MOHAN ALAGAPPAN,CHENNAI vs. ITO NON CORPORATE WARD 10 (4), CHENNAI

आदेश / O R D E R

PER JOGINDER SINGH, VICE PRESIDENT:

2. During hearing the ld.Counsel for the assessee S.Sridhar advanced arguments which is identical to the grounds raised by further submitting that the guideline value cannot be basis of the determination of market value for which the ld.Counsel for the assessee relied upon the decision from Hon’ble Bombay High Court in the case of Lakshmi Narayan Grover Vs. Appropriate Authority 223 ITR 572, and Hon’ble Jurisdictiional High Court in the case of Hindustan Motors Ltd in 240 ITE 424, CIT Vs. R.Jawahr, 217 ITR 59, CIT Vs. R.Damodaran 247 ITR 697 and Hon’ble Rajsasthan High Court in Krishnakumar Rawat VS. UOI in 214 ITR 610(Rajasthan) and the case of Jawajee Naganathan Vs. R.D.O AIR 1994 SC 2852. The crux of the argument is that ld. First Appellate Authority erred in confirming the valuation, as on 01.04.1981, based on guide lines value. On the other hand, the ld.DR Shri B.Sagadevan strongly defended the impugned order by contending that the matter may be sent back to the file of the ld.CIT(A) to consider the arguments of the assessee and the valuation as on 1.4.1981.

“14. Both the properties in question, namely, at No. 10, First Avenue, Har-rington Road, Chetput and at No. 1, Second Main Road, Gandhi Nagar, Adyar, were valued by a registered valuer, namely, Prashanth Engineers and the petitioner filed a statement in Form No. 37-1 on the basis of the said valuation. The appropriate authority rejected both the valuation reports as well as apparent consideration shown in the statement based on the aforesaid valuation reports. The conclusion of the appropriate authority is that the report of the registered valuer is not based on any evidence of the market value of the land. On the other hand, the appropriate authority relied on two sale instances of the property in which "no objection certificates" were issued and according to the said authority which are authentic documents.

15. Mr. Ramachandran, learned senior counsel for the petitioner, by drawing my attention to Section 269UA(b) of the Act, would contend that in respect of an exchange, the apparent consideration of the property which is sought to be transferred, would represent the market value of the property that is taken in exchange plus the money, if any, paid in addition to the property. Thus, according to him, applying the said definition, the apparent consideration for the property at Harrington Road belonging to the petitioner would represent the market value of the property at Adyar. It is also stated that in terms of Section 269UD(1), if the Government desires to purchase the property which is the subject- matter of an exchange, it should pay to the owner the market value of the property which is taken in exchange. Accordingly, it is further stated that the appropriate authority ought to have valued the Adyar property to determine the actual consideration that should be paid by the Government to the petitioner. It is argued that in the absence of valuation of the Adyar property by the appropriate authority, it is impossible for the appropriate authority to actually determine the consideration payable to the petitioner for the purchase of the petitioner's property at Harrington Road. He very much relied on a decision in the case of Hari Krishna Kanoi v. Appropriate Authority . The following passage is very much pressed into service (page 767) :

"One of the grounds for the petitioners contending that the appropriate authority has not determined the apparent consideration in terms of the agreement is that the appropriate authority should have taken the market value of the construction to be made by the petitioners on lot 'B'. It is submitted that Rs. 10 lakhs only represented the cost of construction. The objection must be sustained. The appropriate authority has treated the proposed construction as a 'thing' within the meaning of Section 269UA(b)(2)(ii) and (iii). It should have addressed its mind to the market value of such construction on the date of the agreement. It has not."

16. A perusal of the relevant provisions would clearly show that where an order for the purchase of any immovable property is made under Section 269UD(1) of the Act, the Central Government shall pay, by way of consideration for such purchase, an amount equal to the amount of the apparent consideration. In such a circumstance, the question of fulfilling the promises as per the agreement does not arise. In terms of Section 269UM, the transferee cannot make any claim against the transferor by reason

of such transfer being not in accordance with the agreement for the transfer of the immovable property entered into. Accordingly, the contention of the learned senior counsel for the petitioner is liable to be rejected.

17. Now I shall consider the sale instances cited in the show-cause notice as well as in the ultimate order passed by the appropriate authority. According to the first respondent, both the properties are located in Second Avenue, Harrington Road, Chetput, which is adjacent to the First Avenue and simiarly located and comparable. It is seen that the appropriate authority has based the valuation on documented sale instances where land value has been fixed as Rs. 2,100 square feet by the registered valuer. It is the definite case of the petitioner that the land value in First Avenue, Harrington Road, are lower by 32 per cent, as compared to Second Avenue, Harrington Road, based on a comparison of the guideline value. In this regard, the appropriate authority has concluded that guideline values are fixed by the registering authorities for the purposes of collection of stamp duty and that guideline values of land for the purposes of registration of an immovable property can have no application for determining the market value under Chapter XX-C of the Act. The appropriate authority has relied on a decision of the Rajasthan High Court in Krishna Kuntar Rini'dl v. Union of India [1995] 214 1TR 610, wherein it was held that the market rates for the purpose of registration of an immovable properly as notified by the Sub- Registrar can have no application for determining the market value under Chapter XX-C of the Act. It is further stated that it is limited only for payment of stamp duty. I am in agreement with the view expressed by the Rajasthan High Court. Further, the principles for valuation in respect of an immovable property under the Wealth- tax Act or other tax ation laws arc different from the principles which are applicable to acquisition proceedings. The proceedings under Chapter XX-C are akin to the acquisition proceedings and not to the valuation principles which are applicable for assessing the tax on the basis of the valuation of the property. A certain

element of guess has to be there based on objective factors having reasonable nexus with the evidence on record. The various factors arc there on the basis of which out of the various method by which the valuation of the immovable property can be made, appropriate method is to be adopted. It depends on the location of the property, the purpose for which the property is used, the nature of the property the time when the agreement is entered into and similar other objective factors. The valuation, therefore, has to be done by a method which is more objective and could furnish reliable data to arrive at a just conclusion. As already stated, the market rates notified by the Sub-Registrar for the purpose of registration cannot be a proper guide for valuation in respect of preemptive purchase.

18. Appropriate authority has referred to two sale instances in the past in the vicinity of the said property which are relevant and comparable. The details of two sale instances as mentioned in the show-cause notice as well as in the impugned order of the appropriate authority are stated hereunder :

Sl. No. Date of agree-ment Description of the properly Rate per ground for land Modified rate as on the date of agreement allowing 1 per cent. p.m. 28.2.96 No. 6, II Avenue, Harrington Road, Chennai.

Land : 5.500 sq. ft. (2.29 grds) Bldg : About 3,200 sq. ft. (double storeyed) (i) Rs. 64,13,000 considering depreciated cost for building (i) Rs. 72,46,690 Year of construction-1962 Frontage-15.25 mtrs. Road width-12.19 mtrs. Residential area. Transferee : Sri M. Avais Murvee and two others. D. No. 2, Kothari Road, Nungambakkam, Chennai. Apparent consideration : Rs. 1,55,00,000 (ii) Rs. 66,28,000 considering scrap value for building

(ii) Rs. 74,89,640

24.10.96 No. 8, II Avenue, Harrington Road, Chennai. Land 62.20 per cent. UDS out of 8,800 sq. ft. Bldg. About 4,435 sq. ft. (i) Rs. 67,31,000considering depreciated cost for building (i) Rs. 70,67,550

Year of construction- 1963 Frontage-24.08 mtrs. Road width-12.19 mtrs. Residential area. (ii) Rs. 70,05,000 considering scrap value for building (ii)Rs. 73,53,250

Transferee : S. I. Property Inv. Ltd., Chennai. Apparent consideration Build up area. 5.000 sq. ft. at Rs. 1,000 per sq. ft. Rs. 50,00,000 Rs. 1,18,60,000 Total Rs. 1,68,00,000 Discounted consideration Rs.1,61,36,000.

