Commissioner of Income Tax, Bombay v Ganesh Builders

Bombay High Court

5 March 1977

A No. 643 of 1975 and FA No. 644 of 1975

The Judgment was delivered by DESHMUKH J.

DESHMUKH J.

These two appeals arise out of the proceedings under Chap.XX-A of the I.T. Act, 1961. As both of them arise out of the same proceedings, we have heard them together and this judgment will dispose of both these appeals The property in dispute is S. No. 164/2A CTS No. 104 on Lalbahadur Shastri Marg (Agra Road) at Ghatkopar. The total area of this plot is 4, 550 sq. yards, which is equal to 3, 804 sq. metres. On October 9, 1972, Ganesh Builders agreed to sell this plot to one Mr. Maru or his nominee at the price of Rs. 65 per sq. yard. Actual conveyance was executed on May 10, 1973, by Ganesh Builders in favour of Paras Builders as the nominee of Mr. Maru. At the rate of Rs. 65 per sq. yard the total price paid under the conveyance was Rs. 2, 95, 750. The conveyance was registered on June 29, 1973. Under the provisions of added Chap. XX-A of the I.T. Act the registering authority made a report of the requisite particulars to the competent authority, viz., the IAC of Income-tax

The competent authority obtained a valuation report from the department’s valuer on December 3, 1973. According to the valuer, the “fair market price” as contemplated by cl. (d) of s. 269A of the I.T. Act was Rs. 6, 82, 500. Prima facie being satisfied that the “apparent consideration” is very much less and the fair market value is much more than 15% above the apparent consideration, the competent authority recorded reasons for having reason to believe that the property appears to have been transferred with the requisite intention under cls. (a) and (b) of sub-s. (1) of s. 269C. Thus, a notice was issued on December 4, 1973, under s. 269D of the I.T. Act. This notice was served upon Ganesh Builders, the vendors, on December 20, 1973, and upon Paras Builders, the purchasers, on December 25, 1973Both of them showed cause to the notice under their separate representations. Considerable correspondence ensued between the IAC and the present respondents. During the course of this correspondence, Paras Builders relied upon the report of their valuer, one Jayant Tipnis. In his report Mr. Tipnis pointed out some of the instances of sales and purchases of comparable lands in the locality and observed that the market price of raw lands at about that time was even below Rs. 65 per sq. yard. When the department pointed out that the plot lay in a fairly developed locality and the price of a developed plot would be much more than that of raw land, Jayant Tipnis has clarified the matter by pointing out that the fair market value would be Rs. 140 per sq. yard on the footing of the plot being a developed one. However, certain outgoings will have to be taken into account and adding those to Rs. 65 per sq. yard the price of Rs. 140 per sq. yard would be a proper price

After this correspondence, as required by the provisions of that Chapter hearing was given to both the vendor and the vendee. After hearing them and after considering the evidence on record, the competent authority came to the conclusion that the instances of purchases and sales of raw land do not furnish a proper guide in the case. Since the locality was practically a developed one, it was more appropriate to take into consideration the value of the plot as if it was a developed plot and if it was not so, as a matter of fact certain deductions should be permitted for the purpose of finding out whether the apparent consideration was much less than the fair market value. The competent authority considered the outgoings under three different heads. The respondents pointed out that a 30 ft. wide road passed through this estate dividing the whole plot into two smaller plots on either side of the road. The area covered by this road would be 801 sq. yards. A Pucca road was to be constructed along with side gutters, drainage, electric connections, etc. Expenses in that behalf should be permitted to be deducted from Rs. 140 per sq. yard. The competent authority accepted this proposition. The next point urged was that there were certain structures which were to be removed and the encroachers were to be accommodated by giving them consideration. Even this point was accepted by the competent authority. The third item of expenditure which was pleaded was the value for filling up the plot and bringing it to proper level at which all plots were required to be developed by the owners according to the Municipal Rules. Even this item was accepted. However, on all these three items, the competent authority said that it disagreed with the figures which were estimated as cast by the respondents’ valuer, Mr. Tipnis. It appears that the competent authority also rejected the estimates given by the department’s valuer in this behalf. The competent authority arrived at its own figures in respect of these three items of expenditureA fourth item for which credit was claimed was the stamp duty, brokerage and solicitors’ fees, etc. In other words, expenses incidental to the document of conveyance were claimed under three separate specific heads. In this behalf the competent authority found that they could not be added up to the permissible expenses as this item does not form part of price but was incidental to the conveyance. It may specifically now be noted that the amounts permitted to be deducted were Rs. 45, 000 for road construction, Rs. 60, 000 as value of encroachment and Rs. 50, 000 as value of filling up. These three items totalled up to Rs. 1, 55, 000. Taking the market value of 4, 550 sq. yards at Rs. 150 per sq. yard and after deducting these expenses, the competent authority found that the difference between the two was quite large. The competent authority, therefore, found that the provisions of s. 269C(2)(a) and (b) of the Act were satisfied and directed that the plot be acquired

