The Hindu Business Line : I-T Dept property purchase set aside

The Chennai-based Ashok Leyland Finance Ltd, a leading hire-purchase venture, has won a case at the Madras High Court that enables it to go ahead with development of a property valued at Rs 30.82 lakh in Adyar, an upmarket neighbourhood.

A Division Bench comprising Mr Justice P. Sathasivam and Mr Justice S. Tamilvanan allowed the company's writ appeal challenging an order dated March 31, 1997 of a single judge, and quashed the order.

The judge had confirmed an order dated February 23, 1993 by the Appropriate Authority of the Income-Tax Department for pre-emptive purchase of the property.

The order of the Bench thus paves the way for the company to go ahead with Mr P. Nataraja Sastry to purchase the property and develop it.

By an agreement with Mr Sastry on April 30, 1990 the company submitted the necessary statement to the Appropriate Authority; the latter passed an order acquiring the property and requiring the transferor to hand over the property to it within 15 days.

Through a writ petition, Mr Sastry questioned the Appropriate Authority's order on the grounds that no opportunity was given before passing it.

Following a subsequent Supreme Court order, the Court set aside the impugned order of the Appropriate Authority with a direction to hear the matter afresh after giving an opportunity to both transferor and transferee.

The Authority held that it was a fit case for acquiring property under Chapter XX-C of the Income-Tax Act.

It moved the single judge contending that there had been substantial under-valuation of property by petitioner, which was in excess of 15 per cent of the market value.

The judge dismissed the writ petition. Hence, the current writ appeal.

The Bench held that the grievance of appellants relating to non-consideration of guideline value of property could not be accepted.

The power vested in the Authority is a special power that has to be exercised with great care and with utmost fairness.

In view of materials before the Authority, it was clear that the market value of property at the time of transaction could not be said to have been higher than the rate at which the appellants had agreed to sell and purchase.

The single judge failed to take note of relevant aspects, but merely approved the Appropriate Authority's order, which could not be sustained.

Hence, the order of the single judge was set aside and order of pre-emptive purchase passed by Appropriate Authority was quashed. Both writ appeals were allowed.

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