Law: Income Tax Act, 1961

Section: 269-UD(1),(3),269-UG(1),269-UH

(a) Income-tax---Purchase of immovable property by Central Government---Tender of consideration to be made by Central Government within prescribed time--¬Transferee, a partnership firm, "PR"---Cheque issued by Central Government in favour of "PR Ltd.", a company--- Different legal entity--¬Tender cannot be treated as tender to transferee---Order for pre-emptive purchase stands abrogated---Indian Income Tax Act, 1961, Ss.269-UD(1), (3), 269-UG(1) & 269-UH.---[Prima Realty v. Union of India (1997) 223 ITR 634 (Bom.) reversed]. Prima Realty v. Union of India (1997) 223 ITR 634 (Bom.) reversed. An agreement for sale of certain property in Bombay in favour of the appellant for an aggregate sum of Rs.3.6 crores was entered into on January 13, 1995. A statement in Form No.37-I as required by section 269-UC (1) and (3) of the Income Tax Act, 1961 read with rule 48-L of the Income Tax Rules, 1962, duly signed by all the parties to the agreement was filed with the appropriate authority on January 30, 1995. Show-cause notices under section 269-UD (1-A) of the Act were served on the transferors and the appellant-transferee, correctly described in the notice as "PR, partnership firm". On April 26, 1995, the compulsory purchase order was passed by the appropriate authority under section 269-UD (1) acquiring the property and determining the apparent consideration payable by the Central Government at Rs.3,58,84,384. The purchase order also correctly described the appellant as "PR, partnership firm". The amount of consideration, namely, Rs.3,58,84,384 became payable and required to be tendered to the person or persons entitled thereto under section 269-UG(1), within a period of one month from the end of the month of April, 1995. i.e., on or before May 31, 1995. The appellant, the transferee, was entitled to the sum of Rs.66 lakhs which had been paid by it as earnest money to the transferors; and the transferors were entitled to the remaining amount to the extent of their shares therein. On May 31, 1995, the Central Government issued nine cheques all dated May 31, 1995, in favour of the transferors and the transferee aggregating Rs.3,58,84,384. The cheque in favour of the…

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