Minerva Dealers Private Limited and Another v Inspecting Assistant Commissioner of Income Tax

Income Tax Appellate Tribunal

BOMBAY ‘E’ BENCH

9 November 1977

ITA. Nos. 2 & 3 (Bom)/77-78, Dt. 09 November 1977.

The Judgment was delivered by :

M.P. ARGIKAR, A M

These are two appeals in the matter of acquisition proceedings, one by the Transferor Minerva Dealers Pvt. Ltd. and the other by the Transferee M/s. Bishen Udyog Premises Co-op. Society Ltd. Order Under s.269(f)(6) of the Income-tax Act, 1961, passed by the Inspecting Asstt. Commissioner competent authority) Acquisition Range-IV, Bombay, pertains to immovable property comprising of a building standing on Plot Nos. 116 and 117, which is a part of the what is known as Minerva Estate in village Nahur, Mulund, Greater Bombay. A big piece of land admeasuring nearly 106 acres was acquired by M/s. Minerva Dealers Pvt. Ltd. In 1962 from Life Insurance Corporation of India and the entire area was sub-divided into a number of plots with the sanction of the Municipal Corporation obtained in Jan., 1964 of which the impugned plots are only two. The name of the transferors mentioned in the order under s.269F(6) are :

(1) M/s. Minerva Dealers Pvt. Ltd.

(2) M/s. Ranee Gunge Association Ltd.

both having their head offices at Calcutta. The Transferee is stated in the said order as M/s. Bishen Udyog Premises Co-op. Society Ltd. The competent authority received from the Sub-Registrar a copy of Form No.370 required to be enclosed by the transferee along with the instrument of transfer, as proved in s.269P(1) of the Income-tax Act, 1961, (hereinafter referred to as the Act). This form indicated that the land was freehold, floorwise plinth area of the building was 30, 960 sq. ft. Being the build up area(shed) and the years in which the building was constructed was shown as 1971 mentioning in bracked that the occupation certificate was dated 1st Nov., 1971. The persons in occupation of the property were stated to be members of the society, the Bishen Udyog Premises Co-op. Society Ltd. The consideration for transfer was stated to be Rs.4, 80, 433.50. The estimated fair market value of the property was stated to be the same. Against Column No.7 which requires the Transferee to state the name and address f any other person (s) interested in the property the remark was ‘NIL’. Column No. 13 showed that there did exist an agreement to sell the property, the date of which was given as 30th March, 1971. Under the same column it was stated against clause(c) that towards the consideration for transfer recorded in the agreement of sale was paid a sum to the extent of Rs.60, 000 as under:Rs.10, 000 by cheque on 11th Nov., 1970.

Rs.50, 000 by cheque on 26th Feb, 1971.

The Annexures enclosed with this form No.370 described the said property as a Shed for Industrial purposes situated on a portion of new plot No.116 (old Plot No.114 ) and new Plot No.117 (old plot No. 119) of which measurements were given as under :

Plot No.

Area in sq. yards

116 (part)

2, 500.00

117 (part)

3, 735.22

.

6, 235.22

The property was stated to be bounded towards the North by Plot No.115, towards the South by a 56 ft. wide road, towards the West by a.33 ft. Wide road and towards the East partly by land bearing Survey No. 100 and partly Survey No.101. This form was signed on 25th July, 1973 by the Secretary of Bishen Udyog Premises Co-op. Society Ltd.

2. On receipt of this from the competent authority (I.A.C. Acquisition Range IV, Bombay) wrote a letter dated 11th Feb, 1974 requiring the Transferee to attend his office on 23rd Feb, 1974 and to furnish the information called for including full postal address of the Transferor, details of assessment of the Transferee, the date of registration of the transfer document and the use to which the property purchased had been put to. The Transferee did furnish whatever information it could and in the meanwhile the competent authority referred the matter of valuation of the property to Shri R.L. Hingorani, Valuation Officer, Unit VII, Bombay. The latter after issuing due notice under s..269-L of the Act to the Transferee and after inspecting the property submitted a report (date not given) to the competent authority valuing the property at Rs.7, 94, 000.

3. According to this report, which is at page 58-A of the Transferee’s paper book, the transferee(s) were said to have got transferred an immovable property consisting of 6235.22 sq. yards of freehold land along with a permanent godown built at village Nahur in the industrial area from M/s. Minerva Dealers Pvt. Ltd. As first vendors and Ranee Gunje Goal Association Ltd., as second vendors as for a consideration of Rs.4, 80, 433.50, the conveyance having been executed on 30th June, 1972. The property was said to be inspected by him in the company of Transferees on 23rd March, 1974 and was said to comprise of a godown shed of a permanent type constructed during 1970. Before the transfer it was stated to have been used as food-grain godown. The property was said to be situated at a distance of 2 to 3 kms. from Mulund Railway Station and 75Km. from Bombay Agra Road. It had an approach, the report said, from the Bombay Agra Road. The building was stated to be constructed of R.C.C. columns over which tested steel trusses and asbestos cement sheets covering for the roof. The gaps between R.C.C. columns in the tower walls were said to be filled with 9

“brick masonary walls and the height of the building upto the bottom of the trusses was said to be 18′. Flooring was indicated as sufficiently thick to take the load of grain godown. It was however added that at certain places flooring had not been laid properly and because of this a suitable reduction had been made while working out the cost. The doors were stated to have been provided with steel rolling shutters and the windows and ventilators were said to be of steel. The walls were stated to have been plastered outside and inside. The future life of the building was estimated at 50 years. The land attached to the building was said to be almost levelled and properly developed. The road leading to the godown from the Bombay Agra Road was stated to be blacked topped for some length and the remaining portion, which originally had only stone wearing cost had subsequently een blacked topped by the Transferees. He mentioned that he was given to understand that there was no water supply or electricity when the transfer was effected, though these were available at site at the time of inspection. The valuer, according to the report, noticed a lot of activity as a number of small and big industries were working near the property. He stated that the sales registered with the Sub-Registrar showed that the value of land ranged between Rs. 28 to Rs. 35 per sq. yard and consequently an average of Rs. 30 per sq. yard should be estimated for the impugned land. The plinth area of the godown was stated to be 31, 875 sq. ft. And according to him, the reasonable plinth area rate looking to the specifications adopted could be taken at Rs. 20 after allowing for depreciation. Keeping these factors in mind an giving a deduction of Rs. 1 for bad flooring etc., he valued the property at Rs. 7, 94, 000 as against Rs. 4, 80, 433 shown in the Transfer Deed executed on 30 June, 1972. The break up of Rs. 7 94, 000 was given by him as under :Plinth area of the Building 31, 875 sq. ft. @ Rs. 20 per sq. ft. (Depreciated rate).

Rs. 6, 37, 500

Deduct : For top flooring being defective at places and other repairs etc. 31, 187 sq. ft. @ Rs. 1 per sq. ft. say

Rs. 31, 000

Rs. 6, 06, 500

II. Add : Value of land 6235.22 X 30 = Rs. 1, 87, 056.6 say =

Rs. 1, 87, 000

Rs. 7, 94, 000

Along with this report the valuation Officer enclosed a statement of comparative sales of certain plots, 4 in number, in the same area which showed the value of vacant land as ranging between Rs. 28 to Rs. 36 per sq. yard.

4. On receipt of this report the then competent authority (I.A.C. Acq. Range-IV), Bombay, G.S. Rao) made a note in his records, giving broad details of the property in question and stating that in view of the Departmental valuer’s report there was prima facie reason to believe that the fair market value of the property had not been correctly stated in the Transfer Deed, and the correct value appeared to be Rs. 7, 94, 000. As this value was said to be far in excess of the purchase consideration shown in the deed, he held that the purchase consideration had undoubtedly been grossly understated. He, therefore, further held that it was a fit case for initiation of proceedings under s. 269C and accordingly there was a need to issue a Notice under s. 269D(1) of the Act for publication in the Official Gazette. According to him, the following conditions for the issue of Notice had been fulfilled :

(i) He had reason to believe that the fair market value of the property exceeded Rs. 25, 000

(2) He had also reason to believe that the fair market value of the property transferred exceeded the apparent consideration by more than 15 per cent of such apparent consideration ; and(3) He had further reason to believe that the consideration for the transfer as agreed to between the transferor and the Transferee had not been truly stated in the deed of conveyance with the object of :

(a) either facilitating the reduction or evasion of the liability to tax of the Transferor or

(b) Facilitating the concealment of any income or moneys or other assets of the Transferee which ought to have been properly disclosed.

As the property was stated to have been registered on 3rd Oct., 1973, the Notice under s. 269D(1) was directed to be published before 31st July, 1974. Copies of the said notice were also directed to be served on the Transferor, Transferee and other interested persons.

5. There is no dispute that the notice under s. 269(1) of the Act dt. 17th April, 1974 signed by the said competent authority Shri G.S. Rao was published in the Gazette of India dt. 11th May, 1974. However, even before the publication of this notice copies thereof were served on the Transferee on 27th April, 1974 and on the Transferor Minerva Dealers Pvt. Ltd. On 2nd May, 1974. At this stage no Notice were served on the members of the Bishen Udyog Premises Co-op. Society Ltd. Who were 11 in number and who had occupied 11 different sheds all standing under one roof. There is also no dispute that even after the publication of the Notice Under s. 269D(1) in the Gazette of India no attempt was made to serve the copies of the said Notice once again either on the Transferor or the Transferee by the then competent authority Shri G.S. Rao. After some time the jurisdiction over this case appears to have been transferred to Shri N.M. Mehra (I.A.C. of Income-tax, Acq. Range vs. Bombay) who issued another notice unde s. 269D(1) of the Act dated 8th Oct., 1975. There are three distinguishing factors between the first notice under s. 269D(1) dated 17th April, 1974 and the second notice under the same section dated 8th Oct., 1975. These are :(i) Whereas the first notice was signed by Shri G.S. Rao, the second notice was signed by Shri J.M. Mehra.

(ii) Whereas the first notice was published in the official Gazette, the second notice was not again published in the Gazette.

(iii) Whereas the first notice made no mention of the name of Ranee Gunj coal Association Ltd., as the second Transferor, the second notice did add this name along with that of Minerva Dealers Pvt. Ltd.

The second notice issued by Shri Mehra was again served on the Transferors and the Transferee on 1st Dec., 1975 and 5th Dec., 1975 respectively as also on the members of Bishen Udyog Premises Co-op. Society Ltd. On 10th Jan, 1976. It is after doing all this that the notice was announced in the locality in local language by the ward Inspector by beat of bataki on 13th Jan, 1976. There is no dispute that the other formalities like pasting of notices, obtaining of C.I.T’s approval, etc. were duly complied with as provided by law.

