N.V.Balasubramanian, J. - (1.)WRIT Petition No, 17590 of 1997, is filed for the issue of a writ of mandamus directing the respondent to pay to the petitioner the balance of consideration of Rs. 9,01,500 together with interest on the aforesaid sum of Rs. 9,01,500.
(2.)WRIT Petition No. 17591 of 1997 is filed for issue of a writ of declaration to declare the provisions of Sub-clause (2) of Clause (b) of Section 269UA of the Income-tax Act, 1961, providing for the discount from the total consideration payable to the transferee of the property under Chapter XX-C of the Income-tax Act ultra vires.
Both the writ petitions have been filed by the same petitioner and he is the owner of the property admeasuring 1,757.94 sq. ft. of an undivided interest in the portion of the land in the compound of "Shadowbush" in R. S. No. 106/3 of Layout No. 118 of 1963, Corporation of Madras, as Plot No. 7, No. 110, Mahatma Gandhi Road, Chennai-34, and super built up area of 6,700 sq. ft. in the third floor of the building known as "Prakash Presidium". The petitioner has entered into an agreement with Banque Nationale de Paris, a body corporate incorporated under the laws of France and having its office at "French Bank Building", Mumbai, on June 4, 1997, for the sale of the property to the said Banque Nationale de Paris, for a total consideration of Rs. 3,23,27,500. The relevant terms of the agreement are as under :

"The sale consideration of Rs. 3,23,27,500 will be paid by the purchaser to the vendor in the following manner :

(a) A sum of Rs. 5,00,000 by means of cheque number 071267 dated April 7, 1997, drawn on B. N. P. Bombay, before the execution of the agreement the receipt of which the vendor herein admits and acknowledges ;

(b) The balance sum of Rs. 3,18,27,500 to be paid at the time of lodgement of the sale deed for registration with the Registrar of Assurances.

Subject to the vendor performing the other terms of the agreement, the purchase shall be completed by the purchaser in all respects within 15 days from the date of receipt of the required certificate granting permission under Section 269UC of the Income-tax Act, 1961 (Form No. 37-1) from the appropriate income-tax authority and the vendor shall execute and deliver to the purchaser the sale deed as per the draft prepared by the purchaser's advocate and shall admit the execution of the sale deed before the appropriate registering authority.

Upon payment of the amount specified supra, the vendor shall deliver all documents of title relating to the land and the flat proposed to be sold to the purchaser or its advocate within 15 days from the date of such payment for the scrutiny and approval of the title by the purchaser's advocate."

The petitioner filed a statement in Form No. 37-1 prescribed under Rule 48L of the Income-tax Rules, 1962, under Section 269UC of the Income-tax Act before the first respondent on June 4, 1997. The said agreement was executed by the transferor and the Banque Nationale de Paris as transferee. The first respondent passed an order on October 13, 1997, ordering the purchase of the said property by the Central Government.

The first respondent has stated in the said order that in exercise of the powers vested in them under Section 269UD of the Income-tax Act. they ordered purchase of the immovable property by the Central Government for a sum of Rs. 3,14,26,000. The aforesaid order was made on October 13, 1997, and the consideration was paid to the petitioner on November 6, 1997. The petitioner did not object to the purchase by the Government of the said property. The petitioner is aggrieved by the discount made amounting to Rs. 9,01,500 in the order dated October 13, 1997. The petitioner has challenged the order as well as the provisions providing for discount in the sale consideration in the above two writ petitions.