19. Though learned senior counsel for the petitioner would state that in both the sale instances the properties situate in Second Avenue whereas the property in question is in First Avenue hence the same cannot be compared, I am unable to accept the said contention in the light of the discussions by the appropriate authority. It is clear that both the sale instances relate to properties proximate in location to the subject property and arc in the residential zone of development as per M.M.D.A. Development Control Rules. In respect of the property at Serial No. 1, taking note of. efflux of time, the appropriate authority has allowed appreciation at 1 per cent. p.m. and worked out the fair market value of the subject property. The fair market value in this case works out to Rs. 2,61,66,000 as against the apparent consideration of Rs. 1,87,00,000. Accordingly, the appropriate authority has concluded that there is significant undervaluation of the subject property by 39.92 per cent. Likewise, if the sale instance at Sl. No. 2 is considered, according to the appropriate authority, the understatement will be 36.74 per cent. The details furnished show a reasonable presumption of attempt to evade tax. Though it is stated that the other property, namely, Second Main Road, Gandhi Nagar, Adyar, has not been considered by the appropriate authority even in the show-cause notice dated May 19, 1997, the appropriate authority has referred to and compared with the sale instances in the same locality. The following details have been furnished with regard to the Adyar property :

Sl. No. Date of agreement Description of the property Land rate per ground

No. 2, II Main Road, Gandhi Nagar, Adyar, Chennai.

Rs. 21,00,000 Land : 10,797,33 sq. ft. out of 13,464 sq. ft. Apparent consideration : Rs. 99,00,000 Discounted consideration : Rs. 94,49,011 Transferee : Mrs. Geetha Kumar, No. 55, Rukmani Road, Kalakshetra Colony, Besant Nagar, Chennai.

10-11-95 D.

No. 19. I Main Road, Gandhi Nagar, Adyar, Chennai.

Rs.34,61,000 Land : 12,960 sq. ft. Apparent consideration Rs.1,95,00,000 Discounted consideration Rs. 1,87,88,190 Transferee : Dev Apartments, Adyar, Chennai.

20. It is clear that the land rate reflected in the case of the property at door No. 1, Second Main Road, Gandhi Nagar, Adyar, Chennai, is Rs. 43,64,000 which indicates an appreciation of more than 1 per cent, per month. Here again, the appropriate authority have allowed 1 per cent, per month on the consecutive side for updating the land value.

22. Finally, as rightly contended by learned senior Central Government standing counsel, this court exercising jurisdiction under Article 226 of the Constitution of India, cannot scrutinise the matter like an appeal. It is settled law that judicial review is limited only to the extent of examining as to whether any finding is perverse or there is non-application of mind or the order is contrary to the established principles of law. This court is not sitting in appeal over the orders passed by the appropriate authority and the satisfaction has to be arrived at by the appropriate authority on the basis of the valuation report and the relevant documents which have been taken into consideration. Further, it is not the calculation or the manner which could be examined under Article 226 of the Constitution of India. The calculation is always a question of fact. The principles of valuation

alone have to be considered. I have already observed that the appropriate authority has considered the relevant sale instances and after allowing reduction to certain extent arrived at a correct conclusion. In this regard, it is useful to refer a decision of the Supreme Court in the case of Appropriate Authority v. Sudha Patil . After discussing the provisions referred to in Chapter XX-C of the Act as well as power of this court under Article 226 of the Constitution of India, the Supreme Court has observed that at (page 128) :

"... we are of the considered opinion that merely because no appeal is provided for against the order of the appropriate authority, directing compulsory acquisition by the Government, the supervisory power of the High Court docs not get enlarged nor the High Court can exercise an appellate power."

3.1 It is noted that Hon’ble BombayHigh Court in the case of Lakshmi Naryan Grover (supra) held /observed as under:-

“Accordingly, the petitioner submitted her reply on 13th Feb., 1993, contending that there was no undervaluation in the sale transaction in question and that the suit property was being purchased at its market value. It was also pointed out that the consideration for the suit property agreed to between the parties was fair and reasonable and that in fact the rate of valuation fixed as per the land rates maintained by the Nagpur Corporation and by the stamp authorities for levy of stamp duty and the registration charges upon documents relating to transfer of title was much lower than the market rate calculated for the suit property on the basis of the consideration agreed to between the parties. It was pointed out that for the area in question the said land rate fixed was Rs. 1,500 per sq. mt., i. e., Rs. 145 per sq. ft., whereas the land rate for the suit transaction worked out to Rs. 225 per sq. ft. Further, it was pointed out by the petitioner in her reply to the show-cause notice that there was encroachment upon some portion of the suit land regarding which a dispute was going on and for which reason its market value would be lower than its real market value. The plea was also raised that since there were two co-owners, i. e., the beneficiaries, the share of each would be less than Rs. 10,00,000 and as such the provisions of compulsory purchase in Chapter XX-C of the Act would not be attracted to the instant sale transaction. Along with the reply to the show-cause notice the petitioner had also submitted documentary evidence in the shape of a valuation report and certain sale deeds to show that the suit transaction was for fair market value. It was also pointed out in her reply to the show-cause notice by the petitioner that before issuing the show-cause notice, the Appropriate Authority must come to the tentative or prima facie view that the property was undervalued and that it should incorporate in its show-cause notice the material or the reasons on the basis of which it comes to such a tentative or prima facie view in the absence of which the noticee does not have an opportunity to meet its case. The petitioner, therefore, demanded the reasons from the Appropriate Authority for its prima facie view that the suit property was undervalued. After receipt of the above reply of the petitioner to the show-cause notice issued by the Appropriate Authority and after hearing the learned advocate for the petitioner who appeared before it, the learned Appropriate Authority by its order dt. 23rd Feb., 1993, passed an order for compulsory purchase of the suit land for a net consideration of Rs. 13,25,343 payable to respondent No. 3 by the Central Government including a sum of Rs. 44,178 ordered to be deposited in the Appropriate Authority's account as per its finding in para 7 of its order relating to the question of vacant possession regarding encroachment of about 200 sq. ft. upon the suit land by the owner of the adjoining plot. The reasons for compulsory acquisition were recorded by the Appropriate Authority separately on the same date, i. e., 23rd Feb., 1993. A perusal of the reasons recorded by the Appropriate Authority would show that the suit land was situated in the Civil Lines area which was purely a residential locality of the people belonging to the upper middle class. The permissible FSI for the suit land was one and its permissible user was for residential purpose. After considering the question of its location, the Appropriate Authority determined the discounted value of the apparent consideration of Rs. 13,50,000 shown in the agreement of sale dt. 24th May, 1992, in accordance with the provisions of s. 269UA(b) r/w r. 48-I of the IT Rules, 1962, which provides for a rate of interest of 8 per cent per annum for determining the discounted value of the apparent consideration given in the agreement of sale. It has calculated the discounted value of the consideration for the sale transaction at Rs. 13,25,343 as shown in para 4 of the reasons. The rate, therefore, worked out was Rs. 221 per sq. ft. The Appropriate Authority then worked out the land rate of land in the same locality of Civil Lines which was treated as a comparable sale instance by it. Its particulars are given by it in para 5 of the reasons. It appears from the particulars that the agreement of sale in the sale instance was dt. 26th Dec., 1990, and the area of the land agreed to be sold was 4,839.5 sq. ft. out of plot No. 2 in Shri Vallabh Co-operative Housing Society, Civil Lines, Nagpur. Its apparent consideration was Rs. 15,00,000 and the discounted rate per sq. ft. worked out was Rs. 304.20 with permissible FSI of 1. Since the property in the sale instance was sold one year two months earlier than the suit property, considering the 12 per cent increase in the land rate per annum, the rate of the land in the sale instance was worked out to Rs. 348 per sq. ft. As the difference was thus more than 15 per cent in the light of the judgment of the Supreme Court in the case of C. B. Gautam (supra), the Appropriate Authority was of the view that the suit land was significantly undervalued and there was thus a case for its pre-emptive purchase. As regards the case of the petitioner based upon the land the land rate maintained by the Nagpur Corporation and the stamp authorities, the Appropriate Authority rejected the said case on the ground that its main object was other than determining the market rate. As regards the two sale instances dt. 23rd Nov., 1989, and 23rd Nov., 1991, pointed out by the petitioner as comparable sale instances, the Appropriate Authority observed that the time gap between the instant sale transaction and the sale transaction in the first sale instance dt. 23rd Nov., 1989, was considerable and as regards the second sale instance dt. 23rd Nov., 1991, it observed that since the property therein was purchased by the tenant in occupation, he would naturally pay the price which is less than the market price in view of his tenancy rights. The Appropriate Authority thus rejected both the sale instances relied upon before it by the petitioner. The Appropriate Authority thus passed an order for compulsory purchase of the suit land for a net consideration of Rs. 13,25,343 payable by the Central Government to respondent No. 3 including the sum of Rs. 44,178 which was directed to be deposited in the account of the Appropriate Authority in view of the dispute about encroachment upon the said land by the owner of the adjoining land in the light of the findings of the Appropriate Authority in para 7 of its order dt. 23rd Feb., 1993. Feeling aggrieved by the order dt. 23rd Feb., 1993, passed by the Appropriate Authority, the petitioner has preferred the instant writ petition in this Court.

