Law:

Section:

Principle of discounting under section 269UA cannot be applied where payment made by the appropriate authority is subsequent to the date of payment prescribed in the agreement for payment Section 269UA(b) of the Income-tax Act, 1961 - Purchase of immovable property by Central Government - Whether where payment made by appropriate authority is subsequent to date of payment prescribed in agreement for payment, principle of discounting cannot be applied - Held, yes FACTS Under an agreement, the petitioner agreed to sell his property for a consideration of Rs. 3,70,00,000. It was agreed between the parties that out of aforesaid amount of consideration, a sum would be paid by the vendee to the petitioner and balance amount shall be paid within 48 hours after receipt of no objection certificate from the Income-tax Department and/or from the housing society or on 15-3-1994, whichever was later. In pursuance of the said agreement, the petitioner and the said purchasers furnished to the respondents the statement of transfer of immovable property as required by law under section 269UC in Form No. 37-I as prescribed. In turn, they were served with the show-cause notice under section 269UD, calling upon them to show cause as to why an order should not be made directing the Central Government to purchase the said premises under section 269UD. The petitioner as well as the purchasers gave detailed reply to the show-cause notice contending that the discounting method adopted by the respondents was unconstitutional and in any event erroneous. The appropriate authority, rejecting all the contentions of the petitioner and the said purchasers, ordered the purchase of the said property by the Central Government for apparent consideration of Rs. 3,62,25,050. On writ petition : HELD The principle of discounting is well-known and regularly applied in accounting. In plain words, 'discount' means present value of payment due in future. The word 'discount' has no technical or universal meaning and perhaps its most common meaning is that it is equivalent to the payment of interest in advance. [Para 19] Even though agreement between the parties provides for transfer, the Central…

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