1. This is an appeal under Section 269H of the I.T. Act, 1961, directed against the order of the Income-tax Appellate Tribunal, Delhi Bench (B), dated July 26, 1975, in I.T.A. No. 427 (Acq.)/DEL/1973-74. The provisions of the Act allow under Section 269C for the acquisition of immovable property which has been transferred at an under-valuation below the 'fair market value' of the property. The property involved in this case was plot No. F-24/A situated in Hauz Enclave, New Delhi, measuring 493.7/10 sq. yards which was transferred by Mrs. Malti Bhandari in favor of Shri Kesri Chand for a consideration of Rs. 49,000 by a sale deed dated December 6, 1972, The competent authority under the Act being Shri C.V. Gupta, IAC of Income-tax, passed an order on February 4, 1974, holding that the fair market price of the property was Rs. 88,886 and, thereforee, the fair market price exceeded the apparent consideration by at least 25%. Accordingly, he passed an order under Section 269F giving three findings which were :
'(a) That the immovable property to which the proceedings relate has a fair market value exceeding Rs. 25,000.
(b) The fair market value of such property exceeds the apparent consideration thereforee by more than 15% of the apparent consideration.
(c) The consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer with such object as is referred to in Clause (a) or (b) of Sub-section (1) of Section 269C.'
2. He, accordingly, ordered with the approval of the CIT, Delhi-II, New Delhi, under Section 269F(6) that the property be acquired under the provisions of Chap. XXA of the I.T. Act, 1961.
3. An appeal was filed before the Appellate Tribunal under the provisions of Section 269G of the Act against the order directing the acquisition of the property. The Tribunal came to the conclusion that the 'fair market value' was lower than the amount fixed by the competent authority and in fact we are now concerned with the correctness of the method adopted by the Tribunal. In recomputing the fair market value, the value was calculated at Rs. 112.50 per sq. yard and hence it was found that the excess of the fair market value over the apparent consideration was not 15% and, accordingly, the appeal was accepted and the acquisition set aside.
4. Against the decision of the Tribunal two appeals have been brought to this court under Section 269H on the contention that the Tribunal's order is not correct in law. The two appeals have been brought because one of them has the transferee as the respondent and the other has the transfer or as the respondent. As these two appeals are virtually the same, the decision in this appeal I.T.S.A. No. 7/75 will also govern the other case.
5. The provisions of Section 296H indicate that an appeal lies to the High Court on a question of law; so we are really concerned with whether there is any infirmity on a point of law as far as the Tribunal's decision is concerned. Mr. Kirpal, learned counsel for the department, has urged that the material which was considered by the competent authority in reaching his decision regarding the valuation of the plot has either been omitted from consideration or has been overlooked by the Tribunal, and, thereforee, virtually the decision of the Tribunal is perverse in the sense that it is not based on all the materials which were before the competent authority. It is urged that this is an error of law which requires the setting aside of the Tribunal's order and a remand should be directed for reconsideration of the case. On the other hand, it is urged by Mr. G.C. Sharma, learned counsel for the respondent that in fact all the materials have been considered and to direct rehearing of the case would virtually amount to setting aside a finding of fact. We have been taken through both the orders in some detail. We have considered the questions that arise in this case and we have tried to see whether there has been any infringement of any legal principle or rule regarding valuation of property in the manner in which the Tribunal has dealt with the case. In order to understand the nature of the contentions, it is necessary at the outset to see the manner in which the learned IAC has dealt with this matter.
6. It is useful to recall that the sale in question took place on December 6, 1972. The Assistant Commissioner had before him a report made by the Valuation Officer, Unit III, dated December 15, 1973, which was made under Section 269L(1)(a) of the Act. In that report, which is quoted in para. 9 of the Assistant Commissioner's order, a reference had been made to plots situated in Greater Kailash-II, Masjid Moth and Malviya Nagar Extension, which had been sold at about the same time. These were all leasehold plots which were slightly smaller than the plot involved in the sale. These plots had been auctioned by the Delhi Development Authority on November 13, 1972, at rates which vary from Rs. 160 per sq. metre to Rs. 203 per sq. metre. The average rate was worked out at Rs. 173 per sq. metre which was equal to Rs. 145 per sq. yard. As the property involved in the present transaction was freehold, an addition of Rs. 58 per sq. yard was made for making the proper valuation at Rs. 203 per sq. yard. As there were some disadvantages in the plot, this was further reduced to Rs. 190 per sq. yard and the market value was, thereforee, estimated at about Rs. 93,700 as compared to the apparent 'consideration of Rs. 49,000.
7. The Assistant Commissioner considered the objections of the party to the valuation report and referred himself to some other sales which were in Masjid Moth, Malviya Nagar Extension and Greater Kailash. These examples are set out in paragraph 25 of the order ; the average rate of salewas found to be Rs. 135 per sq. yard. To this 40% was added for freehold. Then another example of a sale of 500 sq. yards plot in Green Park at Rs. 180 per sq. yard was referred to. On this basis, it was observed that Rs. 180 per sq. yard was the fair market value. This led to the conclusion that the 'fair market value V was Rs. 88,886. On this basis, acquisition was ordered.