Being aggrieved by that order, Ganesh Builders and Paras Builders filed two separate appeals before the Income-tax Appellate Tribunal. The Tribunal after hearing these appeals found that it was not necessary for it to expressly determine the actual figure of expenses under the three heads liable to be taken into account by the competent authority. Even on the footing of the expenses allowed by the competent authority it was possible for it to dispose of the appeals. What the appellate authority did was to find, after discussion of the evidence on record, that the fair market value of developed plot in that locality would be Rs. 140 per sq. yard. Accepting this figure given by the valuers of the private parties as correct, the appellate authority rejected the figure of the department’s valuer. The first important finding of fact given by the appellate authority was that the fair market value of developed plots in that locality was Rs. 140 per sq. yard. The appellate authority, therefore, accepted that as its basis for its calculation. Without expressing further on how much in fact to allow, but taking for granted for the time being the three figures allowed by the competent authority totalling up to Rs. 1, 55, 000, the appellate authority added a further figure of Rs. 30, 000 by way of brokerage, solicitors’ fees, stamp duty, etc. The total allowable deduction thus came to Rs. 1, 85, 000. After so deducting from the price of 3, 750 sq. yards at the rate of Rs. 140 per sq. yard, the appellate authority found that the margin between the apparent consideration paid under the document and the fair market value so determined was a little less than 15%. In that view of the matter, both the appeals were allowed and the order directing acquisition was set aside. Being aggrieved with this order, the department has filed these two separate appeals since there were two different appeals by the purchaser and the vendor. As stated earlier, we have heard these two appeals together and this common judgment will dispose of both these appealsBefore we consider the merits of this appeal it is proper to refer to the provisions of s. 269H(1) which determine the scope of this appeal. The Commissioner or any person aggrieved by any order of the Tribunal under s.269G is permitted, within sixty days of the date on which he is served with notice of such order under that section, to prefer an appeal against such order to the High Court on any question of law. The proviso to sub-s. (1) enables the High Court to condone the delay by extending the period of limitation in filing the appeal. Sub-s. (2) requires that such an appeal shall be heard by a Bench of not less than two judges and the provisions of s. 259 shall apply in relation to any such appeal, as they apply in relation to a case referred to the High Court under s. 256. Sub-s. (3) says that the costs of the appeal shall be in the discretion of the High Court

