2001 (12) TMI 14 - HC - Income Tax

Purchase Of Immovable Property By Central Government, Appropriate Authority - In this writ petition the petitioner has, inter alia, prayed for issuance of appropriate writ or writ of certiorari for quashing the letter whereby the petitioner herein was directed to deposit a sum of Rs.22,50,000 plus interest at 18 pet cent. from the date of receipt of the money till its deposit in the Government of India account. - After the dismissal of the appeal, the petitioners made representations for returning the possession of the property in question and asking them to accept the amount of sale consideration paid by the respondents without any interest. However, vide communication dated July 24, 2001, the respondents demanded interest on the amount of sale consideration paid by them to the petitioner under Chapter XX-C of the Income-tax Act. The petitioner challenged the demand of interest and it is for this reason the present petition is filed.

Summary

Issues:
1. Quashing of a letter directing deposit of a specific sum plus interest under the Income-tax Act.
2. Interpretation of relevant legal provisions regarding payment of interest on sale consideration.
3. Application of a previous Division Bench decision in a similar case to the present matter.

Analysis:
1. The petitioner sought to quash a letter directing the deposit of Rs.22,50,000 plus interest under the Income-tax Act. The case involved an agreement for the sale of a property, with previous legal challenges and orders related to pre-emptive purchase. The respondents demanded interest on the sale consideration paid, leading to the filing of the present petition.

2. The court referred to a previous Division Bench decision in Smt. Jaspal Kaur v. Union of India [1999] 240 ITR 493, which held that it would be inequitable to ask purchasers to pay interest on the sale consideration amount. The court emphasized that the deprivation of the use and fruits of the property was a greater loss to the purchasers compared to any interest they could have earned. As per the decision, the petitioners were directed to deposit the specified amount within three weeks, after which the appropriate authority would issue the necessary certificate and hand over possession of the property.

3. The court found the decision in Smt. Jaspal Kaur case to be binding and applicable to the present matter. Therefore, the writ petition was allowed, and the petitioner was directed to deposit the sum within the specified timeline. The court ordered the issuance of the "no objection certificate" and the transfer of possession of the property accordingly.

This detailed analysis of the judgment highlights the issues of quashing a directive for depositing a specific sum with interest, the interpretation of legal provisions on interest payment, and the application of a relevant precedent to resolve the matter effectively.