8. In dealing with the appeal, the Tribunal referred to a number of questions. For instance, whether the proceedings were void ab initio or not with which we are not concerned. It then proceeded to determine the 'fair market value' of the property. For this purpose, reliance was placed by the assessed on a valuation report dated November 11, 1968, submitted by Shri G.D. Bilhotra, an approved valuer, in the assessed's wealth-tax case, who observed that the plot was irregular in shape and, thereforee, its market value was 2/3rds of the normal price. This valuation fixed the market price at Rs. 29,880 as on March 21, 1968. It was also stated that there were two other drawbacks in the plot, namely, that it was situated lower than the police barracks overlooking it and the other being that water was scarce in the area. The previous sales of this very plot were also considered by the Tribunal. In March, 1955, the price was Rs. 9 per sq. yard ; in February, 1965, it was Rs. 40'50 per sq. yard; in February, 1966, the price was Rs. 50'70 per sq. yard whereas in the impugned sale it was Rs. 99.40 per sq. yard. The Tribunal also considered whether the price of the plot should be enhanced by 40% over the corresponding value of leasehold plots and also considered whether the fair market value should not be lower than in normal cases because it was an irregular plot and suffered from the other handicaps already stated. In its conclusions set out in para. 4.1 of the order the Tribunal found that the value of freehold land exceeded that of leasehold land by 25%; but in the case of this plot on account of its disadvantages, the true value was 2/3rds of the normal market price. Acting on this principle, the Tribunal took the normal price of leasehold land at Rs. 135 per sq. yard as found by the IAC and mentioned in paragraphs 25 and 26 of its order as being a correct estimate of the price. It enhanced this by 25% on account of the plot being freehold and then took 2/3rds of this value on account of the plot being irregular and being otherwise disadvantageous. In the result, it found the fair market value of the plot to be Rs. 112.50 per sq. yard. This is how the difference in the valuation has taken place and we are now concerned with finding out whether this method of valuation is unsound in law or suffers from some legal defects.
9. When one compares the method used by the competent authority and the method used by the Tribunal for determining the fair market value, it becomes obvious that the essential difference between the two methods isthe difference regarding the extra amount to be added to the fair market value if the plot is freehold and the discount that has to be given for the disadvantageous features of the plot in question. The competent authority thought that 40% extra had to be added if the plot was freehold, whereas the Tribunal thought that the amount to be added was 25%, On the disadvantages, the competent authority was only willing to reduce the price by Rs. 13 per sq. yard but the Tribunal reduced the value by as much as 1/3rd. We have been at a loss to determine whether there is any ascertainable rule governing this question. It can be said that a freehold plot is much better than a leasehold plot because it does not suffer the possibility of the lease being determined or there being any obligation to pay lease money. However, generally when one considers a long-term lease and one considers freehold land, there does not appear to be so much difference in the price as far as ordinary experience goes. The competent authority has given an example of a freehold plot whose price is considerably greater per sq. yard than the price of the leasehold plots mentioned in that very order. However, as the plots are not situated in the same area, it is difficult to ascertain any definite principle from these examples. As we have not been able to find any rule or practice regarding the amount by which freehold land has a greater value than land obtained under a long-term lease, it seems difficult to say that the Tribunal is wrong in enhancing the price by only 25% as opposed to the 40% mentioned in the competent authority's order. As there is no legal principle governing this question, it cannot be said that the Tribunal has erred in law in enhancing the price by only 25%.
10. On the question of irregularity in the plot or other disadvantages that the plot in question suffers from, it also appears that this is a question of fact. It would largely depend on the degree of irregularity and the degree of disadvantages that the plot may suffer from. As the Tribunal is the final court of fact, it becomes difficult to say that the Tribunal has erred in law in discounting the ordinary price by as much as 1/3rd. A passage has been referred to from Principles and Practice of Valuations by Parks (1970), at page 62, where it is stated as follows :
'In residential areas people like regular shaped plots, that is, if lands are only about 4 to 6 kottahs, otherwise there may be difficulty in preparing building plans. This is definitely the case with small plots in a shopping area where every inch of space is valuable. Irregular shaped plots in this instance would considerably lessen the value. In districts on the outskirts of a town, shape does not play such an important part. Lands slightly irregular in shape will not seriously detract from the value. In fact, slightly irregular shaped plots would have an attraction for a garden house. It is impossible to lay down any hard and fast rule regardingreductions for irregular shaped plots. Each case must be carefully considered, when making a valuation, and dealt with in accordance with the information available.'
11. It is contended by Mr. Kirpal that the valuation report by Mr. Bilhotra submitted in the wealth-tax case of the assessed mentioned the plot to be slightly irregular, and, thereforee, the competent authority was right in reducing the price by only Rs. 13 per sq. yard. On the other hand, actually the competent authority did not reduce the value at all as far as the analysis in paras. 25 and 26 of its order reveals. It is true that the valuation officer had reduced his calculated fair market value by Rs. 13 per sq. yard on account of irregularity, etc. The problem in this case is that we are not in a position to determine how far the plot in question is irregular; we cannot even say in what way it is irregular. At the same time, we are unable to find out what is the effect of the other disadvantages such as the land being much lower than the overlooking police barracks or because water is scarce in this area. It is submitted that water is scarce in many parts of Delhi and that should not detract from the fair market value. We are not able to express any view on this question because these are really questions of fact. As no legal principle is involved we are unable to hold that the Tribunal's decision is unsound in law.
12. The basic question in this appeal as submitted by the learned counsel for the appellant was whether the Tribunal had failed to take into consideration all the materials which were before the competent authority. It seems that the same material has been considered but a different conclusion has been reached, merely because of the two factors we have just set out, whether the amount of an enhancement to be made because the plot is freehold and the amount of discount that has to be made because the plot is irregular and suffers from other disadvantages which would put off a prospective customer. As stated in the quotation set out earlier, each case has to be considered on its own facts and it seems to us that this has to be done by the Tribunal and the conclusions, whatever they may be, are conclusions on the facts. These findings of facts are not open to challenge in appeal before this court. In the circumstances, we dismiss this appeal with costs.