(ii) That no opportunity was given to the petitioner to meet the case of the Appropriate Authority for pre-emptive purchase of the suit property since the material or the information relating to the sole sale instance relied upon by it for its view that the suit property was grossly undervalued was not disclosed to her in the show-cause notice given to her. The impugned order of the Appropriate Authority is thus vitiated for non-compliance with the basic principles of natural justice. (iii) That the sale instance relied upon by the Appropriate Authority was not a comparable sale instance on the basis of which it could be held that there was undervaluation of the suit property and that the consideration of Rs. 13,50,000 agreed to between the parties in the instant case did not represent the true and fair market value of the suit land. (iv) The Appropriate Authority did not properly consider the material placed by the petitioner before it to show that the consideration agreed to between the parties represented the true and fair market value of the suit land, viz., the two sale instances from the Civil Lines area itself and the rates of valuation fixed and maintained by the Nagpur Corporation and the Registering Officers of the Government.

It has to be borne in mind that even as per the circular styled as Instruction No. 1/A 88 of the CBDT referred to in C. B. Gautam's case (supra), and the affidavit filed on behalf of the said Board in the said case, the main objective of Chapter XX-C of the Act is to check proliferation of black money in real estate transactions and to enforce declaration of the true market value of the immovable property in question which is the subject-matter of transfer between the parties so as to prevent evasion of taxes. The said instructions further show that the provisions of Chapter XX-C of the Act are not intended to harass bona fide and honest purchasers or sellers of immovable properties. Para 3 of the said instructions, in particular, shows that it is only for good reasons that the right of pre-emptive purchase has to the exercised by the Department. The said instructions also provide that the rule of difference of 15 per cent and above between the sale transaction in question and the true or fair market price of the immovable property in question as determined by the Department is not a rigid rule and a reasonable margin for probable errors in estimation needs to be kept in view. If the above instructions of the CBDT referred to in para 14 of the judgment of the Supreme Court in C. B. Gautam's case (supra), are kept in view, it is difficult to hold that the Department has made out good reason for compulsory purchase of the suit property and to show that the sale transaction in question is not a bona fide transaction between the parties.

Even otherwise excluding the aforesaid second sale instance dt. 23rd Nov., 1991, on the ground that the land therein is purchased by the tenant in occupation, the first sale instance dt. 23rd Nov., 1989, cited by the petitioner clearly shows that the rate of the suit land is not grossly understated. It may be seen that in determining the rate of Rs. 210 per sq. ft., the valuer of the petitioner had taken into consideration the above two sale instances referred to by him and the location, size, shape and the permissible FSI (FSI allowed is only one). The valuation report of her valuer submitted by the petitioner to the Appropriate Authority thus deserved consideration. The rate offered by the petitioner for the suit land, viz., Rs. 225 per sq. ft. whose discounted rate is worked by the Appropriate Authority is Rs. 221 per sq. ft. cannot thus be said to be grossly understated.

by the Central Government under Chapter XX-C of the Act must disclose how the tentative or prima facie conclusion is arrived at by the Appropriate Authority that the property sought to be compulsorily purchased is significantly undervalued, which means that if any particular sale instance (s) is/are relied upon to show how the property in question is significantly under-valued, it is necessary for the Appropriate Authority to refer to the said details in the show-cause notice so that the transferor and/or the transferee have real and proper opportunity to meet the case of the Department. It is necessary to see that issuing a show-cause notice is not merely an empty formality which is incorporated in s. 269UD(1) of the Act to save it from its invalidity but the opportunity to show cause has to be real and substantial which means that the transferor and the transferee concerned must know as to why the Appropriate Authority is holding that their immovable property under the agreement of sale is significantly undervalued. When an obligation is cast upon an authority to give a notice to show cause before reaching any final conclusion against the person affected by its action, the purpose and the requirement of such a show-cause notice is two-fold (i) the noticee must get an opportunity to meet the case against him and (ii) he must have an opportunity to set forth his own case to show why an order adverse to him should not be passed. In this regard, de Smith in his Judicial Review of Administrative Action (Fourth Edn.) has observed at page 196 as follows : "Natural justice generally requires that persons liable to be directly affected by proposed administrative acts, decisions or proceedings be given adequate noticee of what is proposed, so that they may be in a position - (a) to make representations on their own behalf; or (b) to appear at a hearing or inquiry (if one is to be held); and (c) effectively to prepare their own case and to answer the case (if any) they have to meet".

It must be then seen that the conclusions of the authority at the stage of giving a show-cause notice are always prima facie or tentative conclusions for if it is not so, its ultimate order would suffer from its bias, i. e., its pre-determined mind. However, because its conclusions at the stage of show-cause notice are only prima facie or tentative conclusions, it would not mean that they are not required to be disclosed in the show-cause notice. The above stand taken by the respondents in their return is thus wholly misconceived and is untenable. In fact, it betrays the ignorance of the respondents about the basic tenets of the principles of natural justice which we have referred to above as requirements of a proper show-cause notice.

21. In the light of the view taken by us above, it cannot be held that the Appropriate Authority has proved by clear and cogent material on record that the suit land is significantly undervalued, which is a criteria laid down by the Supreme Court for compulsory purchase of immovable property under s. 269UD of the Act in C. B. Gautam's case (supra). The impugned order of the Appropriate Authority cannot thus be sustained and is liable to be set aside. In the above view, which we have taken, it is not necessary for us to decide the other contention raised on behalf of the petitioner, viz., whether the provisions of compulsory purchase in Chapter XX-C of the Act are not attracted in the facts of the instant case since the share of each of the two beneficiaries, i. e., transferors is below Rs. 10,00,000 which requirement for compulsory purchase under the said Chapter is laid down in r. 48K of the IT Rules, 1962.