It is, therefore, clear that the scope of such appeal is limited and only questions of law can be raised for the consideration of the High Court. Mr. Joshi for the appellants has raised two points for our consideration as points of law. He concedes that the two authorities below have already considered and found that the evidence of comparable prices of sales in the vicinity at about the time of the present transaction was unhelpful to find out whether Rs. 65 per sq. yard as such is a fair market value or not. Since evidence in that behalf has already been appreciated and finding given that question is not now open for debate in this appeal. The competent authority as well as the Tribunal chose to consider the value of the plot by taking the market value of the developed plots in the locality for the purpose of guidance with such deduction as may be permitted for arriving at the value of the raw land. In that behalf certain deductions were allowed by the competent authority under three different heads. He does not dispute that those are the heads under which deductions must be permittedHow much amount should be permitted under each is a question of fact depending upon the evidence led. That point may not be open in this appeal, if both the authorities below had expressed their views and come to a definite finding. What he pointed out is that whereas the competent authority refused to give credit for brokerage, solicitors’ fees and stamp duty, the Tribunal has permitted an amount of Rs. 30, 000 to be deducted from the total value which was to be calculated at Rs. 150 per sq. yard. Giving credit for the stamp duty, brokerage and other incidental expenses, according to him, is an erroneous deduction. In law such deduction cannot be permitted. The first point of law, therefore, raised by him is that these deductions have been wrongly permitted and they should be disallowed

The second point which he developed before us had its genesis in the manner in which the appellate authority wrote its judgment in para. 12. The portion which was read out to us from the paper book No. 1, at page 24, does give an impression that while calculating the fair market value of this property at Rs. 140 per sq. yard the appellate authority only took into consideration 3, 750 sq. yards after deducting 801 sq. yards which were to be covered up by road which was to be surrendered ultimately to the municipality. According to Mr. Joshi, the price of Rs. 140 per sq. yard represents the price of the entire plot of 4, 550 sq. yards. Taking into consideration only 3, 750 sq. yards and deducting 801 sq. yards was an error in law. The second law point which he developed was, therefore, that this deduction is wrongly made and should not be permitted. These are the only two points raised for our consideration by the appellants

We will dispose of the second point first because it seems to have an origin in the misunderstanding rather than the actual calculations as have been made by the authorities below. We will point out here that the appellate authority has not given clear findings on all the questions of facts involved in this litigation, except one, viz., that the fair market value was to be calculated at Rs. 140 per sq. yard as proposed by the respondents’ valuer, Mr. Tipnis. That was the price of developed land from which certain deductions were to be made. On other questions of fact involved, without giving positive findings, the Tribunal disposed of the appeals by accepting the figures and findings of the trial court and without either concurring with them or revising or setting aside them. To those figures the appellate authority merely added the stamp duty, brokerage charges and solicitors’ fees at Rs. 30, 000. Having accepted the competent authority’s calculations in this manner, the Tribunal itself proceeds to point out that these deductions are to be made from the gross value of 3, 750 sq. yards at the rate of Rs. 140 per sq. yard. This being the manner in which calculations are made in paragraph 12 of the judgment, the learned counsel for the appellants felt that 801 sq. yards have been omitted altogether from considerationIt may be true that out of the total area of the plot, 801 sq. yards will be ultimately surrendered to the municipality and will cease to be under the ownership of the present respondents. What appears to have been done by the municipality in this case is that it sanctioned the plan of development by making the party surrender 801 sq. yards against which it has granted an additional F.S.I. of 7, 209 sq. feet. It is obvious that the fair market value of the entire plot as was sold and purchased had to be found out for considering whether the property should be acquired under the provisions of Chap. XX-A of the I.T. Act

A similar argument was addressed to us in this behalf on behalf of the respondents by reference to the report of Mr. Tipnis, the respondents’ valuer. In his report dated February 12, 1974, after considering the various factors which go to constitute the price in a given locality and the sale statistics of properties near about, Mr. Tipnis draws his ultimate conclusions in these words:

“While considering the above facts and size of the plot or plots, I value the property under reference at Rs. 140 per square yard for vacant land available at site and developed as per the items mentioned above”

