RAMESH BHAI J. PATEL ETC. ETC. versus UNION OF INDIA

Citation: [2000] SUPP. 5 S.C.R. 424 · Decided: 06-12-2000 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Dismissed
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Judgment (excerpt)

A 
B 
RAMESH BHAI J. PATEL ETC. ETC. 
v. 
UNION OF INDIA 
DECEMBER 6, 2000 
[S.P. BHARUCHA, N. SANTOSH HEGDE AND 
Y.K. SABHARWAL, JJ.] 
Income Tax Act, 1961-Section 269UA (b)-Apparent consideration-
C Discounted value of consideration-Interpretation of-Held, the discount 
relates to period between date(s) of payment under agreement and date of 
the agreement and not the period between date of payment by Central 
Government and date (s) of payment under agreement. 
Appellant-assesses filed writ petitions before High Court contending 
D that the discounted value stated in Section 269UA(b) relates to the period 
between the date of payment of the purchase price by the Central Government 
and the date of the last payment stated under the agreement on the premise 
that the discount is made because the transferor is compensated by payment 
earlier than scheduled under the agreement; and that such compensation is 
for the period that is saved, that is, between the date of payment by the Central 
E Government and the last date of payment under the agreement The High Court 
dismissed the Writ Petitions. Hence the appeals. 
Dismissing the appeals, the Court 
HELD: 1.1. On a plain reading of Section 269UA(b) of the Income Tax 
F Act, 1961, there is no interlinking of the apparent consideration to be 
determined thereunder with the payment to be made by the Central Government 
on purchase under Chapter XX-C of the Act. Section 269UA(b) prescribes 
how the apparent consideration under the agreement, that is, the consideration 
for the agreement, is to be determined, and it states that ifthe consideration 
under the agreement is payable on any date or dates falling after the date of 
G the agreement, the value of the consideration that is payable after the date of 
the agreement shall be deemed to be the discounted value ofsuch consideration 
as on the date of the agreement. In other words, the apparent consideration in 
such case will not be the consideration that is stated in the agreement but it 
shall be the amount thereof less a discount to be calculated in the manner set 
H out in the definition. The period of such discount shall be the period between 
424 
RAMESH BHAI J. PATEL v. U.0.1. [BHARUCHA. J.] 
425 
the date of the agreement and the date or dates on which the consideration or A 
part thereof is payable. Since under the agreement, the transferor gives the 
transferee time to pay the considerati 
1, the consideration is assumed to 
comprehend some element of interest f ·such delayed payment, and this is 
ascertained and deducted to arrive at the real consideration for the agreement, 
or the apparent consideration. The period of the delay necessarily starts on B 
the date of the agreement. 1427-B, C, D, El 
1.2. The purpose of Chapter XX-C and the definition of "apparent 
consideration" in the Act are to be determined whether immovable property 
has been sought to be transferred at an under-valuation. To determine whether 
there has been an under-valuation, the true consideration for the transfer C 
has to be determined and, necessarily, it has to be determined as on the date 
of the agreement for transfer. That this is so is clear from the latter part of 
clause (b) of section 269UA, the phrase "the discounted value of such 
consideration, as on the date of such agreement for transfer" therein indicates 
- the point of time from which the period for discounting must be calculated. 
[428-B-CJ D 
Shrichand Raheja & Anr. v. S.C. Prasad. (Appropriate Authority) & 
Ors., (213 1.T.R. 33), overruled. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1158of1998. 
From the Judgment and Order dated 19.10.95 of the Gujarat High Court 
in S.C.A. No. 7506of1991. 
WITH 
Civil Appeal Nos. 1159/98 and 1160/98. 
T.L.V. Iyer and R.P. Bhatt, Sr. Advs., Mayur R. Shah, Goodwill lndeevar, 
Lax mi Iyengar, Ajay Shanna, S.K. Dwivedi and S. Rajappa, H.J. Jhaveri for the 
appearing parties. 
The Judgment of the Court was delivered by 
BHARUEHA, J. These are appeals against the judgment and order of 
a Division Bench of the High Court of Gujarat, delivereci on writ petitions. The 
controversy before us relates to the correct interpretation of Section 269UA(b) 
of the Income Tax Act, 196 I. 
E 
F 
G 
Section 269UA falls within Chapter XX-C of the Act, which deals with H 
426 
SUPREME COllRT REPORTS [2000] SUPP. 5 S.C.R. 
A the purchase by the Central Government of immovable properties in certain 
cases of transfer. Section 269UA is the definition
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