2004 (2) TMI 13 - HC - Income Tax

Revenue invoked Chapter XXC of Income-tax Act, 1961 for compulsory purchase of the property and made an order under section 269UD for the apparent consideration of Rs. 25 lakhs - petitioner has challenged the said order on the ground that the amount as contemplated under section 269UF has not been tendered in time to the petitioner - respondent-Union of India could not point out that the amount was tendered to the transferee or any action was taken so far as to indicate that the Department was willing to make the payment to the transferee to the extent to which is indicated in the agreement to sell - it is clear that section 269UH will be applicable in the instant case and the property shall revest in the transferor as the order made by the authority under section 269UD(1) stands abrogated - petition stands allowed accordingly.

Summary

Issues:
Challenge to order under section 269UD of the Income-tax Act for compulsory purchase of property due to non-tendering of amount to transferee as per agreement to sell.

Analysis:
The petitioner entered into an agreement to purchase a property in New Delhi, and the Revenue invoked Chapter XXC of the Income-tax Act for compulsory purchase, issuing an order under section 269UD for an apparent consideration of Rs. 25 lakhs. The petitioner challenged this order on the grounds that the amount specified in the agreement under section 269UF was not tendered in time to the petitioner. The Revenue intended to make the payment to the transferor only, not to the transferee, as evidenced by correspondence and actions. The vendor had received a partial payment, and the remaining sum was to be paid at the time of registration of the conveyance deed. There was no dispute regarding the payment between the buyer, seller, or any third party. The court referred to previous judgments to analyze the situation, emphasizing the importance of tendering the amount to the transferee as per the agreement to sell.

Further Analysis:
During the proceedings, the respondent-Union of India could not demonstrate that the amount was tendered to the transferee or any action was taken to indicate the Department's willingness to make the payment to the transferee as per the agreement. Following the decision of the Division Bench of the court, it was concluded that section 269UH would be applicable in this case, leading to the property revesting in the transferor as the order made under section 269UD(1) stood abrogated. Considering the provisions of sections 269UF and 269UG, the court allowed the petition accordingly, highlighting the significance of adhering to the requirements set forth in the Income-tax Act for compulsory purchase of property.