. Mr. Rajagopal, the learned counsel for the respondents, stated that the conclusion of Mr. Tipnis regarding the fair market value being Rs. 140 per sq. yard is confined only to such vacant land as was available at site and which was developed after making allowance for the items mentioned above. This, therefore, excludes the 801 sq. yards. The value as made by Mr. Tipnis is of the balance land of 3, 749 sq. yards. Mr. Joshi pointed out that the conclusion in fact means that on the footing of the development, land is available at that particular site where the plot is located. The price would be Rs. 140 per sq. yard. It has no reference to the land which is being excluded. Apart from the construction that is possible, we think that it is not the value which is given by either the departmental valuer or the private parties’ valuer that binds the authorities as good value. These reports merely constitute evidence. Authorities have to find out themselves by appreciating this evidence on record as to what is the fair market value. If that be the correct approach we think that the competent authority as well as the appellate authority have taken into consideration the 801 sq. yards which have been covered by the road and thereafter valued the plotsWe may first consider how the competent authority has dealt with this subject. In the order which appears at pages 24 to 26 of the second paper book supplied to us the subject is dealt with under the figure (v)(d) with the caption “expenses on road construction estimated at Rs. 95, 000 to Rs. 1, 00, 000”. The two rival points of view in that behalf were considered by the competent authority. The valuer of the department points out that this being a big plot larger than 3, 000 sq. yards, normally 15 to 20% of it would have been consumed for laying down roads, electrical connections, etc. Instead they are required to prepare a road which will be ultimately maintained by the municipality and against which an additional F.S.I. of 7, 209 sq. feet is made available to the buildings. Since this additional advantage covers the loss, it is not necessary to delete this area from calculations. The respondents pointed out that not only they have to lose this land but have to incur an additional expenditure of Rs. 90, 000 in constructing a road. That would represent the net loss of the respondents

The argument has been dealt with by the competent authority on pages 25 and 26 of the second paper book as follows: The competent authority estimates the value of 7, 209 sq. ft. of the F.S.I. at Rs. 70 per sq. ft. as estimated in May of 1953 at Rs. 5, 04, 630. From this, additional deductions are permitted. The first item is cost of land of 801 sq. yards at Rs. 150 per sq. yard= Rs. 1, 20, 150. The second item is the cost of construction of 7, 209 sq. feet at Rs. 50 per sq. ft.=Rs. 3, 60, 450. The total loss on these two items is thus estimated at Rs. 4, 80, 600. This leaves a balance of Rs. 24, 030 by way of profit. The competent authority thus estimates the net profit of Rs. 25, 000. It has rejected the estimate of construction of road at Rs. 95, 000 but had taken the figure at Rs. 70, 000. Deducting Rs. 25, 000 from Rs. 70, 000 a net loss of Rs. 45, 000 has been arrived at as the loss to the builders under the first item of road construction.

Thus, to the figure of Rs. 45, 000 arrived at by the competent authority as net loss under the road construction cost, he has already given credit to the value of 801 sq. yards which were being lost. This being the manner in which the calculations are made, it is obvious that the competent authority had not permitted deduction of 801 sq. yards just like that, but has taken the value of the entire plot into consideration including the area under the proposed roadSince the appellate authority finds that it was not necessary for it to go beyond what has been found by the competent authority in view of the certain approach adopted by it, the appellate authority merely observes that the figures taken by the competent authority may be accepted for the time being for the purpose of calculation. Since they have admitted Rs. 45, 000 towards the road construction as the figure calculated by the competent authority, it must be held that it already covered 801 sq. yards. Having once covered the cost of 801 sq. yards in this item, it could not be doubly calculated when the price of the rest of the plot at Rs. 140 per sq. yard was to be arrived at. The Tribunal has rightly, therefore, calculated the balance area of 3, 750 sq. yards at Rs. 140 per sq. yard for the purpose of calculating the gross value from which the deductions were to be permitted. This being the manner in which the appellate authority has adopted the figure of the competent authority, we are unable to accept Mr. Joshi’s argument that the appellate authority has excluded 801 sq. yards from consideration and that we ought to add the value of 801 sq. yards at Rs. 140 per sq. yard for the calculations made by the appellate authority. The second point of law thus does not remain a point of law in view of the factual calculations noted by us. That point, therefore, does not arise and must be rejected

