2003 (10) TMI 11 - HC - Income Tax

Challenge to the order passed by the appropriate authority under sub-section (1) of section 269UD petitioner submit that the provisions of Chapter XX-C of the Act apply only to the agreement for transfer made on or after October 1 1986 and these provisions would not apply to the case of the petitioner since the agreement in question was dated March 7 1986 - Held that provisions of Chapter XX-C of the Act shall not apply to the agreement for transfer. That the provisions of Chapter XX-C and rule 48L of the Income-tax Rules would not have retrospective effect as in those cases transfer was complete prior to October 1 1986 such provisions had no application. - writ petition is accordingly allowed.

Summary

Issues:
Challenge to order under section 269UD of the Income-tax Act, 1961 based on the applicability of Chapter XX-C provisions.

Analysis:
The petitioner challenged an order dated December 15, 1986, passed under section 269UD of the Income-tax Act, 1961, concerning the sale of a residential apartment in New Delhi. The petitioner contended that the provisions of Chapter XX-C of the Act only applied to agreements made on or after October 1, 1986, and not to agreements prior to that date. This argument relied on a previous judgment by the court in the case of Bhatia Apartments (P.) Ltd. v. Union of India [2001] 252 ITR 244.

The court examined the applicability of Chapter XX-C provisions in detail, considering previous judgments such as Multi Rise Towers (P.) Ltd. v. Appropriate Authority [1995] 211 ITR 102 (Cal) and Capitan Sanjeev Sethi v. Union of India [1992] 195 ITR 338 (Delhi). It was concluded that Chapter XX-C provisions did not have retrospective effect and would not apply to agreements where the transfer was completed before October 1, 1986. The court held that in cases like the present one, covered by section 269AB falling under Chapter XX-A, only the provisions of Chapter XX-A were applicable, not Chapter XX-C.

The court further ruled that since Chapter XX-C provisions were not applicable, the petitioner was not obligated to file Form No. 37-I, and any genuine mistake of law could not be binding on the petitioner. Additionally, it was determined that no interest was payable on the balance of sale consideration due to a delay in payment, as the income-tax authorities had acted under a bona fide belief that Chapter XX-C applied. Consequently, the court allowed the writ petition, set aside the order dated December 15, 1986, under section 269UD of the Act, and made the rule absolute, with no costs incurred.