3.2 Hon’ble Rajasthan High Court in the case of Krishnakumar Rawat (supra) observed /held as under:-

“The petitioners have entered into an agreement to purchase a plot of 9,500 sq. yards (7,945 sq. metre) with two godowns having an area of 2,920 sq. metres with respondent No. 3 for a consideration of Rs. 99,84,500 out of which a sum of Rs. 40,00,000 was paid by cheque and the possession of the two godowns, guard-room, office premises along with 1/4th Undivided share of the remaining open land was delivered. From No. 37-I along with a copy of the agreement was submitted under section 269UC on December 31, 1993. The Valuation Officer of the appropriate authority of the Income-tax Department, vide his letter dated January 18, 1994, informed the petitioner and the seller for inspection of the property on January 21, 1994. The appropriate authority, after receiving the report from the Valuation Officer, issued a show-cause notice on March 8, 1994, under section 269UD(1A) of the Act on the ground that the apparent consideration was lower for various reasons mentioned therein and the value of the land is much higher than the agreed rate. An example of a plot of land at A-90, Triveni Nagar, near Durgapura Station, sold by the Jaipur Development Authority on November, 7, 1992, at Rs. 1,781 per. sq. metre was taken. Adjustment of five per cent. on account of less development of the plot and ten per cent. on account of general condition of the plot was given and 12 per cent. was added on account of the time gap. On the basis of the rate of Rs. 1,692 per sq. metres, the value of the land of 7,943 sq. metres was calculated at Rs. 1,34,39,556. The petitioner was asked as to why the order for per-emptive purchase under section 269UD be not made and the case was fixed for March 21, 1994. Objections were submitted by the vendor as well as the petitioner that 40 per cent. of the land would be required to be left for amenities like parks and roads besides the cost of development of roads, electricity, water supply, etc. The sub-division has not been effected. It was also stated that the market price of the land in Durgapura notified by the sub-Registrar as on April 1, 1991, for the first category has been fixed at Rs. 550 an the second category at Rs. 450; and if 12 per cent. is added, it would come to Rs. 690 per sq. metre. This is besides the various objections mentioned above and also the fact that the cost of demolition and removal of debris would be substantial and the cost of investment for six months has to be taken into consideration. An example in the representation dated March 24, 1994, was given of a plot of 116.13 sq. metres sold at Rs. 861.10 per sq. meter situated in Triveni Nagar Scheme. The market rate fixed by the Sub-Registrar for registration purposes was stated to be Rs. 1,043.05 per sq. metre. A copy of the office order dated November 4, 1992, of the Jaipur Development Authority fixing the reserve price at Rs. 600 per sq. metre was pointed out. The appropriate authority passed the order under section 269UD(1) and exercising the powers vested in it ordered purchase of the property by the Central Government at an amount equal to the apparent consideration shown in the agreement. The appropriate authority directed delivery of possession of the said property to the Departmental Valuation Officer of the Income-tax Department whereupon the petitioner applied for time.

The submission of learned counsel for the petitioner is that the total land is 17 bighas 12 biswas having Khasra No. 126 owned by the partnership firm, Messrs. Rajasthan Industrial Company, which submitted a plain for development of an amusement park, commercial complex and residential colony. The Jaipur Development Authority approved the plain for the commercial complex and amusement park. The partnership was dissolved and, as such, the single integrated complex for which the plans were approved could not be acted upon. According to the submission of learned counsel for the petitioner, out of the total area of 7,943.48 sq. metres only 1,087.74 sq. metres is capable of being developed commercially and the saleable are comes to 13.693 per cent; and the rest of the area would form part of the roads, parking and other open spaces. If the rate of Rs. 1,800 per sq. metre is applied, the total value of the land would come to Rs. 19.58 lakhs. The godowns are being used for storage purposes and if the industrial use of the land is taken into consideration, then it should be on the basis of the rate charged by the RIICO for industrial land which is Rs. 100 per sq. metre for fully developed land. Even if the valuation is to be taken on the basis of the residential plot, the cost of development and reduction of area on account of the facilities have to be taken into consideration besides the fact that it would take around 12 months to develop the property over which at least Rs. 18 lakhs would have to be deducted on account interest alone. Possession has been taken only of land covered under godowns and the open area is said to be under the co- ownership of Smt. Krishna Kumari. The final agreement with the co-owner has not been arrived as yet, and there can be a change of site also. No notice was issued for treating the property as a commercial property. The value of the godown was also not mentioned in the notice issued. The grievance of the petitioner is also that they were given only ten days time for filing the reply and thus the principles of natural justice have been violated. A reasonable opportunity as directed by the apex court has also not been given. The notice was received on March 11, 1994, and there was a strike by Government staff from March 16, 1994, to April 3 1994, and therefore, the copies of similar sale transactions could not be obtained. The action of the appropriate authority has been challenged on the ground that there was no material available with the Department to the effect that there was any evasion of tax in the transaction. Notice to the co-owners who are interested persons was not issued. The goods were shifted to the godown in several months and it will take a few months now to vacate it. The apparent consideration shown is not less than apparent consideration if 15 per cent. is added thereon. The orders have been passed on grounds different than those for which the notice was issued. The copy of the valuation report was not supplied. The comparison with the land situated at Triveni Nagar which is fully developed has wrongly been made. The value of the structure should have been taken as nil. While valuing the godown incorrect facts with regard to the tubular trusses, A. C. sheet roofing having CC floor, electric installations, iron etc., have been taken and it has wrongly been mentioned that commercial use of the property has been allowed by the District Magistrate and the Jaipur Development Authority. The proper norms for valuation of the property have been not been adopted. A single instance cannot be the basis for valuation of the property. The property is near the vegetable factory which is emitting a foul smell and incapable of developing into a residential colony. The instance of sale of plot given by the petitioner has wrongly been ignored. The salable area is only 66 per cent. of the total area and the calculation should have been made on that basis. It is submitted that the market rate notified by the Sub-Registrar under the provisions of the Rajasthan Stamps Act as on April 1, 1991, was Rs. 777 per sq. metre and if 12 per cent. is added for the time-gap, it would come to only Rs. 963 per sq. meter. The rate notified by the Jaipur Development Authority on November 4, 1992, was Rs. 600 per sq. metre and if 12 per cent. is added thereon it would come to Rs. 672 per sq. metre. The average of the two plots in Triveni Nagar which have been sold at Rs. 1,043