6. Thereafter there was a change in the incumbent of the post and one Shri V.R. Amin took over from Shri J.M. Mehra. The Transferee has enclosed with the grounds of appeal a letter dt. 26th June, 1976 by Shri V.R. Amin to the Valuation Officer Unit VII of the Income-tax Department sending him a copy of the objections raised by the Transferee as per letter dt. 28th May, 1976 and expressing an opinion that on examination of the evidence produced it appeared to him that it would be difficult to consider the agreement of sale date 30th March, 1971 as ante dated. He also added that while the fair market value had to be determined as on the date of conveyance, for the purpose of determining whether the understatement of the consideration in the transfer deed was with a view to facilitating the reduction or evasion of liability to tax or not or whether the difference between the apparent consideration and the fair market value was merely because of the efflux of time it would be necessary for the Valuation Offic r to value the property as on 30th March, 1971. He, therefore, requested the Valuation Officer to re-examine the report and make his valuation as on that date.

7. As is apparent from the correspondence contained in the paper book filed before us the Transferor M/s. Minerva Dealers Pvt. Ltd., as well as the Transferee Bishen Udyog Premises Co-op. Society Ltd; raised several objections legal as well as factual from time to time against the acquisition proceedings making a request to drop them though the main objection as can be easily understood came from the Transferee (s). The Transferee in particular pointed out that the instances of sale referred to by Shri R.L. Hingorani were not at all comparable as the said plots in question were residential in character and were much better placed being nearer to Mulund station. It was also claimed that the best price obtained from open plots was for commercial premises, next came the residential premises and the last in order were industrial premises. It was also urged that the price paid was absolutely adequate, as the rate was calculated at Rs. 16 for the carpet area of 30, 960 sq. ft., the rate at the time being calcula ed in the basis of carpet area and not build up area, that the estimate of the value of the land at Rs. 30 per sq. yard and of the cost of construction at Rs. 19 per sq. ft. was absolutely unreasonable and far from reality and further that the Transferee’s property suffered from various disadvantages when purchased like lack of proper approach road from Bombay Agra Road, lack of access road inside the shed, lack of electricity and water connection, the land also not being properly developed and the plot having been situated in a far corner in the interior. At this stage we may also clarify that the 56′ road mentioned in Form No. 370 as on the South of the impugned property was said to be not in existence even today and in support of this claim the Secretary of the Transferee has filed an affidavit to that effect dt. 26th Sept., 1977. It was, therefore, suggested by the learned counsel for the Transferee Shri D.M. Harish that the correct way of valuing the structure would be to take the actual specifications per bay and then work out the cost of the likely material utilised per bay adding thereto the contractor’s profit. It is on this basis that the Transferee had submitted through letter dt. 17th Feb, 1976 by D.M. Harish & Co. The cost per bay at Rs. 11.33 per sq. ft. Which however, was subsequently modified, after obtaining the Architectural and structural designs to Rs. 12.36 per sq. ft. As per letter dt 2nd April, 1976, just because the valuer had objected to the first valuation on the ground that the rate analysis was not accompanied by architectural and structural designs. M/s. D.M. Harish & Co. also pointed out by giving comparative sale instances of lands sold for residential and industrial purposes at Marol and Thana, that the industrial plots positively fetched at least 50 per cent less than the residential plots. It was further pointed out that after acquiring the property the Transferee was required to spend an additional amount of Rs. 1, 01, 296 on the following items for which it held proper voucher :Flooring

Rs. 52, 704

Water supply and sanitary works

Rs. 32, 572

Filling, levelling, and reconditioning of the existing roads

Rs. 9, 873

Construction of electric sub-station

Rs. 6, 140

Rs. 1, 01, 297

It was further claimed that taking into account the fact that the property was agreed to be purchased in Nov., 1970 when the first instalment of earnest money of Rs. 10, 000 was paid and further sum of Rs. 50, 000 in Feb, 1971 and further that a sum of Rs. 1, 50, 000 was paid on 30th March, 1971 when the agreement of sale was formally entered into and possession acquired of 7 of the 11 sheds, the price paid when the agreement of sale was formally entered into and possession acquired of 7 of the 11 sheds, the price paid was really adequate and it would be absolutely unrealistic and unreasonable to consider the fair market value as on 30th June, 1972 on which date the conveyance deed was not only executed but presented for registration before the sub-Registrar.

During the course of this correspondence the Revenue in its turn referred to certain further instances of sale, 3 of them being industrial plots and one of them being a plot sold by Minerva Dealers Pvt. Ltd. itself to the Telephone Department for constructing residential premises for its staff as also a Telephone Exchange. The Revenue pointed out that just across the Bombay Agra Road on the opposite side CIBA of India Ltd., had sold to M/s. Burroughs-Welcome Co. of India Ltd. In Dec., 1972 registered on 5th Feb, 1973 a plot of land at Rs. 38 per sq. meter, though ultimately because of certain reductions required to be given for passage the rate was reduced to Rs. 29.60 per sq. yard. Another instance cited was of a sale of plot by Shri Syed Abdul Kadri to M/s. Hoechst Pharmaceuticals Ltd., at Rs. 27.50 per yard for which an agreement of sale was made on 30th Nov., 1965 and which price had ultimately to be paid through the official liquidator, as Shri Syed Abdul Kadri was declared insolvent. In addition to his sum of Rs. 27.50, M/s. Hoechst had also to shell out Rs. 2.50 per sq. yard for the same land to one Shri Jagdish Sinha for khoti rights so that the total price ultimately paid by Jan, 1974 was Rs. 30 per sq. yard. The third instance relied upon by the Revenue related to an open plot bearing Nos. 7, 8, 9 & 10 sold by Minerva Dealers Pvt. Ltd; itself to M/s. Bachooali Tin Factory, which plot abutted 56′ wide road just at the point where this road touches Bombay Agra Road. According to the Revenue, this plot admeasuring 9766 sq. yards was really sold on 16th Jan, 1971 for Rs. 2, 26, 490 at Rs. 23 per sq. yard, though ostensibly the consideration shown in the transfer deed was only Rs. 1, 46, 490 because the 5 partners of M/s. Bachooli Tin Factory had themselves made a voluntary disclosure on 29th March, 1976 admitting that they had paid Rs. 80, 000 more to Minerva Dealers Pvt. Ltd; for which an affidavit was also made on that date, a copy of which is made Annexure II to the order of the competent authority. The 4 h plot was again sold by M/s Minerva Dealers Pvt. Ltd; to Bombay Telephones in 1973 at Rs. 32.50 per sq. yard and this plot which admeasured 29, 800 sq. yard was also situated within what is known as Minerva Estates. Replying on these instances, the Revenue claimed that the assessee’s estimate for its own land at Rs. 10 per sq. yard was impossible to accept. It was also claimed by the Revenue that the cost of construction could not be less than Rs. 20 per sq. yard because that estimate was based on the experience gathered by the Government’s valuers.

8. In the course of these submissions and counter-submissions, the then competent authority, Shri N.J. Mehra, had prepared a draft order intended to be passed under s. 269F(6) of the Act, which was sent to the Transferor and the Transferee by his successor Shri V./R. Amin. The Transferee’s objections and correspondence continued even thereafter right till the time the order was ultimately passed on 16th June, 1977 by Shri G.A. James, the then competent authority, who had taken over Acquisition Range-IV by 28th May, 1977 as evidenced by his intimation under s. 129 given to the parties concerned by letter dated 28th May, 1977. The final order passed by him rejected all the contentions and submissions raised by the Transferor and the Transferee, and the fair market value was fixed at Rs. 7, 94, 000 based on the Valuer’s reports, their opinion obtained from time to time and the findings given by the competent authority mostly upholding the opinions given by the valuers.

9. Before we deal with the sub-missions made by the rival sides before us, it would be convenient to state a few more facts relating to the transaction of transfer. As already indicated, the first cheque of Rs. 10, 000 towards earnest money was issued by Bishen Silk Mills in favour of M/s. Minerva Dealers Pvt. Ltd., on 13th Nov., 1970 by Shri Radhesham Peshawaria a partner of M/s. Bnishen Silk Mills. At that stage there was nothing in writing either between Shri Radhesham Peshawaria or Bishen Silk Mills on the one hand and the Transferor on the other. Thereafter another cheque for Rs. 50, 000 was issued again by M/s. Bishen Silk Mills in favour of M/s. Minerva Dealers Pvt. Ltd., one 26th Feb, 1971, though this cheque was encashed on 9th March, 1971. The Bank’s certificates in support of these are at page IA and ID of the Transferor’s paper-Book. Thereafter a new account in the name of Radhesham Peshawaria was opened on 30th March, 1971 in National & Grindlays Bank Limited and on 31st March, 1971 two amounts of Rs. 65, 000 and 85, 000 were found credited. These were not cash deposits but transfers by way of cheques given on the bank. These cheques were given by the following seven parties, of which a list is furnished at page 336 of the Transferee’s paper-Book :.

Name of Member

Name of firm issuing the cheque

Amount

1.

Radhesham Peshawaria

Bishen Silk Mills

Rs. 5, 000

2.

Avtar Singh

R. Kay Textiles

Rs. 20, 000

3.

Baljit Singh

Rubber Textiles

Rs. 20, 000

4.

Paramjit Singh

Fashion Textile Industries

Rs. 20, 000

5.

Narinder Singh

Fashion Textiles

Rs. 20, 000

6.

Kripal Singh

Sobha Singh harbhajan Singh & Co.

Rs. 30, 000

7.

Joginder Singh

Rubber Machine Tools

Rs. 35, 000

.

Rs. 1, 50, 000

Needless to say that all these seven parties ultimately joined as members in the Co-operative Society known as “Bishen Udyog Premises Co-operative Society Ltd.”(Referred to as “the Society” for brevity’s sake). We were informed by the learned counsel for the Transferees that M/s. Bishen Silk Mills, which was having its small factory in Bhandup area had received a Court’s order to vacate the premises, the same not having been located in the Industrial Zone or the Industrial area, and it was hence that M/s. Bishen Silk Mills was anxious to get into the Mulund Industrial Area. We were also told that as soon as Shri Radhesham Peshawaria could enter into an agreement with M/s. Minerva Dealers Pvt. Ltd. for acquiring the property, he joined hands with some others including friends in order to acquire the property jointly and to form a Co-operative Society of 11 members for the 11 sheds. It was only because of this, he pointed out that six other members apart from M/s. Bishen Silk Mills paid on 30th or 1st of March, 1971 a total sum of Rs. 1, 45, 000, which together with Rs. 5, 000 of Bishen Silk Mills was deposited in the newly opened account in National & Grindlays Bank Ltd., Not only this but the proposed Bishen udyog premises Co-op. Society Ltd. opened another bank account in Maharashtra State Co-operative Bank Ltd. on 13 May, 1971 in the following names :1. Mr. Radhesham Peshawaria.

