NEW INDIA CHEMICAL ENTERPRISES Vs. APPROPRIATE AUTHORITY

JUDGEMENT

(1.) This original petition is filed by two petitioners jointly. The first petitioner is a partnership firm and the 2nd petitioner is a private limited company. M/s. P. Sahadeva Menon, V. Govindankutty, G. Gopinathan Pillai, K. M. Ramakrishna Pillai and M. A. George are the partners of the firm. They are also the only share - holders of the 2nd petitioner company. The 1st petitioner firm purchased 69.222 cents of land comprised of 43.926 cents in Sy. No. 59/6A1 and 25.296 cents in Sy. No. 60/1A1 of Edappally North Village by sale deed nos. 3987 dated 04/05/1979 and 5188 dated 11/11/1993 respectively, for a total sale consideration of Rs.2,55,407/-. The firm started a small scale industrial unit, engaged in the business of manufacturing laboratory chemicals, reagents etc. In the land bought by them they constructed factory buildings in 1980, 1988 and 1995 for the purpose of their business.

(2.) The firm entered into an agreement with the company for sale of the said land and buildings for a total sale consideration of Rs.60 lakhs, of which Rs.50 lakhs were to be paid by D.D. or pay order drawn on any bank and the balance Rs.10 lakhs were to be credited to the account of each of the five partners in equal shares. Ext. P3 is that agreement dated 03/10/1998. The firm had credit facilities from M/s. Union Bank of India, Edappally Branch, for repayment of amounts due on which the said land and buildings were mortgaged as security. By Ext. P5 valuation dated 16/06/1994, the Bank had valued the 69.322 cents of land at Rs.15,59,745/- at the rate of Rs.22,500/- per cent and the buildings at Rs.11,05,635/- aggregating to Rs.26,65,380/-. At the instance of the Bank, the buildings were insured with the National Insurance Company Ltd. for a sum of Rs.25,00,000 (Rupees twenty - five lakhs only), as evidenced by Ext. P6 policy of insurance dated 16/10/1998.

(3.) At that time, Chapter XXC of the Income Tax Act, 1961 was in force (which was later repealed), S.269UC of which stipulated that no transfer of immovable property of such value exceeding five lakhs rupees as may be prescribed should be effected, except after entering into an agreement for transfer between the transferror or and transferee at least four months before the intended date of transfer, reduced into writing in the form of statement in Form 37I prescribed under R.48L of the Income Tax Rules, which had to be furnished to the appropriate authority under the Act. Under S.269UD, after receipt of the said statement, the appropriate authority may make an order for purchase by the Central Government of such immovable property at an amount equal to the apparent consideration fixed in the statement. But no such order shall be made after the expiration of three months from the end of the month, in which the statement under S.269UC is received by the appropriate authority.