i.E. Vittal and anr. Vs. Appropriate Authority and ors. - Court Judgment

Excerpt:
direct taxation - reassessment - sections 269c, 269rr, 269ua, 269ub, 269uc, 269ud, 269ud (1), 269ud (2), 269ug and 269uh of income tax act, 1961 - petitioner purchased property from vendor - entire sale consideration was paid - appropriate authority found that there was difference of 15% between apparent consideration and fair market value - directed pre-emptive purchase of property by central government - petitioner contended that chapter xx-c was not applicable since transaction was completed before it became applicable to city - contended that findings of market value by first respondents was vitiated beside being erroneous finding of fact - whether chapter xx-c of act applies to transaction - whether impugned order of preemptive purchase by central government is sustainable by law - there was no completed transfer of property so chapter xxc will be applicable to above transaction - appropriate authority had not furnished documents supporting his contention which amounted to denial of opportunity of being heard resulting in violation of principles of natural justice hence unsustainable by law. head note: income tax compulsory purchase of immovable property by central government--applicability of chapter xx-c--transfer of property not completed before 1-6-1989. ratio : as there was no completed 'transfer' of the property before application of chapter xx-c to the twin cities of hyderabad and secunderabad, i.e., before 1-6-1989, provisions of chapter xx-c was therefore rightly applied in the circumstances of the case. facts : the alleged transfer of the property in question was made on 16-11-1988, which was after chapter xx-a ceased to be operative and before chapter xx-c was extended to the twin cities of hyderabad and secunderabad on 1-6-1989. admittedly, there has been no registered deed of sale. held : there is, however, conflict of judicial opinion on the question of applicability of chapter xx-c where an agreement coupled with delivery of possession, falls within the extended definition of 'transfer' which was completed before the coming into force of chapter xx-c. inasmuch as in the case on hand, the plea that possession was handed over was not accepted by the appropriate authority and the court is not persuaded to disturb that findings, as such there was no completed 'transfer' of the property before application of chapter xx-c to the twin cities of hyderabad and secunderabad. in view of the finding recorded by the first respondent that possession of the property was not handed over to the agreement holders on 31-3-1989, as alleged, there was no 'transfer' within the meaning of that expression and chapter xx-c has been rightly made applicable and the order of pre-emptive purchase cannot be questioned on that ground. application : also to current assessment years. income tax act 1961 chapter xx-c compulsory purchase of immovable property by central government-- - maximssections 2(xv) & 3(1) & (3): [v.v.s. rao, n.v. ramana & p.s. narayana, jj] ghee as a live stock product held, [per v.v.s. rao & n.v. ramana, jj - majority] since ages, milk is preserved by souring with aid of lactic cultures. the first of such resultant products developed is curd or yogurt (dahi) obtained by fermenting milk. dahi when subjected to churning yields butter (makkhan) and buttermilk as by product. the shelf life of dahi is two days whereas that of butter is a week. by simmering unsalted butter in a pot until all water is boiled, ghee is obtained which has shelf life of more than a year in controlled conditions. ghee at least as of now is most synthesized, ghee is a natural product derived ultimately from milk. so to say, milk is converted to dahi, then butter. scientifically or common sense point of view, even though ghee is not directly obtained from milk (which is certainly a product of cow/buffalo), it is certainly a product of a product of livestock i.e., cow or buffalo. it would be rather illogical or irrational to say that ghee is not a milk/dairy product or to say that it is not a product of livestock. section 2(x) and 2(iv) of the act used the plural products of livestock. the legislative intention is very clear that not only a product of livestock like milk (when notified by government), butter etc., are products of livestock but even derivative items (derived from a product of livestock) are intended to be product of livestock for the purpose of the act. thus the term ghee is to be interpreted on the basis of expression products of livestock as defined in section 2(xv) of the act. whatever products are declared as such by the government by notification, they become products of livestock for purpose of the act. consequently it was held that ghee is the product of livestock and by reason of power conferred under section 3(1) read with section 3(3) of the act on them it is competent for the government to declare ghee as product of livestock for the purpose of regulating its purchase and sale, in any notified market area. [per p.s. narayana, j,(dissenting)]if livestock or agricultural produce and the categories thereof had been specified in the statute itself by appending in the schedule or otherwise, that would stand on a different footing from the present provisions of the act which contemplate the issuance of notifications in accordance with the procedure ordained by the provisions specified supra. in view of the clear definition of the livestock and products of livestock, the ghee being derivative of butter or cream, if the language employed in definition to be taken as they stand, the only conclusion would be is that the ghee would not fall within ambit of the definitions aforesaid. sections 4 & 3: [v.v.s. rao, n.v. ramana & p.s. narayana, jj] declaration of notified area held, it is only under section 3 that government are required to publish draft notification inviting objections and section 3(3) mandates to consider objections and suggestions before issuing declaration order. it is very conspicuous that section 4 does not contemplate any draft notification inviting objections and suggestions before either constituting market committee, establishing notified market area or declaring notified market area for the purpose of levy of market fees. thus, except ordaining government to issue preliminary/draft notification inviting objections at the time of issuing declaration order under section 3(3) of the act nowhere much less under section 4 contemplates issuing a notification inviting objections. when the legislature has chosen to exclude principles of natural justice, the court cannot introduce rule of audi alteram partem and render statutory provisions unworkable. in such a case, maxim, expressum facit cessare tacitum (when there is express mention of certain things, then anything not mentioned is excluded) would apply. section 7: [v.v.s. rao, n.v. ramana & p.s. narayana, jj] levy of market fee element of quid pro quo - held, levying fees and tax are two forms of exercise of sttaes taxing power. there is no quid pro quo between tax payer and public authority as tax is a part of common burden. it is also well settled that fee is charge for special service or a benefit given to a class of individual fee payers and fee collected need not have correlation with actual service in exactitude but if it is shown that substantial portion of the fee is expended or the purpose for which it is levied, it would be justified. expressum facit cessare tacitum sections 4 & 3: [v.v.s. rao, n.v. ramana & p.s. narayana, jj] meaning when there is express mention of certain things, then anything not mentioned is excluded. - it is well-settled that consideration for sale of small extents of lands is always more than the consideration for large extents of lands.order under s. 269ud--validity.ratio :order passed under section 269ud is not valid where the same was based on non-comparable sale instances and appropriate authority violated principles of natural justice as copies of documents relied on by him were not provided to agreement holders.heldnot providing copies of the agreements which were relied upon by the appropriate authority to record an adverse finding against the agreement holders amounts to denial of opportunity of being heard resulting in violation of the principles of natural justice which would vitiate the proceedings.what is more surprising is that the appropriate authority did not rely on sale of property in the same locality as not a comparable sale whereas he relied upon agreement for sale of property in another locality which is about 10 kms. away, treating it as a comparable sale. indeed, from the plan it appears that the comparable sale relied upon by the agreement holders is of the property which is only 250 metres away from the property in question. however, another submission is made by learned standing counsel for the revenue to disregard the sale of the said property on the ground that it relates to small extent of land. it is well-settled that consideration for sale of small extents of lands is always more than the consideration for large extents of lands. so this contention is untenable. if the consideration mentioned in this sale deed is accepted as representative of fair market value of land it becomes difficult to support or sustain the finding of understatement of consideration in the agreement for sale in question, recorded by the appropriate authority.the order passed under section 269ud is therefore quashed.application :also to current assessment years.income tax act 1961 s.269ud

