IT bid to sell properties falls flat

FEBRUARY 3: As auctions go, it barely came close to one. When the Income Tax Department put 10 properties on the block recently, its firs...

FEBRUARY 3: As auctions go, it barely came close to one. When the Income Tax Department put 10 properties on the block recently, its first in over a year, the slump in the real estate was very much in evidence. While representatives from public sector units were conspicuous by their absence, a handful of builders chose to remain silent spectators.

In the first sale of acquired properties in over a year, the IT could sell only one flat admeasuring 605 sq ft at Grant Road for Rs 17.85 lakh, a mere Rs 1,000 over the reserve price. Incidentally, the flat acquired in 1994 was the lowest priced property available.

The IT Department has in its possession 60 unsold properties collectively worth Rs 92 crore. With the real estate in the dumps for the last three years, it is having a tough time disposing of acquired properties, some as long back as 1988. Senior IT officials stated that except for selective8217; buying the activity has been temporarily put on hold.

The only buy in the last 16 months, considered aprime property, was a 30,000 sq ft industrial plot at Sewree. The Appropriate Authority AA of the IT Department which paid a cool Rs 2.7 crore for the plot last September, had pinned much hope on this plot while listing it for the auction sale. In spite of the reserve price fixed at Rs 3.1 crore, there was not a single bid. While top IT officials claimed that public sector companies and nationalised banks have evinced keen interest in buying properties, not a single PSU representative was present at the auction.N K Jain, Commissioner of Income Tax and member of AA told Express Newsline that they were 8220;sanguine about the sale of the Sewree plot8221; since it was strategically located near Cotton Green railway station with growing residential stocks. He blamed the poor market sentiments8217; for the miserable performance at the auction.

If the word auction conjures the image of a gallery full of people out-shouting each other8217;s bids, forget it. An IT official revealed that only eight persons turned up at the ITauction. Worse, only one among them made a bid and succeeded8217;. The properties on sale included two small flats worth Rs 30 lakh and commercial premises with values ranging between Rs one to five crore. The IT Department buys properties considered undervalued by over 15 per cent of the fair market value. It sells them after adding a minimum 15 per cent to the purchase price. The augmented price is called the reserve price and is offered as the bidding amount. The property auction is held twice or thrice a year as decided by the Chief Commissioner of IT. The next auction is not likely to be held soon, it was learnt.

Of the 60 properties in the department8217;s possession, IT officials informed that 30 are under litigation. The rest, largely acquired between 1993-95 when the real estate market was rising, include at least six vacant plots, several flats, commercial and industrial structures mostly in prime areas of the city. Apart from the large sum of money blocked in these properties, IT officials admit thatthey have to spend considerable amount on maintaining their acquisitions.

Apart from chasing tax defaulters the IT Department officials now have to contend with local boys playing cricket in its open properties left unguarded. In some flying balls have crashed through window panes. In another instance, a flock of pigeons have set up residence in an acquired property worth several lakhs. Again IT inspectors are dispatched to clean up the space. 8220;We have to take proper care and maintain the properties as they have to be sold later. It is not our main job, so it is difficult,8221; said an IT officer refusing to be named.