The case of the petitioner is that under the agreement, a sum of Rs. 5,00,000 was paid and acknowledged at the time of agreement and the balance amount of Rs. 3,18,27,500 shall be paid at the time of the lodgement of the sale deed for registration with the Registrar. It is also stated that as per Clause 3, the sale should be completed in all respects within fifteen days from the date of receipt of the required certificate granting permission by the appropriate authority under Section 269UC of the Income-tax Act. It is stated that the appropriate authority made the order on October 13, 1997, and if the "no objection certificate" had been granted, it would have been granted on the same date and hence in terms of Clause 3 of the agreement, the balance of sale consideration of Rs. 3,18,27,500 was payable on or before October 28, 1997. It is stated that the appropriate authority has paid the sale consideration only in November, 1997, and in spite of the above said payment, the appropriate authority has discounted the sale consideration which is not correct in law. It is stated that the object of discounting was to arrive at the actual amount that would be payable by the transferee, if the transfer takes place in accordance with the agreement entered into between the parties and it is not open to the Government of India to secure better terms than the terms of the agree- ment and seek to reduce the amount of consideration or acquire the property at a lower price. It is, therefore, stated that the provisions which permit the discounting of the sale value where the dates of payment fall beyond the date of agreement for transfer are ultra vires, and they are vio-lative of his right to hold the property. It is also stated that the definition of "apparent consideration" in Clause (b) of Section 269UA of the Income-tax Act does not justify the discounting of the consideration disclosed in the agreement with reference to the dates fixed for payment from the date of agreement. It is, therefore, stated that the discounting made by the appropriate authority is not justified and the appropriate authority has no jurisdiction to discount the sale consideration. The provision providing for discounting is also challenged as arbitrary and violative of the provisions of the Constitution of India.

(3.)MR. V. Ramachandran, learned senior counsel appearing for K. Mani, learned counsel for the petitioner, submitted that it is not open to the appropriate authority to discount the sale consideration payable from the date of the agreement. His submission was that the appropriate authority has to determine the discounted value only from the date on which payment was tendered to the petitioner and ending with the date on which the balance of consideration was payable under the agreement of sale. He referred to the agreement entered into between the petitioner with the transferee and submitted that the balance of sale consideration was to be paid at the time of lodgement of the sale deed for registration with the Registrar of Assurances, and within fifteen days from the date of receipt of consideration, and he referred to the order of the purchase made under Section 269UD(1) of the Income-tax Act, 1961, and submitted that the appropriate authority was not justified in discounting the sale consideration from the date of the agreement and according to him discounting is permissible only from the date of tender of payment to the transferor and not earlier. Learned senior counsel also relied upon the decision of the Bombay High Court in Skrichand Raheja v. S. C. Prasad, 1995 213 ITR 33, and the decision of the Karnataka High Court in C. Venkata Rao v. Union of India, 1999 236 ITR 895, and both the courts have held that the discounting should be done only from the date of tender of payment by the appropriate authority. Learned senior counsel also submitted that the decision of the Gujarat High Court in Pradip Ramanlal Sheth v. Union of India, 1993 204 ITR 866, and submitted that in preference to the view expressed by the Gujarat High Court, the view expressed by the Bombay High Court should be followed.
Mr. S. V. Subramaniam, learned senior counsel for the Department, submitted that a plain reading of Clause (b) of Section 269UA of the Income-tax Act, discloses that where a part of the consideration is payable as on any date falling after the date of agreement for transfer, the value for such consideration as on the date of such agreement for transfer should be determined by adopting the rate of interest prescribed in Rule 48-1 of the Income-tax Rules and the discounting from the date of agreement is justified in law. Learned senior counsel for the Department relied upon the decision of the Gujarat High Court in Pradip Ramanlal Sheth v. Union of India, 1993 204 ITR 866, and also the decision of the Bombay High Court in Smt. Vimla Devi G. Muheshwari v. S. K. Laul, 1994 208 ITR 734.

I have carefully considered the submission of learned senior counsel on both sides. Section 269UA of the Income-tax Act, defines the expression "apparent consideration" and the section, in so far as it is relevant for the purpose of the case, reads as follows :

" 'apparent consideration'--

(1) in relation to any immovable property in respect of which an agreement for transfer is made, being immovable property of the nature referred to in Sub-clause (i) of Clause (d), means-

(i) if the immovable property is to be transferred by way of sale, the consideration for such transfer as specified in the agreement for trans fer ; ...

and where the whole or any part of the consideration for such transfer is payable on any date or dates falling after the date of such agreement for transfer, the value of the consideration payable after such date shall be deemed to be the discounted value of such consideration, as on date of such agreement for transfer, determined by adopting such rate of interest, as may be prescribed in this behalf ;"