2. Mr. S. Duljit Singh.

3. Mr. S. Narinder Singh.

The letter to the Bank dated 15th April, 1971 clearly indicates that the account was for the proposed “Society”. On 20th April, 1971 the proposed society also applied to the Government of Bombay for a ‘No Objection Certificate’ for starting the industrial units and this was granted as per Government’s letter dated 29th April, 1971 vide page 7 of the Paper-Books. The Assistant Registrar of Co-operative Societies was approached on 4th May, 1971 by Shri Radhesham Peshawaria in his capacity of “Chief Promoter” of the Society for registering the Society, and as per letter dated 4th May, 1971 forwarded to him copies of the Bye-laws signed by the 11 proposed members., Bank certificate, Membership applications, a copy of the agreement duly certified by M/s. Minerva Builders, letter of authority, etc., vide page 7A of the Paper-Book. An application was also made to the Municipal corporation on 7th May, 1971 by Bishen Silk Mills to permit it to transfer its factory to the “Society”, Plot No. 116-117 at Mulund. That ermission was also granted by the Corporation as per letter dated 18th May, 1971 vide page 9 of the Transferee’s paper-book. The Industries Commissioner also wrote on 18th May, 1971 to the Society intimating his ‘No Objection’ for establishing the industrial estate in Nahur village of Mulund. The Corporation wrote to M/s. Bishen Silk Mills on 9th June, 1971 that its proposal to shift the factory was acceptable on condition that proper arrangements were made for sanitary accommodation for workers, proper access to the premises, etc. Durecon Building Corporation as per bill dated 2nd Aug., 1971 built an electric sub-section for the society, vide page 11-A of the paper-book. There is then a letter dated 15th Sept, 1971 from the Assistant Registrar of Co-op. Societies to Shri Radhesham Peshawaria informing him that as all the requirements necessary for forming the Co-operative Society had not been compiled with, the papers submitted to his office would have to be returned and they could be collected by Shri Radhes am. However, Shri Radhesham Pershawaria subsequently fulfilled the requirements and the Society was finally registered on 9th Nov., 1971 as per Certificate filed at page 13 of the paper-book. As per letter dated 25th Oct., 1971 by the Thana Electric Supply Co. Ltd. It also acknowledged to M/s. Bishen Silk Mills receipt of cheque of Rs. 2, 304 for electricity deposit. The Municipal Corporation also sent a letter to the Society for the Municipal taxes due from 1st Dec., 1971 to 31st March, 1972, vide page 17 of the paper-book. There is then a letter dated 14th Dec., 1971 from the Licensing Department of the Municipal corporation addressed to M.s. Bishen Silk Mills giving a finding of the Inspection by the Factory Inspector, which is to the effect that on the day of his visit he had found installed 21 Power Looms, out of which ten were working. All these and other correspondence filed in the Transferee’s paper-book is referred to indicate the stand taken by the Society and its promoter to get the industrial esta e moving even before the final conveyance was executed and registered.

10. We may then refer to the agreement of sale dated 30th March, 1971, which is at page IF of the paper-book. This agreement mentions M/s. Minerva Dealers Pvt. Ltd. as the Vendor and Shri Radhesham Peshawaria”

Chief promoter of Bishen Udyog Premises Co-operative Society Ltd. (Proposed)

“as the purchaser. The clauses mention that the Vendor was the owner of Plot No. 117 (Old Plot No. 115) of Village Nahur, Mulund, that by two separate agreements for sale both dated 25th March, 1971. The vendor had agreed to purchase from Raneeguange Coal Association Ltd. The adjoining Plots Nos. 115 and 116 (bearing old Plot Nos. 113 and 114), that the Vendor had submitted a scheme to the Corporation for amalgamation of the three plots bearing Nos. 115, 116 & 117, that the Vendor had thereafter constructed on portion of the said lands bearing Plot No. 116 (part) 117 (part) a structure consisting of a shed for industrial purposes, that the Vendor had agreed to sell to the Purchaser and the purchaser had agreed to purchase fr m the Vendee’s as the Promoter oif Bishen Udyog Premises Co-operative Society Ltd. (Proposed) the said land, hereditaments and premises together with the industrial shed erected thereon. Clause (:) then gave the description and the measurements of the property adding that a sum of Rs. 60, 000 had been paid prior to the execution of the agreement. Rs. 1, 50, 000 was to be paid on the execution of the said agreement and the balance of Rs. 2, 86, 000 would be paid against delivery of possession of the entire premises. As per clause 4 the sale has to be completed within six months. As per clause-5, the Vendor was to deliver to the Vendor’s Solicitors, M/s. Ambubhai & Diwanji, documents for investigating the Vendor’s title. As per clause 6, the Vendor was to make out a marketable title clear of all defects and free from all reasonable doubts and also clear of incumbrances. As per clause 8, the Vendor, the said Raneegunge Coal Association Ltd. and all other necessary parties were to execute the deed of conveyance and ll other assurances in favour of the said society or its nominees at the appropriate time. The Vendor, as per clause 12, declared that the said property agreed to be sold was within the industrial zone fixed under the proposed Development Plan for Greater Bombay. There is then a letter dated 30th March, 1971 from M/s. Minerva Dealers Pvt. Ltd. addressed to Shri Radhesham Peshwaria as Chief Promoter of the Society that it was put on record that upon the execution of the agreement of sale and upon payment of Rs. 1, 50, 000 the Vendor had handed over possession of seven units admeasuring 16, 000 sq. feet already constructed. This clearly indicates part performance of the contract. There is no dispute that before the conveyance was executed on 30th June, 1972 the rest of the four sheds had been completed, and delivery of possession thereof had also been given to the society in Nov., 1971. The Conveyance Deed dated 30th June, 1972 is at page 20 the Transferee’s paper-book. It mentions M/s. Minerva Dealers Pvt. as t e first Vendor and Raneegunge coal Association Ltd. As the Second Vendor and Shri Radhesham Peshawaria, styled as chief Promoter of the Society, is made a confirming party. The Purchaser is stated to be Bishen Udyog Premises Co-op. Society Ltd. which had then been registered. The conveyance also mentions in clause (vi) that the first Vendor had sold the new plot No. 116 to the second Vendor on the 1st of May, 1968 and which admeasured 2989 sq. yards. Clause (vii) also refers to the application made to the Corporation for amalgamation of Plot Nos. 115, 116 and 117. We may clarify at this stage that we are concerned only with plot Nos. 116 and 117 and not with plot No. 115, Clause 8 then refers to the fact that in or about March, 1971 the second Vendor had agreed to sell to the First Vendor new Plot No. 116 and Clause (vii) adds that the first Vendor had already constructed a shed on the portion of the said two plots bearing Nos. 116 and 117 for industrial user. Clause (x) then refers to the agreement of sale dated 30th March, 1971 between the first Vendor and Shri Radhesham Preshawaria as Chief Promoter of the Society concerning the impugned property admeasuring 6235.22 sq. yards together with the structure consisting of a shed admeasuring 31, 000 sq. feet or there about at a price of Rs. 16 per sq. foot of the area of the said shed. Clause (xi) mentions the exact area of the shed as 30, 960 sq. feet and on that basis the price is calculated at Rs. 4, 95, 360. As per clause (xii) a reduction of Rs. 14, 926.50 is however made from Rs. 4, 95, 360 because of the incomplete flooring admeasuring 16, 585 sq. feet, which reduction was given at 90 paise per sq. foot, so that the final price comes Rs. 4, 80, 433. The same clause further states that the Purchaser had already paid to the Vendor Rs. 4, 40, 000 leaving a balance of only Rs. 40, 533.50, out of which Rs. 35, 000 was payable to the second vendor and the balance of Rs. 5, 433.50 to the first vendor. The other clauses of the deed need no mention.

11. Although the Conveyance Deed was presented to the Sub-Registrar on 30th June, 1972 and although Income-tax Certificate under s. 230A of the Act was furnished to the sub-registrar on 10th Aug., 1972 as directed by him, the Sub-Registrar took no steps to register the property till as late as on 3rd Oct., 1973. On 9th April, 1973 the Sib-Registrar asked Shri Daljit Singh, the Secretary of the Society, to file a declaration in Form No. 37-G, which was filed on 25th July, 1973.

12. On more word is necessary regarding the facts of the case. The same Vendor M/s. Minerva Dealers Pct. Ltd. had constructed a similar shed just across the Nullah flowing beyond plot No. 115, and this shed was on plot Nos. 53, 54, 59 and 66. The total built up area of this shed was 67, 732 sq. feet on a plot admeasuring 12, 672 sq. yards, whereas the carpet area is 66, 223 sq. feet. This shed contained as many as 33 separate sheds areas which were sold by Minerva Dealers Pvt. Ltd. to a number of different parties. This shed as it transpires was constructed in 1969-70, though the sale of the shed areas was between 1973 and 1975 at rates varying between Rs. 20 and 24 per sq. feet. Just as in the case of the impugned property the big shed did not contain partition walls except R.C.C. columns at suitable distances. This shed was also constructed in a similar fashion. There is no dispute that when the shed areas on plot Nos. 53, 54, 59 and 66 were sold an access road had been constructed by the Vendor which ran ac oss the entire shed area and which covered a very major portion of the plot required to be left open except for the small amenity space right in the middle of the plot, around which the different shed areas were constructed.