per sq. metre and Rs. 1,781 per sq., metre comes to Rs. 1,411 per sq. metre and on that basis also the total cost of 5,242 sq. metres comes to Rs. 74.02 lakhs. The cost of laying roads and other amenities should be deducted therefrom. On the basis of the land approved by the Jaipur development Authority, for commercial use to the extent of 1,087 sq. yards, it is submitted that the cost should be calculated at Rs. 1,800 per sq. metre as fixed by the Jaipur Development Authority November 4, 1992, and if 12 per cent. is added for the time-gap, it comes to Rs. 2,016 per sq. metre and the total cost of this land comes to Rs. 21.93 lakhs from which deduction for demolition an interest charges should be given. I have considered the arguments of both learned counsel for the petitioner. The objection which has been taken by learned counsel for the respondents is that the writ petition is not maintainable as the petitioner and the vendor have contravened the provision of the Act by transferring the property before any permission could have been given by the appropriate authority and for which reliance has been placed on the decision given by a Division Bench of this court in the case of Rajasthan Patrika Ltd. v. Union of India [1995] 213 ITR 443 (D.B. Civil Writ Petition NO. 3426 of 1991) decided on April 22, 1994. It is observed that so far as the preliminary objection is concerned, the respondents are to blame themselves. By none of the orders of the court, were the respondents restrained from taking any action if they were legally entitled. The decision relied on by learned counsel is not on the proposition that in such a situation, the writ petition is not maintainable. In that case, the order passed by the appropriate authority was not under challenge, by it was the prosecution of the petitioner in which the court refused to interfere. The writ petition against the order passed by the appropriate authority is maintainable and, therefore, the preliminary objection having no force is rejected. In the agreement dated December 31, 1993, the sale price of the land has been mentioned as Rs. 1,051 per sq. yard. Possession of

the two godowns having Nos. 13 and 14, guard-room, office premises and symbolic possession of 1/4th undivided share of the open land was taken by the petitioner. In clause 12 of the agreement, it was mentioned that the said land is approved and covered for the purpose of construction of commercial and residential units by the Jaipur Development Authority and the dues for conversion have been deposited. if there is any liability in future in respect of such conversion charges, the vendor has to bear it. The show-cause notice which was issued by the appropriate authority on March 8, 1994, has mentioned that the land rate has been shown at Rs. 1,051 per sq. yard in the agreement, whereas the Jaipur Development Authority has shown the land at Rs. 1,781 per sq. metre on November 7, 1992. Certain additions and deductions were made and the total cost arrived at was Rs. 1,34,39,556 at Rs. 1,692 per sq. metre. This was besides the cost of the existing godowns which were mentioned to have commercial potential. In the reply, the vendor has only stated that full consideration has been shown and the development needs 40 per cent. of the land to be left out for amenities, sub-division has to be approved by a large number of Governmental agencies. The petitioner has also submitted objections to the proposed notice as stated above. A certificate of sale of land in Triveni Nagar at Rs. 1,300 per sq. metre of July, 1993, was also submitted. Further reply was submitted on March 24, 1994, and the copy of sale deed dated May 26, 1993, was also submitted.

In the order dated March 30, 1994, the appropriate authority has taken the figure as mentioned in paragraph 2 of the order. On the basis of the reply submitted, the various contentions raised therein were also taken into consideration. The case was adjourned on the request of the parties from March 21, 1994, to March 24, 1994. The opportunity which has been given in the present case cannot be said to be not a reasonable one.

The appropriate authority has also taken into consideration the fact that the transferor has assured the purchaser that the property sold is free from all encumbrances and the responsibility to get the land partitioned was also undertaken; the fact of conversion was also stated. There are residential colonies adjoining the present land. As per cost of construction on the basis of norms applicable in the case of CPWD structures the value of godown was estimated at Rs. 42 lakhs. The submission of learned counsel for the petitioner is that the fact that the future of Rs. 42 lakhs was not mentioned in the notice does not vitiate the order because, even the cost of land itself was considered as more than the apparent consideration shown in the agreement and the fact that the cost of the godown has to be separately considered was also mentioned in the notice. The contention of learned counsel for the petitioner that the cost of removal of the debris will be more than the cost of the structure was rejected. This conclusion of the appropriate authority is also correct as the petitioner has himself stated in the petition that the godowns are being used for storing goods and is used for business purposes, and, therefore, there is no necessity for demolishing them. The value of the godown was taken at Rs. 42 lakhs and the value of the land was estimated at Rs. 1,37,21,532, at 1,727 per sq. metre. The total value has been taken at Rs. 1,79,21,532 as against Rs. 99,84,500. The contention of the petitioner with regard to the deduction of 40 per cent. for roads and park, etc., was not accepted and for the sake of the argument, it was considered that if the salable area as per rule 11 of the Rajasthan Urban Areas (sub-division) Rules, 1975, is taken to be 66 per cent., then it will come to 5,242.38 sq. meters to which if the sale instance was taken into consideration of Rs. 1,718 per sq. metre on which 12 per cent. for the time-gap is added, it will come to Rs. 1,994.72 per sq. metre. Even on that basis, the value comes to Rs. 1,04,58,548 and Rs. 42 lakhs for the building which is much more then the declared apparent consideration. It was also found that the area of Triveni Nagar is on the interior side of the main Tankroad, whereas the present land is having a better situation. The property being commercial has about 50 per cent. more value, which was not added for computation purpose. The decision of the Allahabad High Court in the case of Daya Engg. Works (P.) Ltd. v. Union of India (C.W.P. No. 4240 of 1993) decided on July 15, 1993, was also relied on for the point that the rate determined under the Stamp Rules cannot be determinative of the actual value of the property. The claim of Rs. 10 lakhs as registration charges and Rs. 15 lakhs of roads, water supply and electricity and for interest were also held untenable.

The property was approved by the Jaipur Development Authority and for the reasons as stated by learned counsel for the petitioner that, on account of dissolution of the firm, the park project could not be implemented, Smt. Mithilesh Kumari sold her share. There is no restriction in respect of sale of the property which is privately sub-divided by different owners. Even the contention that the other co-owner may object to the area sold has been not proved by any evidence on record. The vendor has taken up the obligation on her part not only for sub-division but has assured the petitioner that the property under the agreement is free from all encumbrances and the conversion charges in respect thereof have already been paid. It is not on record as to how much conversion charges have been paid but, it is the responsibility of the vendor that, if the conversion charges are found to have been not paid she has to bear the same. A notice was given to the Jaipur Development Authority in order to find out as to whether the plan which was earlier approved is the final plan or they have the power to revise the plan once approved. It is stated by Mr. R. D. Rastogi on behalf of the Jaipur Development Authority that even if a plan is approved, the Jaipur Development Authority has the jurisdiction to revise the said plan. The property which has been directed to be purchased by the appropriate authority is on the basis of the agreement entered into and on the same terms and conditions. The dispute with regard to the possibility of a different area of land or the other questions which have been raised by learned counsel do not require to be gone into.

The principles for valuation in respect of an immovable property under the Wealth-tax Act or other taxation laws are different from the principles which are applicable to acquisition proceedings. The proceedings under Chapter XX-C are akin to the acquisition proceedings and not to the valuation principles which are applicable for assessing the tax on the basis of the valuation of the property.

The valuation has no doubt to be made objectively and not on the subjective satisfaction of the appropriate authority. The figure which is arrived at has to be based on the material on record. There may be a certain element of arbitrariness while estimating the market value and it is for that reason alone, that without there being any mandate of the Act, the respondents have issued a circular that the acquisition of the property under Chapter XX-C would be if the difference of the market value and agreed value shown in the instrument is more than 15 per cent. Thus, the 15 per cent. margin covers the estimation part of the valuation, so that no injustice is done while acquiring any property. The right of pre-emptive purchase by the Central Government of immovable property is at an amount equal to the amount of apparent consideration so as to relieve the transferor of any grievance. The order undersection 269UD has to be passed in a time-bound programme. The appropriate authority consists of three persons; two of whom are to be members of the Indian Income-tax Services Group A holding the post of the Commissioner of Income- tax or, any equivalent or higher post and, one has to be a member of the Central Engineering Services Group A holding the post of the Chief Engineer or, any equivalent or higher post. The transferor and transferee are to be given the opportunity and a reasoned order has to be passed. The respondents have to make the valuation of the property by taking into consideration all relevant facts and thereafter a decision has to be taken by the appropriate authority. Viscount Simon J., in Gold Coast Selection Trust Ltd. v. Humphrey [1949] 17 ITR (Suppl) 19 (HL) observed that, "valuation is an art, not an exact science, mathematical certainty is not demanded, nor is it possible ?" A certain element of guess has to be there based on objective factors having reasonable nexus with the evidence on record. The various factors are there on the basis of which out of the various methods by which the valuation of the immovable property can be made, appropriate method is to be adopted. It depends on the location of the property, the purpose for which the property is used, the nature of the property, the time when the agreement is entered into and similar other objection factors. The valuation, therefore, has to be done by a method which is more objective and could furnish reliable data to arrive at a just conclusion.