We are, however, in agreement with Mr. Joshi that the authorities under Chap. XX-A of the I.T. Act have to find out the value of the property in the condition in which it was sold on a particular date and that would be always the price of the entire property as it is and in the condition in which it was. However, since this is actually done in this case, it is only a misunderstanding developed by the superficial reading of a certain part of the judgment of the appellate authority that has helped the department to raise that question. In our view, that question does not arise in this case and, therefore, no additions in the price are required to be made on account of the so-called point of lawThis takes us to the question whether stamp duty, brokerage and solicitors’ fees which are all expenses in the nature of incidental expenses are to be deducted from apparent consideration of a conveyance. “Fair market value” has been defined in cl. (d) of s. 269A for the purpose of this Chap. XX-A of the I.T. Act. That definition says that “fair market value”, in relation to any immovable property transferred, means the price that the immovable property would ordinarily fetch on sale in the open market on the date of execution of the instrument of transfer of such property. This Chapter has been introduced by the Taxation Laws (Amendment) Act, 1972, with effect from November 15, 1972, for a specific purpose. The legislature found that mischief was being perpetrated by showing lower prices as apparent consideration in a document of sale. This enabled concealment of income, avoidance of taxes and gave rise to what is known as parallel black market. In order to do away with this mischief, the remedy contemplated by this Chapter was provided. The legislature was aware that in genuine sales a needy seller or a fancy buyer might be responsible for some variation in the price. For that purpose a margin of 15% has been provided. If, however, the fair market value as contemplated by cl. (d) of s. 269A exceeds by more than 15% of the apparent consideration, it is permissible for the authority under the Chapter to initiate proceedings, if conditions of s. 269C are satisfied. If ultimately the fair market value is found to have that much difference as stated above, acquisition on payment of apparent consideration plus 15% is permitted. This is a salutary provision made with a view to check the unhealthy trend in the economy. However, the legislature is further aware of the fact that there can be certain sales which are genuine and are not meant either to conceal income or avoid taxes. Such genuine sales are permitted to be proved because the provisions of s. 269C(1) merely raise a presumption and it is a rebuttable presumption. For the purpose of removing doubt on this topic care has been taken to add sub-s. (3) to s. 269D. The law is not, therefore, made mechanical, so as to direct acquisition the moment there is just a difference of more than 15%. Some additional factors must exist before which acquisition is directedThat being so the fair market value as defined by the Act will have to be found out in each case. In a case like the one which we are dealing with, where the actual price paid for the property in the conditions in which it was, is not being compared with similar properties round about but an artificial method of taking price of developed land in the locality subject to certain deductions is being followed, we are of the view that the approach in allowing certain deductions which are mere estimates on many occasions, should ordinarily be liberal. However, saying that original estimates should be examined in a generous manner is entirely different from saying that all the items claimed should be permitted to be deducted

