1998 (8) TMI 23 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the order passed by the appropriate authority under Section 269UB of the Income-tax Act, 1961.
2. Interpretation of the term "transfer" under Section 269UA(f) of the Income-tax Act.
3. Jurisdiction and powers of the appropriate authority under Chapter XX-C of the Income-tax Act.
4. Obligation of the appropriate authority to issue a "no-objection" certificate or to resort to pre-emptive purchase under Section 269UD.
5. Consequences of the appropriate authority's failure to act within the statutory time limit.

Issue-wise Detailed Analysis:

1. Validity of the Order Passed by the Appropriate Authority:
The appeal was directed against an order dated June 24, 1994, by the appropriate authority constituted under Section 269UB of the Income-tax Act, 1961. The order declared the submission of Form No. 37-I as invalid, stating that the transfer had already taken place according to Section 269UA(f) and was also subject to the Urban Land (Ceiling and Regulation) Act, 1976. This order was challenged and subsequently dismissed by a single judge on March 10, 1998.

2. Interpretation of the Term "Transfer" under Section 269UA(f):
The appropriate authority's order was based on the premise that the transfer of the property had already occurred through the handing over of possession, thereby making the submission of Form No. 37-I invalid. However, the court found that the possession was handed over not in pursuance of the sale agreement but as a consequence of a lease agreement. The lease was for three years, and Section 269UA(f) specifies that only leases for twelve years or more qualify as a "transfer." Hence, the court concluded that the appropriate authority misconstrued the definition of "transfer."

3. Jurisdiction and Powers of the Appropriate Authority:
The court emphasized that the appropriate authority under Chapter XX-C of the Act has limited jurisdiction. It can either issue a "no-objection" certificate or resort to pre-emptive purchase under Section 269UD. The authority does not have the discretion to declare the submission of Form No. 37-I as invalid or non est. The court cited precedents from the Delhi High Court and the Calcutta High Court to support this interpretation.

4. Obligation to Issue "No-Objection" Certificate or Resort to Pre-emptive Purchase:
The court held that the appropriate authority is legally bound to either grant a "no-objection" certificate or to direct the pre-emptive purchase of the property. The authority's failure to act within the statutory time limit and its decision to treat Form No. 37-I as non est were deemed impermissible. The court referenced the cases of Tanvi Trading and Credits (P.) Ltd. and Mrs. Satwant Narang to affirm that the appropriate authority must either purchase the property or issue a "no-objection" certificate.

5. Consequences of Failure to Act Within the Statutory Time Limit:
The court found that the appropriate authority's failure to act within the statutory time limit resulted in the loss of its right to adjudicate the issue of the apparent consideration. Since no decision was taken within the time envisaged under Section 269UD, the court directed the authority to issue a "no-objection" certificate to the parties. The court cited the cases of MOI Engg. Ltd. and Hindustan Lever Ltd. to support this directive.

Conclusion:
The appeal was allowed, and the judgment of the single judge was set aside. The order of the appropriate authority dated June 24, 1994, was quashed. The appropriate authority was directed to issue a "no-objection" certificate without any delay. The court rejected the oral prayer for staying the operation of this judgment. No order as to costs was made.