a factor which would have no bearing on the purchase itself. Had the sale been effected by four instruments the case urged by the Revenue may not have arisen. It would make no difference merely because the four sales were covered by one instrument. Sec. 269C was held to be inapplicable.
5. The object behind the enactment of Chapter XX-C is to prevent transactions by shady transfer or exchange of immovable property for under-the-table considerations so as to generate black money. The general law relating to property rights and governing transfer of immovable property has not undergone any change or been affected by the provisions of Chapter XX-C. It remains what it was as if Chapter XX-C of the IT Act, 1961 was not enacted.
In the case at hand the facts found project an entirely different picture. Even at the risk of repetition let the facts not in dispute, be noticed in their chronological order.
The property was purchased jointly by Jaswant Singh and Harbans Singh from DLF Housing Construction by sale deed dt. 21st March, 1964. Both of them got a building plan sanctioned from the MCD and raised a house with 2-1/2 storeys. Harbans Singh expired and his fifty per cent share in the property devolved upon his four heirs, one of whom, namely, Amarjeet Kaur, relinquished her share in the property in favor of her brothers and sister.
All the co-owners thereafter decided to have the property partitioned amongst themselves proportionately with the share held by each of them. There was an oral partition which is evidenced by a memorandum of partition dt. 5th June, 1987. The property has been partitioned by metes and bounds. On 25th Aug., 1987, all the owners of the property have entered into an agreement, each one of them agreeing to transfer his share in the property and the property which has fallen to his share consistently with the entitlement to a prospective vendee. The agreement entered into between the parties states all the relevant facts including the factum of partition. The actual property which has fallen in partition to the share of each of the vendors is mentioned. The agreement recites separately the consideration payable to each of the vendors by each of the prospective vendees. Each of the vendors could have entered into a separate agreement to sell. However, they have entered into only one agreement. The correctness of the facts stated in the agreement is not disputed by the respondents nor could it have been.
The respondents could not have in law treated the several different transactions evidenced by the agreement as one and then proceeded to apply the provisions of s. 269UD of the Act.
In the opinion of this Court, though there is one agreement to sell, it must be deemed that there are four transactions of immovable property entered into by four owners in favor of five vendees. It is only the transaction entered into by Jaswant Singh in favor of Surinder Gupta and Minakshi Gupta alienating his 50 per cent share in the property for a consideration of Rs. 20 lakhs (25 per cent each for Rs. 10 lakhs) which could have attracted the applicability of s. 269UD of the Act. In so far as the proposed sales contained in the agreement to sell dt. 25th Aug., 1987, by Pritipal Singh and Gurcharan Singh and Gulshan Kaur are concerned, the apparent consideration for each of the transactions being less than Rs. 10 lakhs, s. 269UD of the Act is not at all attracted to any of them.
6. Learned counsel for the respondents has relied on a decision of the Bombay High Court in Jodhram Daulatram Arora vs. M. B. Kodnani : [1996]221ITR368(Bom) . Having carefully perused the Bombay decision we are satisfied that it does not help the respondents. The Madras view in K. V. Kishore's case (supra) and N. C. Rangesh's case (supra) was cited before the Division Bench of Bombay High Court. The Bombay High Court has not expressed any dissent with the Madras view of the law. What the Division Bench has stated is that on the facts of the case before it, the petitioners (before it) had purchased the property in joint ownership, the shares were undivided, the transaction was one and it could not be said that each of the petitioners had individually agreed to buy individually an undivided share in the property from the vendor. The agreement did not mention any price separately being paid for each undivided share. The consideration was one for the whole joint property. On these facts, the Madras view of the law was held to be inapplicable.
For the foregoing reasons Civil Writ Petitions Nos. 3286 of 1987, 3288 of 1987 and 3290 of 1987 filed respectively, by Surinder Gupta, HUF, Miss Neha Gupta and Miss Sumina Gupta are allowed. The impugned order dt. 6th Nov., 1987, and all the proceedings under Chapter XX-C of the IT Act, 1961, in so far as the interest in the property or the properties belonging to Pritipal Singh, Gurcharan Singh and Gulshan Kaur are concerned are set aside.
In so far as Jaswant Singh is concerned, to the extent of the property owned by him and sought to be alienated the impugned order would stand.
7. The relief to be granted shall have to be moulded and worded in accordance with the law laid down and relief granted by the Supreme Court in C. B. Gautam's case (supra). Consistently therewith it is directed that the statement in Form No. 37-I jointly submitted by the several petitioners as set out earlier shall be treated to have been submitted only by the vendor, Jaswant Singh as regards the 50 per cent share of the property owned by him and the agreement entered into by him with Surinder Gupta and Smt. Minakshi Gupta. The remaining part of the Form No. 37-I shall be treated as redundant. The statement shall be deemed to have been submitted on the date of signing of this judgment. Thereafter, if the Appropriate Authority considers it fit, it may issue a show-cause notice calling upon the petitioner, Jaswant Singh, and his vendees to show cause why an order for compulsory purchase of the property in question should not be made under the provisions of sub-s. (1) of s. 269UD and give a reasonable opportunity to the persons noticed to show cause against such an order being made. Having afforded such an opportunity if the Appropriate Authority considers it fit, it may hold an enquiry, even though summary in nature, and may pass an order for compulsory purchase by the Central Government of the property in question under s. 269UD(1). The Appropriate Authority will have to decide whether an enquiry is called for in the facts and circumstances of the case after the show-cause notice is issued. If an order for compulsory purchase of the property is made hereafter, the Central Government shall pay to the intending seller the amount of apparent consideration plus interest at nine per cent per annum from 6th Nov., 1987, the date on which the impugned order was made. No order as to costs.
8. All the five petitions stand disposed of.