13. Shri Jetly, the learned counsel for the Transferor, who represented the transferor in the matter of acquisition proceedings of these other sheds, asserted that the conveyances made for the different shed areas were all identical and one of these conveyances, is filed at page 189 of the Transferee’s paper-book. This conveyance dated 25th Feb, 1974 is between M/s. Minerva Dealers Pvt. Ltd, and Sailesh Shivkumar Dalmia. Sub-clause (viii) thereof mentions that the large structure admeasuring 66, 223 sq. feet was originally meant for storage but was subsequently sub-divided into different portions. These different portions were sold to a number of parties as already stated. The portion admeasuring 2105.8 sq. feet was sold at Rs. 20 per sq. feet. The first Schedule to the said deed indicating what was sold mentions the said portion of 2105.8 sq. feet alongwith the portion of land on which it stood. Clause (viii) of the conveyance, however, clarifies that the vacant portions of land running round the structur as also the unbuilt portion on the Northern side together with the open land in the middle though retained by the Vendor would be for the common benefit and enjoyment of all purchasers of the various portions. The Transferee’s paper-book at page 187 contains the names of 24 of these purchasers to whom portions of the said shed were sold, giving details of the area, the consideration, the date of execution of the conveyance etc. There is no dispute that in regard to these portions sold by M/s. Minerva Dealers Pvt. Ltd. the competent authority being Inspecting Assistant Commissioner, Acquisition Range-IV, Bombay, had initiated proceedings under s. 269-C 1 ) of the Act for acquisition and the paper-book contains 24 orders (page 153 to 186) showing that the same competent authority Shri G.A. James had after considering the objections and submissions made by the parties dropped the acquisition proceedings under Chapter XXA of the Act. It is to be specifically noted that in this case also the Transferor was the s me party, M/s. Minerva Dealers Pvt. Ltd. and these proceedings were dropped a week prior to the passing of the order in the present appeals.Against the background of these facts, though stated as briefly as possible, the learned counsel for the Transferor as well as the Transferee made several submissions, some legal and the others factual. The gist of the legal submissions is that because of several defects or technical defaults in the matter of initiation and continuation of proceedings the entire proceedings become bad in law and hence null and void necessitating cancellation of the order. The legal propositions, which were argued at length by Shri Jetly representing the Vendor and to which reference was also briefly made by Shri D.M. Harish, representing the transferee (s), are as under :

1. Whether the provisions of Chapter XXA (s. 269-C or any other section) are applicable in the present proceedings?

2. Whether s. 269-F (9 ) contemplates registration of agreement to sell entered into prior to 15th Nov., 1972?

3. (a) Whether the proceedings initiated by issue of a notice dated 2nd May, 1974 and publication in Gazette dated 11th May, 1974 stood discharged, because of service of fresh notice on 1st Dec., 1975?

(b) If answer to question 3(a) is in the affirmative, whether proceedings initiated by service of notice on 1st Dec., 1975 were barred by limitation?

4. Whether the mandatory provisions of s.269D (2) were complied with, and whether their non-compliance renders the proceedings invalid?

5. Whether reliance by the Competent Authority for its conclusion on the affidavit filed by the partner of M/s. H.A.H. Bachooali Tin Factory, which was not tested by cross examination was justified in law?

6. Whether on the facts of the present case proceedings under s.269C were correctly initiated and acquisition order passed under s.269F(6) was lawful?

7. Whether there was any evidence on record that Transfer of immovable property was with either of the objects set out in clauses (a) or (b) of sub-s. (1) of s. 269C .

8. Whether the Commissioner of Income tax was justified in according approval for acquisition of the present property?

At this stage, we would have first dealt with the legal submissions and then proceeded to ‘deal with the factual aspects, which were argued at great length by Shri D.M. Harish and according to which it was claimed that the apparent consideration represented the correct fair market value and Chapter XXA could not at all be invoked in this case. But so far as the legal aspects are concerned, there is on many of the points raised conflict of opinion between the different Benches of the Tribunal in India that we would have had to refer these to a Special Bench of the Tribunal in order to resolve the issues finally. But we are of the opinion that the assessee has a strong case on facts we do not deem it necessary so far as this case is concerned, to go into the legal aspects, and we shall decide the matter on factual aspects, and we shall decide the matter on factual aspect alone without touching upon the issues raised by Shri Jetly on behalf of the Vendor. Our attention was drawn to the observations of the Ho . High Court of Bombay in the case of Paras Builders (First Appeal Nos. 643 and 644 of 1975 decided on 5th March, 1977 but what their Lordships have said in the last paragraph is that in a case like the one that was before them, where alternative arguments on facts were possible, the Appellate Authority should given all findings on facts and not dispose of the matter merely on a point of law, because the jurisdiction of the High Court under Chapter XX was merely limited to a question of law and hence the factual position had to be death with by the Tribunal by covering the factual aspects from all angles. These observations in our opinion need not deter us from deciding the appeal in assessee’s favour by dealing fully with facts and we, therefore, proceed to do likewise.

15. There very first submission on facts was that the first instalment of earnest money having been paid in Nov., 1970 and the agreement of sale having been executed on 30th March, 1971, when seven of the shed portions had been constructed and taken possessions, of, it would be absolutely illogical to consider the fair market value as on 30th June, 1972 as the Revenue authorities had done. According to Shri Harish there was considerable spurt in prices between the end of 1970 and June, 1972 and consequently the picture would be completely lopsided if the fair market value as on 30th June, 1972 was to be considered. According to him there was not only a spurt in land prices but also in the cost of construction during this period of more than 1-1/2 years and hence the valuation ought to be made by considering the market conditions as existing in Nov., 1970 or at the most as on 30th March, 1971 when the agreement of sale was entered into. He said particular stress on the fact that one of the Competent Author ties, Shri V.R. Amin was clearly of the opinion, as evidenced by his letter dated 26th June, 1976 to the Valuation Officer, that it would be difficult to consider the agreement dated 30th March, 1971 as ante-dated and it would be necessary to make the valuation of the property as on 30th March, 1971 and not as at 30th June, 1972 as there Valuer had one till then. His next submissions was that it was very clear from the voluminous correspondence that Shri Radhesham Peshawaria throughout acted as a Promoter of the proposed Co-operative society and the parties interested had taken a number of steps right from November-Dec., 1970 to form a co-operative society in order to establish an industrial estate of which the advantage could be taken by all the 11 members. This correspondence to which reference was made by him was with banks, Registrar of Co-op. Societies, Government of Maharashtra Bombay Municipal Corporation, etc. to which a brief reference has been made above. He drew our attention pointedly to the fac that seven of the units had been constructed and given Poisson of by 30th March, 1971 and the other four by Nov., 1971 i.e. even prior to the execution of the conveyance. He then pointed out that the conveyance deed was even presented for registration on 30th June, 1972 itself and at that time the only requirement in the act was to present to the Sub-Registrar a certificates under s. 230A of the Act, and no question could have arisen at that time of filing information in form No. 370 prescribed by ITR. 48G, because Chapter XXA dealing with acquisition of immovable properties which was inserted by Taxation Laws (Amendment) Act of 1972, passed in Aug., 1972 was itself made effective only from 15th Nov., 1972. Had the two sides any apprehension in their mind regarding the fair market value, he argued, it would not have been difficult to get the registration completed before 15th Nov., 1972 i.e. before Chapter XXA came on the Statute Book. It was because of this, he claimed, that the basis of valuation in this section should be hot in determining whether the assessee could have had the objects set out as on 30th June, 1972 but as in Nov., 1970 or at the most 30th March, 1971.

16. He next submitted that the value of Rs. 16 per sq. foot of the carpet area paid to the Transferor was the proper fair market value and the Departmental Valuer’s valuation was not only a wild guess but was made by completely disregarding and not even referring to the several objections raised by he Transferees. In this connection he claimed that the instances of sale referred to by the Departmental valuer were not at all comparable and it was a wild guess to put the price of the land in question with all its disadvantages and inconvenient location at Rs. 30 per sq. Yard. He then pointed out that even one of the Departmental Valuers, Shri R.D. Gupta in his report dated 19th Dec., 1975 (page 80 of the paper-book) had accepted the position that in principle it was true that the industrial plots would fetch lower value in comparison with residential plots or the premises meant for commercial use, but inspite of this the transferee’s submission was rejected on the flimsy ground that this principle would not necessarily hold good where large chunks of land were sold in an undeveloped stage. This according to him was very strange especially when Shri R.D. Gupta had not even visited the site, as claimed repeatedly by him before the Competent Authority, though the competent Authority had generally said that he might have done so incognito. This he claimed was very unusual especially when the transferee was strenuously opposing the valuation made by the Departmental Valuer. He then referred to the fact that the transferee on its part had produced evidence to prove that industrial plots would fetch a much lesser price than residential plots, very often being less than 50 per cent of the residential plots but as against this no attempt was made by the Revenue to controversy this evidence by any contrary materiel. He then claimed that the transferee’s submission would be proved even on the basis of one of the instances cited by the Revenue, which referred to the sale of plot by M/s. Minerva Dealers Pvt. Ltd. To Bombay Telephones (Government of India) in Jan., 1973 admeasuring 29, 800 sq. Yards at Rs. 32, 50 per sq. Yd. This plot he claimed was not in the industrial zone was at a much higher level and well developed and very conveniently located. He then pointed out that the first Departmental Valuer’s report had cited four instances of sale of 1970 and 1971, with prices ranging between Rs. 28 and 36, on the basis of which the average price for the assessee’s land was estimated as Rs. 50 per sq. Yard. He submitted that as repeatedly told to the Competent Authority all these were residential plots, three of them being much small in area and located nearer to Mulund Railway Station, which, therefore, could not be compared. It was because of this, he claimed that the Revenue thereafter tried to rely on some other instances of sale, particularly the land purchased by Burroughs Welcome & Co. (I) {Pvt. Ltd. And by M/s. Hoechst Pharmaceuticals Ltd. The former, as already indicated, was effectively purchased at Rs. 29.60 per sq. ya , though the conveyance had provided the rate of Rs. 38 per sq. Mtr. (Because of the deduction obtained for the access road). This was purchased from Ciba of India Ltd. (In Dec., 1972 date of deed 5th Feb., 1973). The other instance relied upon by the Revenue was the purchase of an open plot by M/s. Hoechst Pharmaceuticals Ltd. For a total price of Rs. 30 per sq. Yard, for which, as already indicated, the agreement of sale was made as early as on 13th Nov., 1965. Shri D.M. Harish submitted that both these instances were not comparable. For one thing, he said both the plots were situated on the other side of the Bombay-Agra Road which was at a much higher level and where the land was not required to be developed in the manner that the transferee’s property was required to be developed. Secondly, he said, both these Pharmaceutical firms, which were multi-nationals and which had large funds at their command, wanted to expand their already existing factories and hence they were prepared to pay a fancy price for the two adjacent plots. Moreover, he claimed that so far as Burrough Welcome & Co.’s plot was concerned, the company got the advantage of higher F.S.I. for the passage to the hutments for which the price was reduced. Moreover the plots, he said, had a long frontage on the Bombay-Agra Road and consequently presented a better show and potentiality of development, and these plots did not suffer from the disadvantages which the transferee’s plot suffered from inasmuch as when it was acquired there was not even a proper approach road, no access road, neither water not electricity and even the floor had not been constructed. Considering all these factors he claimed the price of Rs. 10 as estimated by the transferee for its own land was not at all unreasonable especially considering the time when negotiations took place. He agreed that when the first instalment of earnest money was paid, there was nothing in writing between the Transferor and the Transferee but claimed that in the business world such conduct was q ite understandable and not uncommon, especially when the agreement to sell was made only four months thereafter.