It is precisely here that we are required to consider whether the stamp duty, brokerage and solicitor’s fees can be deducted as permissible items of deduction. Mr. Joshi on behalf of the department has no objection to permit the deductions under the heads “Construction of road”, ” Removal of encroachment”and” Filling of the plot” where it is necessary. These are ordinarily incidences of development of any plot and expenses incurred in that behalf must normally be deducted before finding out the value of raw land at a particular point of time. The definition of “fair market value” in cl. (d) of s. 269A merely tells us that we have to consider the price that the immovable property would ordinarily fetch on sale in the open market. A sale in the open market and the price thereof are the factors which are indicated for the purpose of deciding the fair market value. The open market price is a matter of evidence as it relates to the ruling market rates of sales and purchases in a given locality. Even then when a certain figure is quoted as price, which a buyer accepts and a seller is willing to offer, will that offer of a price be further amenable to a deduction for the incidental expenses that the parties must necessarily incur in executing conveyance ? It is true that a sale of immovable property of more than Rs. 100 in value must always take place in law by executing a registered document. It would be again reasonable to assume that when a buyer wants to purchase immovable property he would always think in terms of buying property of undisputable title. The Transfer of Property Act does lay down responsibility on a vendor to guarantee title. However, that by itself is not a satisfaction to a purchaser, if any defect of title is discovered later. In normal course of business, therefore, the purchaser would take legal advice, inspect the documents and incur some expenses before he is satisfied that the property offers good, clear title and he may invest his money into that property. The stamp duty for registration is a legal must, whether one takes legal advice or not. It is also possible that in big towns like Bombay where a buyer may not be aware of properties, the brokers might help in bringing about a transaction and some expenses in the matter of brokerage may have to be incurred. The question, however, is whether the expenses under these heads can be permitted to be deducted from that price itself after the price is once quoted ?The question, therefore, that arises is: What is precisely the price or, in terms of the I.T. Act, what is the fair market value ? What is argued on behalf of the respondents is that when a person thinks of investing his moneys in land he would offer a price after undergoing some mental process. If an undeveloped land is available the buyer is bound to think in terms of additional expenditure that he will have to incur in developing the piece of land. After bearing those expenses in mind and after calculating how developed land is available round about at the time of his purchase, the buyer will make an offer and, when accepted, that offer will become the price of the land. If the buyer will think of the expenses of development which are being permitted, in the case of the three other items in this case, why should not the stamp duty and other incidental expenses be added in the same manner? We find it rather difficult to accept this kind of approach in the matter of determining the fair market price. The definition in cl. (d) of s. 269A of the I.T. Act in terms lays down that the fair market value in relation to any immovable property transferred, means the price that the immovable property would ordinarily fetch on sale in the open market. The concept is that the price offered in the open market should represent the fair market value. The central theme being price offered, let us understand how that word is used by the legislature in some other context when sale of immovable property was defined in the Transfer of Property Act. Under s. 269A of the I.T. Act, the relevant consideration is the price of transfer of immovable property. It would be, therefore, legitimate to look to s. 54 of the Transfer of Property Act which defines sale of immovable property

According to that section “sale” is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. Sale thus becomes completed as soon as the price of immovable property is fixed as either paid or promised. There could be either part-payment or part-promise or even otherwise. When incidentally discussing what precisely the price should include, the learned author, Mr. Mulla, had occasion to consider what precisely the word “price” means in that section. That expression has not been defined. In the view of the author, the word “price” seems to have been used in its ordinary sense as meaning money only. It is used in the same sense as in s. 2(10) of the Sale of Goods Act. Since it is not defined, price would mean as, under the Sale of Goods Act, the money consideration for the sale of goods. When it came to the expenses of the conveyance, the learned author points out that incurring of the expenses is primarily a matter of contract. In the absence of a contract between the parties under the provisions of s. 29(c) of the Indian Stamp Act, it would be the buyer who has to pay the cost of the same. These provisions do not directly help us to decide whether the stamp duty and other incidental expenses are to be treated as a part of the price or otherwise.

However, they do indicate the manner in which the question has to be examinedWe may now look at the process of thinking which precedes the sale of properties in the market. We may take into consideration both the instances of sale of developed as well as undeveloped lands. When undeveloped land is seen by a person who wants to buy, it may be that he would think for himself about the additional expenses he may have to incur so that investment may become profitable. Taking into consideration all the possible expenses that he may have to incur and making provision for it when the buyer gives his own offer, say as in this case Rs. 65 per sq. yard, that would be the price as contemplated by s. 54 of the Transfer of Property Act. The whole amount of Rs. 65 per sq. yard which would be the consideration of the document is also the price at which the sale has been decided by the parties. It may be, as the learned counsel for the respondents argues, that the buyer was considering the possible expenses of development including perhaps his own share of the expenses of the conveyance and legal advice, etc. Having provided for all this, the offer still made is Rs. 65 per sq. yard and that represents the price which is not now subjected to further reduction. When undeveloped land is thus sought to be purchased by a buyer at a particular price, we have no doubt that that would be the price and no reduction can be made either for conveyance charges or otherwise

