Builders get notices for 'illegalities' in sale of flats
Feb 15, 2014
Source : The Times of India


THANE: The Bombay high court bench of Justices S J Vazifdar and B P Colabawala recently issued notices to the state chief secretary, leading developers, Income-Tax and municipal commissioners of Thane and Mumbai seeking a response to social activist Vikrant Karnik's letter alleging illegalities in sale of flats.

The high court had in early 2013 suo moto converted Karnik's letter into a Public Interest Litigation (PIL). The case is coming up for hearing on March 7. Karnik said that he had written letters seeking an inquiry to various government authorities following a sting operation carried out by regional channel and sent a copy to the high court.

"The channel pointed out how builders were selling flats based on their super built-up area. The sale agreements were also not proper, as developers showed the flat area to be far less than its actual area, presumably to reduce taxes,'' said Karnik.

The letter said developers also advised to specify only such amount that is determined as per the government's rules for tax purpose and the balance amount to pay in cash. "I have learnt that developers are now asking 60 % of the flat price in cash while the balance 40%in cheque. There is obviously a need for an inquiry to be conducted for the loss of revenue to the government,'' Karnik contended.

In his letter, the activist has pointed out unusual real estate practices in the sale of residential and commercial spaces. The letter further points out the differences in the market value of flats vis-a-vis the government stipulated ready reckoner rates. Karnik said that there are huge number of flats lying vacant as developers have sold the same to investors, which in turn has created artificial housing shortage.

The developers to whom notices have been issued are Lodha, Deewan, HDIL, Hiranandani, Conwood, Runwal and Kalpataru. Some developers refused to comment as they had not yet received the notices.

"All developers specify the carpet area in their agreement value. Also, there is bound to be a difference between the market value and the ready reckoner rates, as costs rise in projects with amenities like gym,'' said a developer.

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