17. He then claimed that the other instance of the plot sold by M/s. Minerva Dealers itself to M/s. Bachooali Tin Factory was also not comparable. A pare from pointing out that it was only at a very late stage that the transferor and the transferee were intimated about the affidavit made by the five partners thereof regarding the alleged on-money paid, which he claimed had no evidentiary value on the absence of proper testing of their assertions, even assuming that such on-money was plaid, still the position of that plot was not at all comparable. For one thing it was situated very near Bombay-Agra Road, almost at the mouth of the 56 ft. Road join Bombay-Agra Road, and for another it was fully developed. He then pointed out by referring to the map of the area that the front portion of the said plot was on level with the 56 feet road whereas the rear portion though at a lower level claimed to be 7 feet low by the Department, was also on level with the by-lane abutting the said plot in the rear. The Revenue he claimed, was entirely wrong in suggesting that the plot required filling up because by the very nature of its situation it could obtain the benefit of constructing a basement for which no F.S.I. was calculated and no filling as claimed by the Revenue was at all necessary. This fact, he point out, had been specifically brought to the notice of the Department but the objection was brushed aside without dealing with it in a proper manner. He, therefore, urged that the instance relied upon by the Revenue for claiming the value of land at Rs. 30 per sq. yard were not at all comparable and he could be of no assistance to the Revenue in establishing its point.

18. As for the cost of construction of structure, he pointed out that no only was it urged before the Revenue that the industrial shed purchased by the transferee was a third-rate construction with a future life of only 25 years, but the transferee had tried to satisfy the Revenue in the best manner possible for it. The transferee’s Valuer on the basis of cost analysis had it first valued the cost at Rs. 11.33 per sq. Feet, vide D. M. Harish & Co.’s letter dated 17th Feb., 1976 (page 84 of the paper-book), but this cost analysis was tried to be brushed aside by the valuer by raising a technical objection that the architectural and structural designs were not enclosed with the estimate. Because of this objection, he pointed out, the assessee with great difficulty obtained even these designs and on the basis thereof re estimated the cost at Rs. 12.36 per sq. Foot, vide D.M. Harish & Co.’s letter dated 2nd April, 1976 (page 121 of the paper-book). Not only this but the Transferee also made an offer to the co petent authority to let the Government Valuer sit with its own valuer to work out the cost analysis if the transferee’s cost analysis was found to be wanting in any respect, but even this request was not acceded to without assigning any reasons. This he claimed was surprising indeed especially when an eminent authority like Shri Roshan Nanavati had stated in his book that the most proper way to estimate cost was to do it on the basis of item-wise rate analysis by considering specifications, and as against all the evidence tried to be produced by the transferee the only basis of estimate made by the Revenue at Rs. 19 per sq. Foot, was said to be their own experience. As to how that experience was gained and on what basis had never been clarified, he alleged. In addition the Revenue had failed to take due note of the sum of Rs. 1 lakh and odd spent by the society for developing the property to which reference has already been made, and if only this item is taken into consideration the cost would go up by Rs. per sq. Foot, part of which can be attributed to developing the land and part to the structure. Merely because the structure used R.C.C. columns the life of the building could not be estimated at 50 years as claimed by the Revenue, he urged, because the Revenue had totally failed to consider the distance of the columns, the width of the spans, the nature of construction of the outer walls, etc. He further claimed that inspite of repeatedly telling the Revenue that the cost of things like rolling shutters, steel windows, proper ventilation, etc. Were incurred by the members on their own, that evidence was totally ignored and the cost of construction was just estimated at Rs. 19 per sq. Foot on the basis of the alleged experience of the Government Valuer.

19. He then invited our attention to the fact that the industrial portions which were later sold between 1973 and 1975 at rates from Rs. 20 to Rs. 24 by the same Minerva Dealers P. Ltd. Had been accepted by the very same Competent Authority and this was so inspite of the fact the same Minerva Dealkers Pvt. Ltd. Was claimed to have received on-money from Messrs. Bachooali Tin Factory. He further pointed out that the other industrial shed which was sold was fully developed with access road, water and electric connections, etc. And considering the fact that these shed-areas were sold at a much later date at mostly Rs. 20 per sq. Foot the transferee’s estimate of cost in 1970-71 was not at all unreasonable.

20. The initial submission of the learned Departmental Representative was that it was not at all permissible to consider the fair market value as in Nov., 1970 or even March, 1971, because of several factors. He firstly invited our attention to the definition of the expressions “transfer” and “instrument of transfer” as contained in cls. (h) and (f) of s. 269A or the Act. “Transfer” is defined in relation to any immovable property to mean transfer of such property by way of sale or exchange. “Instrument of transfer” is defined to mean the instrument of transfer registered under the Registration Act. He then diverted to the definition of “fair market value” as contained in s. 269A(d) , which means, in relation to any immovable property transferred, 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. These definitions he claimed, made it clear beyond doubt that the fair market value which had to be es imated could only be the one as one the date of execution of the conveyance deed which in his case was 30th June, 1972. Apart from this legal aspect, he further claimed that even factually the transferee could not be heard to say that the estimate should be made as in Nov., 1970 or March, 1971. In this connection his first submission was that the entire arrangement was between M/s. Minerva Dealers P. Ltd. On the one hand and Shri radhesham Peshawaria on the other as an individual or as representing M/s. Bishen Silk Mills, and the arrangement could not be said to have been effected with the Co-operative society, because it was not at all in existence till as late on 9th Nov., 1971. His second submission on facts was that without prejudice to this and even assuming that that the proposed sale was for and on behalf of the Society, still it was not permissible to consider the fair market value as on earlier dated as claimed by the opposite side, because the agreement of sale dt. 30th March, 1971 was, in his opi ion, ante-dated. That according to him was an after-thought and was put up merely to enable the transferee to claim that the fair market value should be taken as on an earlier date. His next submission was that the fair market value had necessarily to be estimated as on 30th June, 1972 and that was properly estimated at Rs. 7, 94, 000 after considering all the pros and cons as discussed in the order of the Competent Authority. He made pointed reference to the initial report of the government Valuer who he claimed was very experienced in this line and also to several objections raised by the transferee in particular from time to time, which according to him was merely to thwart the proceedings. So far as the transferor was concerned, he claimed that it did not at all appear to be very serious in contesting these proceedings and had given little co-operation to the Revenue. Inspite of the protracted correspondence spread over more than two years the Competent Authority, he said, had made every attempt to meet w th the several objections raised from time to time and this itself showed that the matter was given careful thought by the Competent Authority. He pointed out that in his order under s. 269-F, (6 ) the Competent Authority had dealt with the objections serially and was careful enough to indicate in connection with each point as to what the Valuer’s opinion was and then what his finding was on each point. According to him the instances cited by the Revenue to establish the price of land were very pertinent especially when the two instances of sale to M/s. Burroughs Welcome & Co. (I) Ltd. And to Hoechst Pharmaceuticals Ltd. Were taken into consideration. He invited our attention to the purchase by Hoechst Pharmaceuticals Ltd. Because this according to him indicated beyond doubt that the price of land could never be as low as Rs. 10 per sq. Yard. He pointed out that the agreement of sale in this connection was as early as in Nov., 1965 when the price was fixed at Rs. 27.50 per sq. Yard, when the Mulund area was n t well developed, and he questioned as to how the transferee could claim that its to how the transferee could claim that its land should be valued at merely Rs. 10 per sq. yard in 1970-71. He also pointed out that M/s. Hoechst Pharmaceuticals Ltd. Were ultimately able to obtain possession of the land through the Court because the then Transferor, Shri Syed Abdul Kadri had in the meanwhile been declared insolvent and Official Assignee was required to take control of his Estate. That itself indicated, according to him that the price of Rs. 30 as estimated by the Government Valuer as on 30th June, 1972 was not at all excessive. In this connection he also laid stress on the fact that M/s. Minerva Dealers Pvt. Ltd. Could not at all be said to be a party above-board because there was evidence to indicate that it was in the habit of charging on-money. This had been established, he claimed, by the Affidavits made by the partners of M/s. Bachooali tin Factory, who had stated in no uncertain terms that they were requ red to pay on-money of Rs. 80, 000 through the apparent consideration shown in the deed was only Rs. 1, 46, 494. A Vendor like this would not have spared the transferee from charging on-money on the sale effected to the transferees, he claimed. He further invited our attention to the sale of an open plot of land by M/s. Minerva Delaers Pvt. Ltd. To Bombay Telephones (Government of India) at the rate of Rs. 32.50 per sq. yard in 1973 and claimed that this instance itself indicated that the correct price was not shown in the instrument executed with the Society. According to him M/s. Minerva Dealers P. Ltd. Could not have charged on-money to a Government Department and hence that price was the correct price of open plots in that area and even on that ground the price of Rs. 30 per sq. Yard estimated by the government Valuer was not excessive.

21. So far as the cost of construction was concerned it was his case that the cost was properly estimated by the Government Valuer at Rs. 20 per sq. Foot based on his past experience and the Department had been liberal enough to grant a deduction therefrom of Re. 1 per sq. Foot for incomplete flooring and other in or repairs needed to make the structure useful.

22. Coming to the transferee’s claim that the same competent Authority a week earlier had dropped proceedings in a number of cases of industrial sheds constructed by it on plot Nos. 53, 54 59 and 66, his contention was that these proceedings were dropped on certain submissions made by Shri Jetley, the learned counsel who also represented the transferor in those proceedings, and according to him Shri Jetley had taken as one of his arguments that the F.S.I. for the open space in connection with those industrial sheds could be made use of by the transferor for his own purpose if need be. That according to him was a very distinguishing feature between that industrial sheds could be made use of by the transferor for his own purpose if need be. That according to him was a very distinguishing feature between that industrials shed and the industrial shed under consideration and neither the transferor nor the transferee can now be heard to say that there was really no distinguishing feature between the two sheds, aving obtained a specific benefit or an advantage of the proceedings being dropped in the other cases, he claimed that what was sold were the industrial sheds to as many as 33 different parties and not even the land, whereas in the case under consideration what is sold or transferred is a small shed with only 11 shed areas or shed spaces with a large piece of open land. He, therefore, claimed that these two cases were not at all comparable.

23. He even went to the extent of doubting the transferee’s claim that the property when taken possession of did not have electric or water connection because he claimed that there was a petrol pump very near which could not have operated without electric or water connection.