In respect of land, comparable cases provide the better guide. The comparable cases could be which are in respect of the land having similar character and is in the proximity of the land under agreement having similar advantages and amenities. The proximity in time is also an important factor in such a case. The location, frontage, transport facilities and other amenities besides the size of the plot are relevant considerations. The method of belting is also applied in respect of and having a large area as the front of the land on the main side fetches a higher price than the next belt and so on. In this method, the plot is divided into belts on the basis of distance from the main road and the value of such belts has to be determined separately.

In Raghubans Narain Singh v. U. P. Govt., AIR 1967 SC 465, it was observed by the apex court that the value to be ascertained is the price to be paid for the land with all its potentialities and with all the use that can be made of it by the vendor. Similarly, in U. P. Govt. v. H. S. Gupta, AIR 1957 SC 202, the market price was considered the highest value the property could fetch when laid out in the most advantageous manner. The potentialities or the capacity to use therefore is also an another relevant factor. The instances of comparable cases which are taken into consideration must be of genuine cases.

There may be different methods for valuation of the property, i.e., land and building, which depends on multiplicity of situations and one of such principles is comparable transaction which is mainly applicable to valuation of land only, the others use : (i) Return basis : Under this system the value is determined on the basis of the amount of rent which a tenant is ready to pay and that rent is considered a return on the investment of capital which is applicable on the properties which are on lease/rent/easement. (ii) Direct capital comparison : This method is rarely applied for valuing the property, as under this method the two objects, namely, the property and other similar object like shares, etc., are taken into consideration and the price which could be obtained therefor is taken into consideration. The identification of the object itself is problematic and the property is rarely identical with other object and, therefore, this method is rarely used. (iii) Residual method : Under this method, the valuation of lands or buildings is taken if they are developed or redeveloped. It is on the basis that the inevitable process of development or demolition and redevelopment goes to meet the changing demands of the society. The value by direct comparison of sale of similar property which is developed in a similar manner is taken into consideration. This method is also known as the development method of valuation. The method is applied mainly in respect of old buildings which are demolished and new construction is raised thereon. (iv) Profit basis :