In the same way let us consider that the property now stands developed. It is a question of fact answered by the appellate authority that for a developed property in that locality the price offered would be Rs. 140 per sq. yard. When a buyer, therefore, goes to the market, the price at Rs. 140 per sq. yard is the ruling price which he must offer and when he becomes willing to buy at that rate he knows that the documents require expenses which in law he must fully bear, unless there is a contract to the contrary where the expenses are to be shared. Bearing this in mind his offer of Rs. 140 per sq. yard thus becomes the price and is not now subjected to further deductionsBy this process of reasoning we are satisfied that the incidental expenses like stamp duty, brokerage and legal expenses may form part of the mental process of the buyer for the purpose of making an offer but the offer and acceptance at Rs. 140 per sq. yard or Rs. 65 per sq. yard in either of those cases would become the price at which the land is being sold and paid in the open market. In our view, therefore, it is not possible to add or subtract, as the case may be, the additional expenses of Rs. 30, 000. Whether these expenses are reasonable or not is not a question that can be raised before us. That is a pure question of fact. Since the Tribunal permitted it to be deducted, for the purpose of this case, it would be treated as a finding of fact. If those expenses are not deductible in law for the reasons we have stated above, it is not possible for us to accept the reasoning of the appellate authority

The position which now develops is this. The appellate authority has already given a finding that the ruling market price of developed plot in that locality is Rs. 140 per sq. yard. In calculating the total price of the entire plot of 4, 550 sq. yards, the Tribunal has taken the value of 3, 750 sq. yards at 140 per sq. yard. So far as the remaining 801 sq. yards are concerned, the Tribunal has also taken the value at the same rate but has subjected it to certain deductions. Out of these four items, we are disallowing the item on stamp duty, brokerage and solicitors’ fees at Rs. 30, 000. In other words, the deductions to be now permitted are Rs. 1, 55, 000 and not Rs. 1, 85, 000 from the gross amount of Rs. 5, 25, 000

This leaves a balance of Rs. 3, 70, 000. If this price were to be taken as the final price of the plot in question, it certainly exceeds the apparent consideration of Rs. 2, 95, 750 by Rs. 75, 250. The difference would be almost 25%. However, in spite of our coming to this conclusion, it is not possible for us to dispose of this appeal finallyThe difficulty in our way is created by the fact that all the relevant findings of fact which ought to have been given by the appellate authority have not been so given. It is now common ground between the parties that one has to allow deductions for road construction, value of encroachment and filling of plot. How much amount may be so permitted is a decision which lies exclusively within the domain of facts depending upon the evidence led and appreciated. The department’s valuer’s report in that behalf has not been accepted even by the competent authority. The competent authority made its own assessment and arrived at the three figures. The road construction expenses are estimated at Rs. 70, 000 and by the process, which we have already described above, the figure was brought down to Rs. 45, 000. In this behalf, the respondents have claimed before the competent authority expenses of Rs. 95, 000 and they have also produced some evidence in justification of those expenses. In the same way in the matter of encroachment the competent authority allowed an amount of Rs. 60, 000, which is its own estimate. The respondents are claiming Rs. 77, 750. On the third item of the filling expenses though the department’s valuer did not imagine beyond Rs. 33, 000 the competent authority allowed Rs. 50, 000. The respondents’ valuer estimated the cost of filling up at Rs. 1, 50, 000 and the respondents claim to have spent Rs. 66, 000 already till then in filling up a part of the plot and not the whole. On all these three items, what should be really allowed to be deducted was a matter for the Tribunal to decide, which unfortunately they have not decided by giving firm findings. The decision proceeded on the assumption that the competent authority’s figures may be accepted for the time being but if the amount of Rs. 30, 000 by way of stamp duty, brokerage, etc., were added to the figure of the competent authority the respondents’ case was at once taken out from the provisions of Chap. XX-A of the I.T. ActOn that approach the Tribunal felt that it was not actually necessary for them to give any clear finding on the amount of expenditure to be permitted. They are conscious of it and have so observed. In para. 13 of its order, the appellate authority noticed that the result which it has brought about is based upon the estimated value of encroachments, cost of road and cost of filling up as arrived at by the competent authority. They further noted that, according to these appellants, now respondents, the expenditure incurred by them on those items was in fact much more as supported by the vouchers that they have to produce. They were also urging a point that there was the definite contract with the three persons who surrendered the trespassed portions that they would be provided also with three of the flats to be built up on the property, to that extent the potentiality of the site for building purposes stands further deleted. The Tribunal, therefore, noticed that the present respondents had additional ground to urge on the question of quantum of permissible expenses. But in the light of the reasoning adopted by them, they found it unnecessary to pronounce finally on that subject. Since on the reasoning which we have adopted here the difference between the apparent consideration and the fair market value is now more than 15%, which is the requisite minimum under Chap. XX-A for taking further action, it would be necessary to remand this case to the appellate authority for expressing itself clearly on the permissible expenditure under the three agreed heads of value for encroachment, cost of road construction and cost of filling up