24. We have considered the rival submissions of both the sides. We may first deal with the legal aspects of the matter relating to valuation as canvassed is no doubt that the two expressions “transfer”, and “instrument of transfer” are defined by s. 269- A, thought it starts with the expression “unless to context otherwise requires”, and “instrument of transfer” is defined to mean only the instrument as registered under the Registration Act. It is without doubt that the agreement of sale was not registered and hence will not fall within the definition of s. 269-A(f ) of the Act. From this it follows that the fair market value as defined by s. 269-A ( d) would mean the price that the immovable property would originally fetch on sale in the open market on the date of execution of the instrument of transfer which is registered, which in this case would mean the conveyance deed. In this connection we may also refer to s. 269-F, (9 ) of the Act which states that in respect of any immovable property no objection sha l be entertained on the ground that although the apparent consideration for the property is less than the fair market value as on the date of execution of the instrument of transfer, the consideration as agreed to between the parties has been truly stated in the instrument of transfer because such consideration was agreed to having regard to the price that the property would have ordinarily fetched on sale in the open market on the date of the execution of the agreement of sale of the property except where such agreement has been registered under the Registration Act. Those being the clear provisions of the Act, the material date for our purpose would be 30th June, 1972 and not any earlier date.

25. That, however, is not the end of the matter. The very initiation of proceedings under s. 269-C(1 ) of the Act, in order to be valid in law, has to satisfy the following four conditions :

(i) the fair market value of the property should exceed Rs. 25, 000;

(ii) the property should have been transferred for an apparent consideration which is less that the fair market value of the property ;

(iii) the consideration for the transfer of the property as agreed to between the parties has not been truly stated in the instrument of transfer ; and

(iv) the under-statement of the consideration in the instrument of transfer is with the object of either :

(a) facilitating the reduction or evasion of the liability of the Transferor to pay tax in respect of any income arising from the transfer

or

(b) facilitating concealment of income or any monies or other assets which have not been or which ought to be disclosed by the transferee for the purposes of the IT Act or the Wealth-tax Act of 1957.

Unless and until all these four conditions are satisfied, the very initiation of proceedings would not be valid in law.

26. In this connection it would be necessary to refer to the presumptions which lay out certain rules of evidence as contained in s. 269C(2) of the Act which reads as under :”

(2) In any proceedings under this Chapter in respect of any immovable property:

(a) Where the fair market value of such property exceeds the apparent consideration therefor by more than twenty-five percent of such apparent consideration, it shall be conclusive proof that the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer;

(b) Where the property has been transferred for an apparent consideration which is less that its fair market value, it shall be presumed unless the contrary is proved, that the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer with such object as is referred to in cl. (a) or cl. (b) of sub-s. (1)

“.Although the presumption contained in s. 269C (2 ) would apparently look to be unrebuttable, it is doubtful whether it is completely so in view of the provisions of s. 269E(3) of the Act, which authorises the Transferor and the Transferee to take objection even in regard to 269C(2) (a) that it would not apply in its case because the fair market value of the property did not exceed the apparent consideration by more than 25 per cent of the apparent consideration. The Delhi High Court in Mahavir Metal Works Pvt. Ltd. vs Union of India(1) has gone to the extent of ruling that the presumptions to the extent of ruling that the presumptions in either of the cls. (a) and (b) of s. 269C(2) are rebuttable and this is proved from the provisions of s. 269E(3) . Their Lordships said that the presumption raised in s. 269C(2) is reasonable because justice requires that the person who acquires property for a consideration less than the market value of the property should be required to displace the presumption and if the urpose is genuine he should be able to rebut the presumption. Apart from the question whether the presumption contained in s. 269C(2)(a) is or is not rebuttable, there is no doubt that the presumption contained in s. 269C (2)(c ) is positively rebuttable as is clear from the very wording of section. Even assuming that the presumption contained in cl. (a) is not rebuttable, that would only mean that where the fair market value exceeds the apparent consideration by more than 25 per cent of the apparent consideration, it is conclusive proof that the consideration as agreed to between the parties has not been truly stated in the instrument of transfer. That unrebuttable presumption will be of help only in satisfying the condition No. 3, under s. 269C(1) to which we have referred to earlier. But the rebuttable presumption as contained in cl. (b) has reference to condition No. 4 which also has to be satisfied by the Revenue and it is here that the transferee can make submissions to indicate the apparent considerat on was agreed to in such circumstances that the parties cannot be said to have understated the consideration with the objects indicated in the section. The two presumptions, according to us, cover two different filed and transferor or the transferee would not also be precluded from leading evidence to indicate that the fair market value did not exceed the apparent consideration by more than 15 per cent. That was the view taken by Bombay Bench ‘C’ of the Tribunal in the case of M/s. Paras Builders vs. I.A.C., which went in appeal even to the High Court. We may with advantage reproduce paragraphs 8 and 14 of the said order :”

(8) That takes us to the nature of the presumptions laid out by s. 269C(2) ; Under cl. (a) the fact the difference between the apparent consideration and the fair market value is more than twenty-five percent, shall be taken as proof conclusive that the consideration for the transfer as agreed to between the parties has not been truly stated in the instrument of transfer. The presumption arising in such a case is thus irrefutable and the very difference of more than 25 per cent between the apparent consideration and the fair market value would thus be proof of the third condition referred to earlier for the initiation of “proceedings for acquisition.” The presumption arising under clashing (b) of the sub-section relates also the object of the under-statement which is made the fourth condition for the initiation of acquisition for the initiation of acquisition proceedings and is a rebuttable one. It arises wherever the apparent consideration is less, to whatever extent, that the fair market value. It may hus be seen that the presumptions in the two clauses are notably of different nature but have also in a sense distinct and independent spheres of operation.

“(14) ……………………………………………..

Certain further consequences also follow. The irrefutable presumption under s. 269-C(2) ( a) being one arising only where the fair market value exceeds the apparent consideration by more than twenty-five per cent, cannot then apply to this case. No doubt eve so, the very fact that the apparent consideration is less than the fair market value would be sufficient to attract s. 269C (2)(b ). But the presumption there is, as we have already seen, very much open to be displaced. Even taking note of the fact that s. 269F , (9 would not allow the parties to make use of the unregistered agreement prior to the instrument of the transfer to contend that the apparent consideration was the fair market price of the property as on the date of that agreement, the fact strikes us that that sub-section in no way debars the assessee from still contending and proving that in spite of the presumed understatement of the actual consideration in the instrument of transfer, there had been on the part of neither the transferor nor th transferee the objects referred to in s. 269C(1) . If, therefore, the apparent consideration is shown to be the price that the property would have fetched in the open market on the date of the agreement that preceded the actual conveyance, that would be proof enough of the fact that there was not in the presumed understatement of consideration any object to evade tax on the part either of the transferor or of the transferee. In other words, if the difference between the apparent consideration and the fair market value of the property in the dates of the instrument of transfer is accountable to the increase in price of lands during the interval between the agreement of sale and the actual sale, that itself would rebut, if not the presumption regarding the understatement, at any rate the presumption that the presumed understatement was with either of the objects referred to in s. 269C(1) . We are referring to this aspect only for the reason that there is the Appellant’s contention, which in our opinion is not ithout some force, that the difference if any between the apparent consideration and the fair market value of the property on the date of the instrument of transfer is in fact on account of the general increase in the price of lands during the aforementioned interval. We find no need to go further into this aspect to give a definite finding, as even otherwise on the basis of what is already stated, the Appellants must succeed.”

Although this point did not come up directly for the consideration of their Lordships, they did not disapprove of these observations and they in fact said in paragraph 33 of their order that they found in the Tribunal’s order certain observations towards the end of paragraph 14 where the Tribunal did seem to say something in favour of the Respondents, who were the transferor and the transferee.

27. It is because of this position that we will have to take into consideration the submissions made by the Transferor and the Transferee, particularly the latter, to prove that the fair market value did not exceed the apparent consideration by more than fifteen per cent because of the several factors on which stress was laid by them and particularly by Shri D.M. Harish. Considering the question from the factual angle the Revenue tried to suggest firstly that the entire arrangement was not with the Society as such but only with Shri Radhesham Peshawaria and secondly that the agreement of sale was ante-dated. These submissions we find difficult to accept. It is needless to refer to the evidence on record which we have already discussed, and the several pieces of correspondence undoubtedly indicate that Shri Radhesham, Peshawaria acted in the capacity of chief Promoter of the proposed Society, which had not come into existence till as late as on 9th Nov., 1971. Even though the initial payment of Rs. 10, 000 as made by M/s. Bishen silk Mills, then claim of the transferee was that they were trying to gather other members to form a Co-operative Society and to purchase the industrial site which was certainly in excess of the requirements of M/s. Bishen Silk Mils, This is not an unbelievable position and the subsequent events do in fact prove the transferee’s claim. Shri Radhesham Peshawaria had in fact intimated as early as on 10th Dec., 1970 to the Assistant Registrar of Co-operative Societies that ten other members had agreed to join with him and had hence requested the Assistant Registrar to permit the proposed society to adopt the name of either M/s. Bishen co-operative Industrial Estate or Mulund Co-op. Society. The Asst. Registrar gave permission on 16th Dec., 1970 to Radhesham Peshawaria to adopt the name of Bishen Udyog Co-op. Society Ltd. And to submit the necessary documents. Although the second instalment of earnest money of Rs. 50, 000 was again paid on 26th Feb., 1971 by M/s. Bishen Silk Mills, Shri Ra hesham opened a separate account in National & Grindlays Bank Ltd. on 30th March, 1971, wherein were credited on the very next day two amounts of Rs. 65, 000 and Rs. 85, 000 collected from seven of the eleven proposed members. Just because M/s. Bishen Silk Mills had already paid a sum of Rs. 60, 000, they paid on 31st April, 1971 only a further sum of Rs. 5, 000 and the balance of Rs. 1, 45, 000 was collected again by cheques from the other six members. That is how the third instalment of Rs. 1, 50, 000 was paid to the transferor, who at that stage gave possession of seven of the eleven industrial sheds or industrial sheds areas which had by then been contemplated. Not only this but a new account was opened on 13th March, 1971 with the Maharashtra State Co-op. Bank Ltd. In the name of the proposed Society and this was duly intimated to the Asstt. Registrar of Co-op. Societies on 4 May, 1971 when bye-laws etc. Were sent. Even the correspondence with and by the government, the Bombay Municipal Corporation, etc. Indic tes that permission for licences, no objection certificates, etc. Were being obtained for the proposed society. The Society also ultimately came into existence on 9th Nov., 1971. This material is enough to indicate that Shri Radhesham Peshawearia acted not on his own behalf or on behalf of the firm of M/s. Bishen Silk Milk but as a promoter of the Society which had taken steps right from December onwards to establish the industrial shed(s). The first submission of the Revenue is, therefore, clearly untenable. Moreover, if the Revenue claim were to be accepted it would make the entire proceeding bad because the transferee is clearly held to be M/s. Bishen Udyog Co-op. Society Ltd. And Shri Radhesham Peshawaria.