Where the comparison of one with another is different since each property is susceptible to different factors which may have a dramatic effect on the figure of sale achieved. Even in the same market, the value of shops may differ on account of location. The profit which is derived on account of situation, location or special circumstances of the property is taken as basis for valuing the property. It is considered appropriate in respect of hotels, cinemas, shops, petrol pumps and other commercial properties. (v) Cost of replacement : This method is applicable in respect of property which is to be designed or used for a special purpose to meet specific requirement and the valuation of such property is derived from the value of alternative sites plus cost of building. The property in such cases have no sale instances in the market and thus no comparable cases could be found. The price of an alternative site and cost of erection of the building is taken into consideration. This cost of replacement is also referred as contractors method. (vi) Break-up method : The break-up method or asset breaking method is adopted for loss incurring concerns which have no chance of revival. (vii) Municipal valuation : Under this system taxes which are calculated by municipal authorities as a percentage of rent realised or realisable are taken into consideration and on that basis the annual value of the property is determined. (viii) Land and building method : Under this method, the valuation of the land is done separately on the basis of comparable instances of sale of other plots and the cost of construction as prevailing is taken from which the depreciation looking to the year of construction is reduced. This method is normally applied in cases of compulsory acquisition. The objection that solitary instance rate cannot be adopted for the purpose of comparison cannot be considered to be an absolute proposition of law. It depends on the facts and circumstances of the case and even where there is no other comparable case available a single solitary instance can be taken into consideration. The objection that the land should be considered to be agricultural land or that the rate of industrial land should be made applicable or that since the value of the building has been taken then the cost of land should be taken as nil cannot be accepted, as factually it could neither be considered as agricultural land nor a industrial land and the potentiality of the land has to be taken into consideration as observed by the apex court in the case of Raghubans Narain Singhs case, AIR 1967 SC 465. The various propositions with regard to the costing of land or restricting the saleable area on the basis of the already approved map can also not be taken into consideration as in accordance with the approved map the seller has not taken any action and learned counsel for the Jaipur Development Authority who was issued notice in this matter has admitted that the map could be revised by the Jaipur Development Authority. So far as the valuation of constructions is concerned, it is not proved by any evidence on record that the valuation has incorrectly been arrived at. The only thing which has been said is that the valuation was not depicted in the notice so that the petitioners could have submitted their reply. Even if for the sake of argument, the contention is accepted, nothing is stated by the petitioner in the petition itself as to how the valuation has not correctly been arrived at or there is any mistake apparent, so that the order of valuing the cost of built-up area at Rs. 42 lakhs would be considered to be illegal or a mistake apparent from record or an arbitrary figure. The contention of the petitioner that the said godown is to be demolished is contrary to his own averment in the petition that the godowns are used for storing the goods and it will take a number of months in transporting the goods and that the petitioner is carrying on his business there, which is near to the airport as well. In an area which is already constructed long-back and the business is being carried on neither there is any possibility of any authority demolishing the structure or restraining the purchaser from carrying on the activities. The contention that the building is to be demolished cannot be taken into consideration at this stage, even if the construction is finally demolished after a number of years. The valuation which has been arrived at by the appropriate authority of the constructed area, therefore, cannot be said to be unreasonable or requiring any interference by this court as there is no evidence on record by which it could be concluded that the petitioner has no intention to carry on the business in the said premises where it is being carried on by him under the agreement. The method of valuation of the godown has rightly been taken on the basis of land and building method. In CWT v. Mrs. Sara Varghese [1991] 187 ITR 450, the Kerala High Court has observed that for valuation a hypothetical market is contemplated. Imponderables are involved in the matter of valuation. The market value of the property is the price which a willing buyer will pay to a willing seller. It will vary from case to case. Valuation is not an exact science. Mathematical calculation is not possible. The money value attributable to the asset should be decided and estimated by the concerned statutory authority in a reasonable and judicial manner on the basis of the facts and circumstances available. The valuation should be made objectively and should be based on some material. The qualitative and quantitative analysis in the matter of valuation will differ from asset to asset, from place to place, and also considering the particular statute for which the valuation and price of the property have to be determined. It could be a wooden rule. Different methods and approaches, necessary in the context of different statutes under which the market value of an asset has got to be determined, pose difficult problems. The market value has got to be fixed with reference to the particular statute. The approach will differ, according to the nature of the statute, between fiscal statutes or non-fiscal statutes. Among the non-fiscal statutes, the Land Acquisition Act is an important legislation. Among the fiscal statutes, the Income-tax Act, the Wealth-tax Act, the Gift-tax Act, the Municipalities Act, etc., are important. In fixing the market value of a particular asset or property, the approach and analysis are likely to vary according to the subject-matter of legislation. The principles that are ordinarily applied in the case of non-fiscal statutes like the Land Acquisition Act cannot be applied mechanically to cases arising under the fiscal statutes. In Mani Singh Avtar Singh v. I.A.C. of I.T. [1985] 151 ITR 233 (P&H), it was observed that a plot built upon cannot be compared with an unbuilt not on which the purchaser has the opportunity of exercising a wide choice of building. In Debi Prosad Poddar v. CWT [1977] 109 ITR 760 (Cal), the following principles were laid down for the valuation of immovable property under the Wealth-tax Act (at page 773) : "(i) Attempt must be made to find out the price which the immovable property would fetch on the valuation date imagining a willing buyer to purchase the property from a willing seller in respect of the property; (ii) In respect of the immovable property, there is no fixed market such as market for shares or for other commodities, like sugar, cloth, etc. In order to arrive at a valuation in respect of the property, there must necessarily be certain element of guess. But the guess must be based on certain facts and according to certain principles which would be, in the facts and circumstances of each case, as fair as possible to the Revenue as well as to the assessee in trying to imagine reasonably and intelligently the price which was expected to be fetched if it was possible to sell the property in question on the relevant valuation date. (iii) Such a determination, therefore, involves adopting certain methods in determining the valuation and there are different kinds of methods, as mentioned in the circulars of the Board and the principles enunciated in the several decisions of the court as noticed before. (iv) Which one of the various methods would be suitable for a particular case must depend upon the nature of the property, the location of the property, the purpose for which the property is used and several other objective factors, viz., the time when the valuation is made, the prospect of buying and selling in respect of the property at the relevant time and also special features in respect of the property, if there be any. Taking all these factors into consideration it is, therefore, necessary to determine which one of the various methods will be most suitable to reach as accurate as possible a guess as to the valuation on the valuation date. (v) Another factor that has to be borne in mind is that such a method should be preferred which has more objective and reliable data to rely upon than mere subjective opinions. For instance, if there are more objective data to work out in respect of one method more reliable than another, then that method for a particular land should be preferred. If, however, there is any objective and reliable evidence of any transaction of sale of the land or property similar in quality or of the same type and in approximately same time then that would, however, provide more reliable method to follow." In Tribeni Devi v. Collector of Ranchi, AIR 1972 SC 1417; [1972] 3 SCR 208, it was observed by the apex court that (at page 1419) : "the general principles for determining compensation have been set out in sections 23 and 24 of the Act. The compensation payable to the owner of the land is the market value which is determined by reference to the price which a seller might reasonably expect to obtain from a willing purchaser, but as this may not be possible to ascertain with any amount of precision, the authority charged with the duty to ward compensation is bound to make an estimate judged by an objective standard. The land acquired has, therefore, to be valued not only with reference to its condition at the time of the declaration under section 4 of the Act, but its potential value also must be taken into account. The sale deeds of the lands situated in the vicinity and the comparable benefits and advantages which they have, furnish a rough and ready method of computing the market value. This, however, is not the only method. The rent which an owner was actually receiving at the relevant point of time or the rent which the neighbouring lands of similar nature are fetching can be taken into account by capitalising the rent which, according to the present prevailing rate of interest, is 20 times the annual rent. But this also is not a conclusive method. This court had in Special Land Acquisition Officer v. T. Adinarayan Setty [1959] Supp. 1 SCR 404; AIR 1959 SC 429, indicated at page 412, the methods of valuation to be adopted in ascertaining the market value of the land on the date of the notification under section 4(1) which are : (i) opinion of experts; (ii) the price paid within a reasonable time in bona fide transactions of purchase of the lands acquired or the lands adjacent to the lands acquired and possessing similar advantages; and (iii) a number of years purchase of the actual or immediately prospective profits of the lands acquired. These methods, however, do not preclude the court from taking any other special circumstances into consideration, the requirement being always to arrive as near as possible at an estimate of the market value. In arriving at a reasonably correct market value, it may be necessary to take even two or all of those methods into account inasmuch as the exact valuation is not always possible as no two lands may be the same either in respect of the situation or the extent or the potentiality nor is it possible in all cases to have reliable material from which that valuation can be accurately determined." So far as the question of valuation of land is concerned; reliance has been placed on the decision of Mathura Prosad Rajgharia v. State of West Bengal, AIR 1971 SC 465, wherein it was observed that (at page 469) : "the market value according to the disposition of the land apparently means the value of the land in a hypothetical market which willing purchaser may in the prevailing conditions pay for the land to a willing vendor, taking into consideration its situation and advantages. In determining the disposition the hypothetical purchaser would normally take into consideration the advantages of the situation and the potentialities of the land, for the market value of land, especially in urban areas, depends upon its situation, special adaptability, advantages and inherent potentiality in the light of the demand for land. Where a large area of land in an urban locality is sought to be acquired in determining the market value the method of belting is appropriate. It is common knowledge that lands having frontage on the main roads in urban areas are always more attractive than the lands which have no such frontage." In Sahib Singh Kalha v. Amritsar Improvement Trust [1992] Supp. AILACC 593, it was held by the apex court that where there is a large area of undeveloped land under acquisition, provision has to be made for providing the minimum amenities of town life such as water connections, well laid-out roads, drainage facility, electric connections, etc. The process necessarily involves deduction of the cost of factors required to bring the undeveloped lands on par with the developed lands. An extent of 20 per cent. of the total land acquired was taken as a reasonable deduction for the space required for road. Apart from it, the cost of laying roads and other amenities like electricity, water, underground drainage, etc., was taken at 33 per cent." A distinction was also drawn between a tiny plot and a large area. In the case of Mirza Nausherwan Khan v. Collector, Land Acquisition, AIR 1974 SC 2247, the apex court observed that : "there is no doubt that the value of an extensive plot of land in a city, the strip that adjoins an important road will have a higher value than what is in the rear, for obvious reasons of potential user or commercial exploitation." In State of Kerala v. P. P. Hassan Koya, AIR 1968 SC 1201, it has been observed : "in determining compensation payable in respect of land with buildings, compensation cannot be determined by ascertaining the value of the land and the break-up value of the buildings separately. The land and the building constitute one unit and the value of the entire unit must be determined with all its advantages and its potentialities." The method of capitalisation of return actually received or which might reasonably be received from the land and the buildings in respect of a property which is used for business purposes was approved. In CWT v. Raghubar Narain Singh [1984] 146 ITR 228, it was held by the apex court that the market value of an asset would be a question of fact, but if the Tribunal has arrived at its conclusion by taking wrong principles into consideration, then such a finding would not be binding on the High Court. The contention that the area is in the vicinity of a factory which is emitting a foul smell and chemicals cannot be considered because it is mentioned in the order that a number of other colonies have also been developed and had it been the position the residents of the colonies would have approached the environmental authorities of the State of Rajasthan for taking necessary action. The contention that the entire land cannot be used for residential purposes as part of it is to be left out for facilities and roads are to be developed may affect the market value. The question whether the instance of sale should be relied upon is also a question of fact. It may be the correct depiction of the market value (rate) or may not be so and, therefore, the market value is to be adopted looking to the rates prevailing in the locality, situation of the plot, the potentiality and use of it. The valuation of the land could be on the basis of comparable cases of which one example has been given by the respondent while the other has been given by the petitioner. The total value for which the agreement was entered into was of Rs. 99,84,500. If the value of the godown of Rs. 42 lakhs is reduced therefrom, the value of the land remains only at Rs. 57,84,500 in respect of 9,500 sq. yards. The value comes approximately to Rs. 600 per sq. yard. It may be observed that in the case of Rajendra Giriraj Prasad Tiwari v. Union of India [1995] 212 ITR 158-S. B. Civil Writ Petition No. 3492 of 1993 decided on April 18, 1994, it was observed that judicial review is limited only to the extent of examining as to whether any finding is perverse or there is non-application of mind or the order is contrary to the established principles of law. It was further observed that this court is not sitting in appeal over the order passed by the appropriate authority and the satisfaction has to be arrived at by the appropriate authority on the basis of the valuation report and the relevant documents which have been taken into consideration. It is not the calculation or the manner which could be examined under article 226. The calculation is always a question of fact. Principles of valuation alone have to be considered. The respondents have taken into consideration the sale of the plot by the Jaipur Development Authority, at Rs. 1,781 on December 7, 1992. The said colony is situated in the inferior than the present land and necessary deductions have already been given to the petitioner. The land is said to be in the vicinity of the main road. The various arguments which have been raised by learned counsel for the petitioner to arrive at the value of the land are only hypothetical. The deduction as contemplated in the case of Sahib Singh [1992] Supp. AILACC 593 (SC) referred to above is given, still the value exceeds more than 15 per cent of the apparent consideration. In these circumstances, I am of the view that the action of the appropriate authority in making the order of the pre-emptive purchase is not contrary to law. The reliance on the letter dated November 4, 1992, with regard to the reserve rice is of no avail because it is not the market value but is only the reserve price below which the Jaipur Development Authority cannot sell or allot a plot to any person even of a reserved category and such price cannot be taken into consideration while determining the market value for pre-emptive purchase under Chapter XX-C. The market rates for the purpose of registration of an immovable property as notified by the Sub-Registrar can also have no application for determining the market value under Chapter XX-C of the Act. It is limited only for payment of the stamp duty. The said notification also does not take into consideration the difference of value, even of the plots in the same locality having different situation. As such the value notified for the purpose of registration cannot be a proper guide for valuation in respect of pre- emptive purchase. An objection was also taken that the land is not an identifiable separate piece of land as the other co-owners may object or give another land in lieu of the land shown in the map. This argument is also of no avail to the petitioner, because the other co-owners have not raised any objection when the possession was taken over by the petitioner from the vendor and a number of vehicles must have come to unload his goods and, therefore, it could be a case of implied consent. Even if it is not a case of implied consent, the responsibility has been taken by the seller that the conversion charges of the land have been deposited and the land as shown in the map is to be sold by the vendor. The agreement reciting the obligation of the seller is the complete answer to the argument raised by learned counsel for the petitioner. Shri B. L. Sharma, appearing on behalf of the vendor, has submitted that on account of the stay order the seller could not get the remaining sale consideration and thus in view of the decision in C. Dass v. Appropriate Authority [1993] 199 ITR 9 (SC), at least direction for interest should be given. This matter has also been considered by me. The seller has already received a sum of Rs. 40,00,000 as an advance under the contract itself, and even after the clearance by the appropriate authority certain obligations are to be fulfilled by the seller. Directions for payment of interest could be given in an appropriate case but I do not consider that the present one is an appropriate case for giving directions to the Central Government for making payment of interest in addition to the consideration and hence this plea is accordingly rejected. In view of the observations made above, there is no mistake apparent from the record nor could the order be said to be without application of mind or perverse nor could the order be said to be contrary to the established principles of law. The writ petition having no substance is hereby rejected. The respondent-Central Government shall make the payment to the seller within a period of 15 days on fulfilling the various obligations as contemplated in the agreement and under law.”