If additional expenditure is allowed on any or all the three items, the difference between the apparent consideration and the fair market value will have to be arrived at on the basis of the additional expenditure deducted in the manner in which the difference has already been worked out. In other words, if the expenditure permitted is about Rs. 30, 000 or more under any or all the three heads of expenses referred to above, the difference between the apparent consideration and the fair market value would again fall below 15% and the respondents’ case might be taken out of the provisions of Chap. XX-AThere is a further duty upon the appellate authority to decide whether acquisition should be permitted even if a difference between the apparent consideration and the market value exceeds 15%. That situation might arise if, after deducting the expenses as the appellate authority would be now inclined to allow after hearing both the sides, it still brings about a difference of more than 15%, then it is necessary to decide whether the acquisition should be permitted. Besides the difference in the apparent consideration and the fair market value, conditions required by cls. (a) and (b) of sub-s. (2) of s. 269C are also to be satisfied. We find in the Tribunal’s order certain observations towards the end of paragraph 14 where they seem to say something in favour of the respondents

In the present case, the contract of sale was on 9th October, 1972, whereas the execution of the documents was on 10th of May, 1973. The agreement of contract not being registered that date may not be relevant in the present case strictly for the purpose of considering the fair market value of the property. The market value has to be ascertained as on the 10th of May, 1973. The appellate authority has incidentally observed that the contract of sale seems to represent a genuine transaction and it may be that the value as presented before the authorities now shows a variation because of price rise between October, 1972, and May, 1973. These and such other considerations as may be urged before them would be considered by the appellate authority and the appellate authority would then pronounce whether this is a fit case for acquisition in view of the provisions of s. 269C, sub-s. (2)

For the above reasons, we allow these appeals, set aside the order of the appellate authority but remand the entire case and restore both the original appeals to the file of the appellate authority for further hearing and disposal according to law in the light of our observations aboveWe may incidentally observe that in a case like the present one, where alternative arguments on facts are possible and varying findings can be given, it is desirable that the appellate authority gives all findings of fact and not dispose of the matter merely on a point of law. This would facilitate final disposal of the matter by the High Court, whose jurisdiction is limited merely to the question of law by the added Chap. XX-A. This is a normal approach in all civil matters unless of course a point of law is already decided by the highest court of this land and it is not worthwhile making all the exercises in going through the complicated facts required for the decision of this case. Bearing this in mind, the appellate authority will dispose of these appeals

In the circumstances of the case, there will be no order as to costs of these appeals