28. We also find it is difficult to agree with the Revenue that the agreement of sale was ante-dated only with a view to claim in further that the fair market value which ought to be estimated should be as in Nov., 1970 or March, 1971 and not as on 30th June, 1972. Not only there is no whisper of any such doubt in the order of the competent Authority, but even one of the competent authorities, shri V.R. Amin, had intimated to the Government Valuer that it would be difficult to treat the agreement of sale as ante-dated. According to us there is no reason at all to suspect ante-dating of the said agreement. When the members of the society had paid as such as Rs. 2, 10, 000 on 31st March, 1971 and the transferor had also given possession of seven of the units, it would be very natural to enter into an agreement of sale at that stage to establish the rights and liabilities of the transferor and the transferees. Not only this but the said agreement is duly certified and was sent as early as on 4th May, 1971 to t e Assistant Registrar of Co-op. Societies, There is then the evidence to show that on 1st April, 1972 the Municipality had charged the Co-op. Society Municipal tax for the period from 1st Dec., 1971 to 31st March, 1972 and further that the Factory Inspector had visited the premises on 14th December 1971 and had seen some of the looks working. This clearly indicates that possessions was also given of at least certain sheds by Nov., 1971 as claimed by the transferee. There is then mention to the agreement of sale in cl. (x) of the conveyance executed on 30th June, 1972 which was submitted for registration in the office of the Sub-Registrar on the very same date i.e. 30th June, 1972. The description of the shed and the plot Numbers on which it stands is given in the conveyance, which also mentions the area of the sheds etc. And the net price payable after deducting the discount given for unfinished flooring. All this evidence convinces us that the agreement of sale cannot be regarded as ante-dated and further hat the proposed society had taken steps right from an early stage to establish the industrial estate. The agreement of sale, according to us, is not ante-dated.

29. In this connection we may also deal with another subsidiary objection raised by the Revenue, which is to the effect as to how transferor could have entered into an agreement of sale on 30th March, 1971 when it had not even acquired the title to the new plot No.116, which then belonged to Raneegunge Coal Association Ltd. And when the said plot was in fact transferred to the Society (Transferee) only by the conveyance dated 30th June, 1972. This according to the Revenue was another clear pointed to the ante-dating of the deed. The position may appear to be ostensibly peculiar but if the sequence of events in this case is borne in mind, it would dispel all doubts created by the Revenue. The conveyance deed itself indicates that the plot was sold to Raneegunge Coal Assn. Ltd. In 1965, though the deed was registered in 1968, and there must have been an understanding between M/s. Minerva Dealers Pvt. Ltd. And Raneegunge Coal Assn. Ltd. to reconvey the plot to the former as otherwise steps would not have bee taken to obtain sanction of the Municipality as early as June, 1970 to amalgamate the three plots, 115, 116 and 117. In fact there is a reference to this agreement in cl.(viii) of the conveyance deed itself, which is said to have taken place in March, 1971, and cl.(ix) further states that M/s. Minerva Dealers Pvt. Ltd. Had constructed a shed on the portions of the said two plots bearing new plot Nos.116 and 117 for industrial user. Nothing has been brought on record to establish the nature of the relationship between M/s. Minerva Dealers Pvt. Ltd. And Raneegunge Coal Association Ltd. but there is evidence enough to indicate that the construction of the shed on the two plots was undertaken by M/s. Minerva Dealers Private Limited after amalgamation of the plots and it is quite possible that Raneegunge Coal Association Ltd. Had agreed to reconvey the plot to M/s. Minerva Dealers Pvt. Ltd. We, therefore, find title substance in the Revenue second submission also.

30. Coming to the price of land the Revenue laid stress on the on-money received by Minerva Dealers Pvt. Ltd. From M/s. Bachaooli Tin Factory. Apart from the fact that the Affidavit of the partners of M/s. Bachaooli Tin Factory was not put to test even by the ITOit is to be noted that when this fact was brought to the notice of the transferor, the transferor’s counsel completely denied that any on-money had been received in connection with the impugned property from Bishen Udyog Co-op. Society Ltd. No doubt the latter did not ask for cross-examination, but that by itself would not prove that any on-money had passed in this particular transaction. Not only this but in the case of the adjoining sheds constructed by M/s. Minerva Dealers Pvt. Ltd. And sold to 33 parties, the same Competent Authority accepted that the price of Rs.20 paid for most of the industrial shed areas in the bigger shed, during 1973-74, was acceptable and dropped acquisition proceedings inspite of knowing fully well that the partners of M/s. Bachaooli Tin Factory had made an Affidavit regarding on-money said to have been paid to M/s. Minerva Dealers Pvt. Ltd. May, be that the Competent Authority might have considered that the on-money, if at all it was received, was restricted to that one plot sold to M/s. Bachaooli tin Factory, but in any event there is no evidence to indicate that in the case of the impugned property such on-money was paid or received. May, be that the Affidavit made by the partner of Bachaooli Tin Factory together with the voluntary disclosure made by them might raise some suspicion or doubt in the matter of the dealings of M/s. Minerva Dealers Pvt. Ltd. But according to the well established principles of law nothing can be held against a person merely on the basis of suspicion or surmise. We cannot, therefore, merely on the basis of the Affidavit of the partners of M/s. Bachaooli Tin Factory hold that in this case also on-money might have been passed. If that had been the main plank of the Revenue’s argument, we are su e the Competent Authority would not have dropped the proceedings in the case of other sheds constructed on the adjoining plot by the same M/s. Minerva Dealers Pvt. Ltd.

31. There was then the argument of the Revenue that the two industrial sheds, the one constructed by M/s. Minerva Dealers Pvt. Ltd. and then sold to 33 parties and the other constructed and sold to the present transferee were not comparable because of the distinguishing factors and because of the representation made by Shri Jetley on the basis of which M/s. Minerva Dealers Pvt. Ltd. Obtained an undue advantage or benefit, we are of the opinion that it is not really so. We have carefully looked into the maps of the two sheds and we find really not much of a difference between the characteristic of the two sheds. In both the cases there is an open road surrounding the entire shed, and such an open road was absolutely essential in the case of the sheds standing on plot Nos. 53, 54, 59 and 66 because each individual shed space owner had to be provided with a clear access road. That is condition necessary according to the Municipal and the Development Rules. Apart from this the case of impugned property is on he eastern side and is shown in the map as garden for plot ‘B’. As against this the open space in the assessment case of the sheds standing on plot Nos. 53, 54, 59 and 66 is in the middle with a small portion shutting to the North and connecting the surrounding road. The nullah to which a reference was made by the learned Departmental Representative and which was claimed to be an advantage from the impugned property because it can serve as an outlet for waste water, is really not adjoining the impugned property but lies beyond plot No. 115 which is not the subject matter in this case and which in fact is actually adjacent to plot Nos. 53, 54, 59 and 66. We may indicate at this stage that the so-called Petrol Pump, to which a reference was made by the learned Departmental Representative is nowhere near the impugned property but is stationed on the Bombay Agra Road at a distance of 75Km. And is opposite the plot of Rallis Wolf Ltd., which is adjacent to the plot of Burroughs Welcome & Co. Ltd. that would not, t erefore, indicate that there was electric and water connection available to plot Nos. 115 and 116 when they were agreed to be purchased. There is in fact evidence to show that the assessee has spent sums to obtain electric and water connection from Bombay Agra Road and, therefore, the Revenue’s claim in this regard is clearly unacceptable.

32. As regards the Revenue’s objection that the acquisition proceedings in the case of the sheds standing on Plot Nos. 53, 54, 59 and 66 might have been dropped on misrepresentation and wrong appreciation of facts, we do not think there is much substance therein. Even assuming that Shri Jetley might have then argued that the F.S.I. of the open land would be available to the transferee, in actual practice it was manifest that this theoretical F.S.I. could not have been of use for any purpose. The land, as can be seen from the map, was fully developed because the land kept open was only that which was required to be kept open according to building regulations. May, be the condition regarding F.S.I. might have been kept because of the peculiar nature of the sale effected for this big shed. This shed which was divided into a number of smaller shed areas was sold to different parties and it was possibly because of this that the right of F.S.I. was not allotted to any of the parties was kept aside so that no co plication could arise between the different parties in case someone contemplated the use of the F.S.I. There is also no substance in the Revenue’s claim that what was sold in the shed was merely the structure and not the eland beneath it, because the conveyance deed itself indicates otherwise. What was sold to each member was the structure along with the land on which it stood. Even the height of the two sheds is the same i.e. 18 feet. We, therefore, find very little difference between the nature and the characteristics of these two sheds and nothing more need be said thereat. It may also be clarified that a major number of shed areas in the shed adjoining the impugned property were sold at Rs.20 per sq. Foot and only a few subsequently at Rs.24.

