SUNDARAM CLAYTON LIMITED Vs. APPROPRIATE AUTHORITY

JUDGEMENT

(1.) THE petitioner is aggrieved by the order of the Appropriate Authority declining to grant no objection certificate for the purchase of approximately 13.1 grounds in an area known as Boat Club, one of the sought after areas in the city of Madras. THE total consideration for which it was proposed to be purchased was Rs. 5,85,01,540. This area is part of a larger area measuring 46.945 grounds which the petitioner had agreed to buy under an agreement dated October 11, 1999, from Binny Limited, which being a sick company, had been permitted to sell this valuable property with a view to realise its cash equivalent

(2.) THE agreement with Binny Limited provided for the sale of that larger area of 46.945 grounds to the petitioner or its associates for a consideration of Rs. 2,565 lakhs. THE petitioner nominated five of its associates to purchase parts of that areas--T.V.S. Suzuki Limited 8.576 grounds, Lakshmi Auto Components-6.166 grounds, T.V.S. Electronics Limited-6.138 grounds, T.V.S. Finance Limited-8.965 grounds, Mr. Gopala Srinivasan, joint managing director of the petitioner-company, as an individual 4 grounds. THE remaining extent of 13.1 grounds was to be purchased by the petitioner in its own name.

(3.) THE fact that the petitioner chose to show the sale consideration in the proposed sale deed between it and Binny Limited for 13.1 grounds at a figure which worked out to approximately Rs. 44 lakhs per ground, on the assumption that the value of 3.1 grounds (out of 13.1 grounds purchased by it) being the area of the private road providing access to the other ten grounds, had a reduced value by reason of the obligation to retain that area as a pathway/private road and to make that pathway available to two others whose residences abutted that private road/pathway, does not in any way militate against the petitioner's contention that what was ultimately payable to the common vendor Binny Limited for the total area agreed to be sold to the petitioner and its nominees was an amount which represented the true value of the entire land, and was an amont which was not less than the market value by more than 15 per cent. Once that contention is found to be acceplable, it is evident that no presumption could be made that the proposed conveyance from Binny Limited to the petitioner was with a view to evade the amount required to be paid as tax by suppressing the true value of the transaction.