BRINDCO SALES LIMITED Vs. APPROPRIATE AUTHORITY

JUDGEMENT

(1.) Order dated 31/07/2000 passed by the Appropriate Authority Income-tax Department, New Delhi (in short, the Authority) under Section 269UD(1) of the Income-tax Act, 1961 (in short, the Act) directing pre-emptive purchase of property D-1/5, Okhla Industrial Area, Phase II, New Delhi, is under challenge in this petition.

(2.) Background'facts necessary for disposal of the writ petition, which has been filed alleging non-application of mind and/or non-consideration of relevant materials by the authorities essentially are as follows:- A statement in Form 37-1 was filed by Span India Pvt Ltd, respondent No. 3 on 28/04/2000 indicating that it was the transferor and the petitioner was transferee in respect of an immoveable property, i.e., D-1/5, Okhia Industrial Area, Phase II, New Delhi, having total land area of 1042.34.sq. meters. In Column No. 4 of the form particulars of the property were described as an industrial building with basement, mezzanine floor, two-storied office block with built up area of 15174 sq. ft. However, in the Annexure to the said form at Sl. No. 3 no description of the industrial building was given. It was only indicated to be as per agreement of sale enclosed. A copy of the agreement to sell was also filed along with Form 37-1. Notice under Section 269 DC (4) of the Act was issued on 15/05/2000 pointing out certain defects;which, inter alia, included defects in Columns 3, 5 (iv) (b) and 8 (ii) of the Annexure to Form 37-1. It was also pointed out that Column No. 11 of the Annexure was also not properly filled up. Further, signatories of both the transferor and the transferee, at pages 1,3, 4, 5 and 6 of Form No.- 37-1 had put only initials and not the full signatures. Rectified form 37-1 was filed on 22/05/2000. So far as Sl. No.3 of Annexure is concerned following details were provided: <FRM>JUDGEMENT_649_AD(DEL)3_2001Html1.htm</FRM> Thereafter, a notice under Section 269 UD (1) was issued by the Authority on 7.7.2000. It was pointed out in the notice that apparent consideration of Rs. 1,50,00,000.00 (Rupees One Crore Fifty Lacs) in respect of the property is considered low when compared with instance property, as per valuation report enclosed in the notice. The fair market value of he property was stated to be assessed by adopting instances received pertaining to property D-158/A, Okhia Industrial Area, Phase-l, New Delhi. The fair market value was assessed at Rs. 1,98,14,425.00 (Rupees One Crore Ninety Eight Lacs Fourteen Thousand Four Hundred Twenty Five). As the understatement worked out to +24.3% taking the above fair market value as the base, notice in question was issued. Further, valuation report enclosed with the notice, indicated the price and as to how the market value was arrived at. The same is as follows:

(3.) Main ground of objection was that the property in question adjoins on the right side a vacant plot which has been encroached upon by squatters who have built 40/ 50 jhuggies on the plot. The encroachment occurred about a decade back. The plot now houses about 300 jhuggies dwellers who pose a serious security hazard, besides filth and foul smell that has been created. The service lane at the back has also been occupied by the jhuggies dwellers who have built jhuggies on it. There are two Sulabh Socchalayas opposite the factory adding'to the foul atmosphere. It was also submitted that the building had severe problem of termites and practically the entire woodwork had been eaten away by termites, which had spread along the walls to all floors. Drying up of a water well was an additional disadvantage. The factory in the left side used heavy presses resulting in heavy noise pollution. It was further stated that depreciated value of the building as fixed at Rs. 49,30,000.00 is exorbitant when the original value was Rs. 18,43,000.00 in the year 1988. It was highlighted that the plot size of the instance property was in the neighbourhood of 600 sq mts, whereas the plot under consideration is 1042.34 sq mts. Instance area has better potential which is not available to the property in question. Because of better locality, the instance property may have fetched better price.