3.3 We have considered the rival submissions and perused the material available on record. In the light of the above cases, now we shall examine the facts of the present appeal before us.

The facts in brief are that the assessee is an individual, filed his return on 27.07.2009, which was processed u/s.143(1) of the Income Tax Act,1961. The case of the assessee was selected for scrutiny under CASS, therefore, notices u/s.143(2) and 142(1) were issued on 25.08.2010 and 28.07.2011 respectively. The assessee in his return offered long term capital gains of `.4,53,983/-. As per the Revenue/AIR information, the assessee sold the property, jointly held with his brothers, for a consideration of `.6,50,00,000/-, the copy of the sale deed was obtained from the office of the Sub-Registrar.

It was observed that the property to the extent of 5903 Sq. ft., out of 13,058 sq.ft was sold during the assessment year 2008-

9. While working out the long term capital gains, the fair market value as on 01.04.1981 for the property measuring 5903 sq.ft. , at New Door No.160, (Old No.937), Poonamalee High Road, Purasawakam, Chennai was taken at `.2,29,792/- (i.e Rs. 5 lacks

per ground). To verify the claim, a letter was addressed to the Sub-Registrar to verify the value of the claimed property as on 01.04.1981. As per the Sub-registrar, vide letter dt.10.11.2011 the property was opined to be `.50,000/-per square ground. As

per the Revenue, the value was only considered for the land and not for the building, therefore, the value of the building was not considered. On appeal, before the ld.CIT(A), the ld. First Appellate Authority affirmed the stand of the ld. Assessing Officer.

The assessee is aggrieved and is in appeal before this Tribunal.

If the observation made in the assessment order, conclusion drawn in the impugned order, assertions made by the ld. respective counsel and material available on record, if kept in juxtaposition, and analyzed during open hearing we sought the opinion with respect to valuation, from both sides, wherein the ld.DR opined that in any case that the valuation may not be more than `.2,50,000/- however, the ld.Counsel for the assessee asserted that the fair market value as on 01.04.1981 was not less than `.5 lakhs. So far as the other facts are concerned, these are on record. Now the question for our consideration is adoption of value of the impugned property as on 01.04.1981. Hon’ble Apex Court in Special Land Acquisition Officer v. T. Adinarayan Setty [1959] Supp. 1 SCR 404; AIR 1959 SC 429, indicated at page 412, the methods of valuation to be adopted in ascertaining the market value of the land on the date of the notification under section 4(1) which are as under :-

(i) opinion of experts; (ii) the price paid within a reasonable time in bona fide transactions of purchase of the lands acquired or the lands adjacent to the lands acquired and possessing similar advantages; (iii) a number of years purchase of the actual or immediately prospective profits of the lands acquired.

The Hon’ble Apex Court further observed that the above methods, however, do not preclude the court from taking any other special circumstances into consideration, the requirement being always to arrive as near as possible at an estimate of the market value. It was specifically observed that in arriving at a reasonably correct market value, it may be necessary to take even two or all of those methods into account inasmuch as the exact valuation is not always possible as no two lands may be the same either in respect of the situation or the extent or the potentiality nor is it possible in all cases to have reliable material from which that valuation can be accurately determined. Likewise Hon’ble Jurisdictional High Court in the case of CIT Vs. J.Chelladurai (supra) observed that no useful purpose would be served to remand the matter and further observed it would be reasonable to fix market value of the land by averaging value given by the assessee and the assessing officer as on 01.04.1981. Under these observations from Hon’ble High Courts including from Hon’ble Apex Court, we deem it appropriate to adopt the value as suggested from both sides. Therefore, considering the totality of the facts and the assertions made from both sides, we are of the view that it will meet the ends of justice, if the fair market value of the property is adopted at `.3,50,000/- as against `.5,00,000/-, per ground, as on 01.04.1981, suggested by the ld.Counsel for the assessee and `.50,000/-,

per ground, adopted by the ld.CIT(A). Thus, the appeal of the assessee is partly allowed. The ld. Assessing Officer is directed to adopt the value of the property as indicated herein above.

Finally, the appeal of the assessee is partly allowed.

This order was pronounced in the open court, at the conclusion of the hearing, in the presence of learned counsel from both sides on 05th December, 2018.