- (1.) This appeal is preferred by the appellants, who suffered an order of compulsory pre-emptive purchase under Chapter XXC of the Income Tax Act, 1961 (hereinafter referred to as "the Act") passed by the Appropriate Authority under Section 269UD of the Act.
(2.) Vidarbha Engineering Industries - Appellant No. 2 (hereinafter referred to as "Vidarbha Engineering") holds on lease, three plots of land admeasuring 2595.152 sq mtrs i.e. 27934 sq ft at Dahipura and Untkhana, Nagpur (hereinafter referred to as the "subject land"). This land is comprised of three plots of land i.e. Plot Nos. 34, 35 and 36 obtained by Vidarbha Engineering from the Nagpur Improvement Trust. Vidarbha Engineering decided to develop the subject land and entered into an agreement for the purpose with Unitech Ltd. (herein after referred to as "Unitech"). The Memorandum of Understanding between them was formalized into a collaboration agreement dated 17.03.1994. Under this agreement the land holder agreed to allow Unitech to develop and construct a commercial project on the subject land admeasuring 2595.152 sq mtrs at the technical and financial cost of the latter. The parties to the agreement agreed, upon construction of the multi storied shopping cum commercial complex, that Unitech will retain 78% of the total constructed area and transfer 22% to the share of Vidarbha Engineering. Unitech agreed to create an interest free security deposit of Rs. 10 lakhs. 50% of the deposit was made refundable on completion of the RCC structure and the other 50% on completion of the project. The parties were entitled to dispose of the saleable area of their share. It was specifically agreed that this agreement was not to be construed as a partnership between the parties. In particular, this agreement was not to be construed as a demise or assignment or conveyance of the subject land. It is significant to note that the agreement does not contain any clause by which Unitech, the developer, is to pay any consideration in terms of money to Vidarbha Engineering, the land holder. The only consideration apparently provided is the entitlement of Vidarbha Engineering to 22% of the constructed area in the proposed multi storied building.
(3.) The appellant submitted a statement in Form 37-I under Section 269UC of the Act annexing the agreement dated 17.3.1994. According to Shri V.A. Mohta, the learned senior counsel, this form contains only the nomenclatures of transferor and transferee and contemplates only the transaction of a transfer and not an arrangement of collaboration. Therefore, the appellants were constrained to describe themselves as transferor and a transferee. Accordingly, they mentioned that the consideration for the transfer of the subject property was Rs.100.40 lakhs towards the cost of share of 22% of Vidarbha Engineering, which was to be constructed by Unitech " builder at its own cost. This submission was made as a preface to the contention that in fact and in law, Vidarbha Engineering has not transferred the property held by it to Unitech, but that it has only allowed Unitech to make a construction on the land. Indeed, we have considered this submission notwithstanding the self description of the parties as transferor and transferee since it involves the true construction of a document which is always a substantial question of law. We find much substance in the contention. In the first place, Vidarbha Engineering itself is a lessee holding the land on lease of 30 years from Nagpur Improvement Trust. It has no authority to transfer the land. Secondly, no clause in the agreement purports to transfer the subject land to Unitech. On the other hand, clause 4.6 specifically provides that nothing in the agreement shall be construed to be a demise, assignment or a conveyance. The agreement thus creates a licence in favour of Unitech under which the latter may enter upon the land and at its own cost build on it and thereupon handover 22% of the built up area to the share of Vidarbha Engineering as consideration and retain 78% of the built up area. By the statement in Form 37-I the consideration has been valued by the parties at Rs. 1,00,40,000/-.;