Judgment:
ORDER

UNDER S. 269UD--Validity.

Ratio :

Order passed under section 269UD is not valid where the same was based on non-comparable sale instances and appropriate authority violated principles of natural justice as copies of documents relied on by him were not provided to agreement holders.

HELD

Not providing copies of the agreements which were relied upon by the appropriate authority to record an adverse finding against the agreement holders amounts to denial of opportunity of being heard resulting in violation of the principles of natural justice which would vitiate the proceedings.What is more surprising is that the appropriate authority did not rely on sale of property in the same locality as not a comparable sale whereas he relied upon agreement for sale of property in another locality which is about 10 kms. away, treating it as a comparable sale. Indeed, from the plan it appears that the comparable sale relied upon by the agreement holders is of the property which is only 250 metres away from the property in question. However, another submission is made by learned standing counsel for the revenue to disregard the sale of the said property on the ground that it relates to small extent of land. It is well-settled that consideration for sale of small extents of lands is always more than the consideration for large extents of lands. So this contention is untenable. If the consideration mentioned in this sale deed is accepted as representative of fair market value of land it becomes difficult to support or sustain the finding of understatement of consideration in the agreement for sale in question, recorded by the appropriate authority.The order passed under section 269UD is therefore quashed.

Application :

Also to current assessment years.

Income Tax Act 1961 s.269UD