33. What we have then to consider is the reasonable fair market value of the entire property sold to M/s. Bishen Udyog Co-op. Society Limited. According to the Revenue the price of land should be Rs.30 per sq. Yard and of the constructed area Rs.19 per sq. Foot, whereas according to the transferee it should be Rs.10 per sq. And Rs.12.36 per sq. Foot. Now the first question is which should be the year that should be considered for the purpose of ascertaining whether the acquisition proceedings were justified or not.”Fair Market Value” has been defined as 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. The open market, as is well settled in law, connotes a hypothetical free market where the seller could be interested in obtaining as high a price as possible whereas the purchaser would be anxious to get the property at a price which is in line with the market conditions. Even assuming that the fail market value should be determined as on the date of execution of the instrument of transfer i.e., as on 30th June, 1972, we have to look at the problem from the point of view of an intending purchaser. We will have to consider the question as to what factors the intending purchaser would take into account on that date if he wants to go in for the property. In this connection we may state at the outset that we are not much impressed by the claim of the transferee that its property was in a low lying area even the Valuer had been t at in monsoon there were pools of water in the surrounding area. By 30th June, 1972 or even as early as on 30th March, 1971 the land on which the property was to be constructed must have been properly filled up and levelled and if at all there was any accumulation of water it could be only on the road side surrounding the factory. That according to us would not be a great deterrent for an intending purchaser. However, the intending purchaser would still take into account the prices of similar sheds or similar structures on the adjacent plot and he would also take into account as to whether there was any possibility of his getting vacant possession, because without vacant possession there is little scope for expecting a higher value. He would further take into account the nature of construction of the property and the potentialities of development. Considering the question from this angle, it is really not very material to value the land and building separately as the factory sheds had already been given pos ession of by Nov., 1971, and atleast some of the factories had started working by Jan., 1972, The valuer of the Transferee had repeatedly pointed out to the Department that the nature of construction of the factory was third rate and its future life could be only 25 years and further that the distance of the R.C.C. columns and the spans was more than necessary for a good factory. The transferee had also submitted rate analysis on the basis of specifications and had made an offer to sit with the Government Valuer to prove or ascertain the cost analysis as submitted. Not only did the Revenue make no attempt to offer its own rate analysis but it merely said that the cost of construction would be Rs.20 per sq. yard according to the experience of the Government Valuer. The evidence offered by the Transferee in our opinion is more weight than that of the Revenue especially considering the fact that the very first valuation report of the Department appears to be more in general terms. According to us an intending urchaser would not have been willing to offer a price higher than Rs.20 per sq. foot of the carpet area especially when a year later similar sheds were sold by Messrs Minera Dealers Private Limited itself in the adjoining plot at the rate. The intending purchaser, in our opinion, would have offered something less that Rs. 20 per sq. foot even on 30th June, 1972, because he would have taken into account the fact that the factory sheds had already been occupied by the members of the society and it would have been extremely difficult, it not well nigh impossible, to get them ousted. Even for that he would have had to take recourse of the law Courts, There is also no doubt, as can be seen from the map, that the transferee’s property was situated in one corner of the industrial estate and it is established that the so-called 56 feet road bounding the Southern side has not been extended till to-day so that the access road to the property comes to a dead end near the transferee’s property. The proposed 56 feet roa is yet to be constructed by the Municipality. It is also clear that an Intending purchaser would have taken into account that there was little scope for developing the property because there is no buildable open space left and being a factory shed it is difficult to construct another floor upon the ground floor even assuming that any extra FSI was available though of course there is nothing to indicate that extra F.S.I. was available. Considering the question from all these angles, we do not think that an intending purchaser would have paid for the property as on 30th June, 1972 anything more than Rs.18 per sq. foot of the carpet area. We may also indicate at this point that upto 1971-72 the rates which were quoted in the market were on the basis of carpet area and not on the basis of the built up area as is the practice in Bombay during the last couple of years. Inasmuch as the apparent consideration shown in the conveyance deed is Rs. 16 per sq. Foot of the carpet area, we are of the opinion that the fai market value would not exceed 15 per cent of the apparent consideration on the basis that an intending purchaser would not have offered anything more than Rs. 18 per sq. Foot. That being the position, we hold that the Competent Authority could not he assumed jurisdiction to pass an acquisition order in this case.

34. That again in our opinion is not the end of the matter. As already indicated, the Competent Authority, in order to initiate action under s. 269C(1) has to satisfy four conditions and the last condition as stated by us, is to prove that the understatement of the consideration, if any, in the instrument of transfer was with the object of either facilitating reduction or evasion of tax liability by the transferor or facilitating concealment of income or money or other assets of the transferee. Needless to say that the burden of proving this is of the Revenue, though the transferee would certainly try to explain as to why this condition cannot be said to be satisfied because of certain factors. It is in this connection that the position will have to be considered by taking into account the various developments in the case. It is here that the transferee would be entitled to claim that the developments that took place in 1970 and 1971 should not be lost sight of in deciding this question. This would be apa t from the question as to what would be relevant date for determining the fair market value. The transferee in this case undoubtedly paid the first instalment of the earnest money as early as in Nov., 1970 and the second instalment of Rs.50, 000 at the end of Feb., 1971. Not only this but an additional sum of Rs.1, 50, 000 was paid on 31st March, 1971 when the transferee was given possession of seven of the units. Steps were undoubtedly taken right from Dec., 1970 onwards to satisfy the requirement of the Government of Maharashtra as well as the Bombay Municipal Corporation in the matter of outstanding licences, no objection certificates, etc. The position of all the 11 sheds was handed over to the transferee by Nov., 1971 when out of the total consideration payable as much as Rs.4, 40, 000 was paid and only Rs.40, 433.50 was left to be paid on the date of execution of the conveyance. It well known, and this has come up before us in other valuation appeals also, that there was a dip in the market rates of real pr perty during 1969-70, and the prices started going up gradually from 1971 onwards. This can be ascertained from any of the several magazines published by real estate brokers. For considering the question, if any, was with a view to effecting tax evasion by the transferor or understanding the income or assets by the transferee, the position as existing at the end of 1970 cannot be lost sight of. From that angle the market price as existing at the end of 1970 cannot be lost sight of. From that angle the market price as existing at the end of 1970 cannot be ignored. Though the agreement of sale is dated 30th March, 1971 the very fact that the first instalment of earnest money was paid in Nov., 1970 would surely go to indicate, if the position is concerned from a commercial angle, that some negotiations regarding the purchase of the property including the consideration payable must have taken place in Nov., 1970 itself. Without an oral agreement regarding consideration the Promoter of the society would not have certainly paid Rs. 10, 000 in Nov., 1970 and Rs. 50, 000 on 26th Feb., 1971. The transferee has been able to adduce evidence and this is accepted by one of the Govt. Valuers, that the industrial plots would fetch the least price as compared to residential plots and commercial plots. These three categories cannot therefore be equated by any chance. The industrial plots can at best be compared only with industrial plots and that too similarly situated and with similar advantages. The plot sold to Burroughs Welcome & Co. Ltd. On 5th Feb., 1973 and agreed to be sold to Honecht Pharmaceuticals as early as in 1965 were, no doubt at rates nearly Rs.30 per sq. yard, but those plots were on the other side of the Bombay Agra road, where the land was developed and the extra land was required for extending the already existing factories owned by multinational. The frontage of those plots was also very wide unlike the very congested area in which the impugned property is situated. The evidence also indicates that the prop rty when purchased did suffer from a number or disadvantages like lack of proper approach road from the corner of Bombay Agra Road, the need for atleast filling up a portion of the land and constructing a road surrounding the estate for giving access to each of the shed owners, etc. Regarding the plot sold to M/s. Bachooali Tin Factory and the residential-cum-commercial plot sold to Bombay Telephones, we agree with the learned counsel for the transferee that as regards the first plot it had distinct advantages as compared to the transferee’s plot and the latter plot being meant for residential-cum-commercial purpose was in a different category altogether. However, we shall bear in mind while fixing the value of land the position regarding these plots also. Considering the question from all angles and if we were to value the one plot of land as in Nov., 1970, we would not put the price at anything more than Rs. 15 per sq. yd. This we are doing keeping in view the fact that the transferee was required to spen more than Rs. 50, 000 for filling and levelling, construction of electric sub-station, providing water supply and sanitary works etc. The cost of flooring a shown at Rs. 52, 700 is ignored for purposes of valuing the open plot land as such. Even if the price of open land is raised by us from Rs. 10 to Rs. 15 per sq. yard, that would increase the valuation by only Rs. 31, 000.

35. We may then consider the question of construction cost as at the end of 1970. Here we have there is very little material to accept the Revenue’s valuation at Rs. 19 per sq. foot , though that value again is as on 30th June, 1972. this figure as stated by the Revenue is based on merely the so-called experience of the Government Valuer, as against which the transferee had tried to give full rate-analysis not only once but twice to satisfy the requirements of the Revenue. Here again we have to bear in mind that sheds were sold for Rs. 20 sq. foot in 1973-74 in the adjoining plot even when the prices had risen by the time, and that rate of Rs. 20 also included the value of the land below the structure. Keeping all these factors in mind, we are inclined to accept the cost of construction at Rs. 12.36 as estimated by the transferee rather than the cost of Rs. 19 as estimated by the Revenue.

36. In considering whether condition No. 4 is satisfied, we cannot also overlook the various developments in this case. Not only was the property booked in 1970 when possibly the construction must have been started, as otherwise seven units would not have been ready by 31st March, 1971 but steps were also taken right from Dec., 1970 for establishing the impugned industrial estate as early as possible, and there is evidence to indicate that possession of all the units was handed over by Nov., 1971, and many of the different units started functioning by Jan., 1972. The conveyance deed was also executed on 30th June, 1972 and was immediately offered for registration on the very day. The acquisition proceedings had certainly not come into effect till 15th Nov., 1972 because Chapter XXA was inserted by Taxation Laws (Amendment) Act of 1972, though the draft Bill was introduced in 1971. It is also interesting to note that the original Bill as introduced in 1971 did not contain s.269F(9), to which a reference is already made, and this was added by the Select Committee in 1972. When the conveyance deed was presented for registration there was surely no requirement in law to send to the Registrar anything other than a Certificate under s. 230A which requirement was also tried to be fulfilled by the transferee in August 1972 i.e. even prior to 15th Nov., 1972. There is some force in the contention of the learned counsel for the transferee that had the transferee any inkling of the difficulties that it would be put to because of the proposed introduction of Chapter XXA, it would have hurried and managed to get the conveyance registered even before that date, and the transferee was quite sanguine that it would have to encounter no difficulties on account of acquisition proceedings as Chapter XXA was not at all in force on 30th June, 1972. The transferee, it was claimed, had duly discharged its obligation atleast by Aug., 1972 in the matter of registration of documents and never bothered as to when the Registrar would ul imately register the document because according to the Registration Act the Registration when ultimately made would relate back to the date of execution of the document. not only this but, claimed the learned Shri D.M. Harish, that even prior to 30th June, 1972 the transferee having discharged most of its liabilities had no doubt in its mind at all that the contract would be completely fulfilled by the transferor as early as possible because of a number of part performances referred to in the Transfer of Property Act. All these factors which we have mentioned would be quite relevant in judging the issue, even assuming that there was some under-statement, whether such understatement was or was not with the object of facilitating tax evasion by the transferor or concealment of Income or assets by the Transferee. The conduct of the parties and their dealings, part performance of contract by both the sides, presentation of the conveyance deed by 30th June, 1972, absence of Chapter XXA of the Act on 30th June, 1 72, the delay caused in registration for no fault of the transferee, the absence of s.269F(9) in the draft Bill, the natural and the expected conduct of the society members interested in doing business but not expected to be experts in law, etc. can lead to no other conclusion but that the understatement if any could not have been with object of facilitating evasion of tax by the transferor or concealment of income or assets by the transferee. That being so, the fourth condition in our opinion cannot be said to be satisfied and even on this ground the Competent Authority would not be justified in initiating the proceedings under s. 269C(1) of the Act.

37. Having come to these different conclusions, we have necessarily to cancel the order under s.269F(6) of the Act and we do so accordingly.