1998 (3) TMI 99 - HC - Income Tax

Issues Involved:
1. Legality of the order dated June 24, 1994, passed by the Appropriate Authority of Income-tax.
2. Jurisdiction of the Appropriate Authority under Chapter XXC of the Income-tax Act, 1961.
3. Validity of the transfer under the Urban Land (Ceiling and Regulation) Act, 1976.
4. Compliance with the provisions of sections 269UC, 269UE, and 269UL of the Income-tax Act.
5. Interpretation of "transfer" under section 269UA(f) of the Income-tax Act.

Detailed Analysis:

1. Legality of the Order Dated June 24, 1994:
The writ petitioner challenged the order dated June 24, 1994, issued by the Appropriate Authority of Income-tax, arguing that it was illegal and passed in excess of jurisdiction. The petitioner contended that the order declared the transfer null and void under section 5(3) of the Urban Land (Ceiling and Regulation) Act, 1976, and this action was beyond the authority's jurisdiction. The petitioner claimed the order was illegal, mala fide, and arbitrary.

2. Jurisdiction of the Appropriate Authority under Chapter XXC of the Income-tax Act, 1961:
The petitioner argued that under Chapter XXC, the Appropriate Authority had only two options: either to purchase the property for the amount of apparent consideration or to issue a "no objection certificate." The petitioner contended that the authority did not have jurisdiction to adjudicate the legality of the transaction. The petitioner cited several judgments to support this claim, including Shantivan Corporation v. Sub-Registrar and Tanvi Trading and Credits P. Ltd. v. Appropriate Authority.

3. Validity of the Transfer under the Urban Land (Ceiling and Regulation) Act, 1976:
The petitioner asserted that no part of the premises in question was vacant land under the Urban Land (Ceiling and Regulation) Act, 1976. The petitioner acquired the property through a court order under section 394(2) of the Companies Act, 1956, and had decided to dispose of the mill due to its non-viability. An agreement was entered into with respondent No. 4 to sell the jute mill as a going concern.

4. Compliance with the Provisions of Sections 269UC, 269UE, and 269UL of the Income-tax Act:
The petitioner submitted Form No. 37-I for the necessary permission under Chapter XXC of the Income-tax Act. The petitioner argued that if the authority did not pass an order of purchase, it was obligatory to issue a certificate under section 269UL(3). The petitioner claimed that the protection under section 53A of the Transfer of Property Act, 1882, was only against the transferor or any person claiming under him.

5. Interpretation of "Transfer" under Section 269UA(f) of the Income-tax Act:
The Appropriate Authority argued that the transfer had already taken place by handing over physical possession of the property in part performance of the agreement for sale. The authority held that the submission of Form No. 37-I was an attempt to regularize the transaction for which prior permission was necessary. The authority cited section 269UL(2) and section 269UA(f), arguing that the transfer had already occurred and was thus invalid.

The court referred to the definition of "transfer" under section 269UA(f) and the judgment in Rajasthan Patrika Ltd. v. Union of India, which held that the transfer is deemed to have occurred if possession is given in part performance of a contract. The court concluded that the transfer had indeed taken place before the submission of Form No. 37-I, making the application invalid.

Conclusion:
After considering all facts and circumstances, the court found that the transfer had been effected before the submission of the statement in Form No. 37-I. The court held that the Appropriate Authority acted fairly and within its jurisdiction. The writ petition was dismissed, and all interim orders were vacated.

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