1995 (8) TMI 23 - HC - Income Tax

Appropriate Authority, Auction Sale, Immovable Property By Central Government, Movable Property

Issues Involved:

1. Requirement of a no objection certificate (NOC) under Chapter XX-C of the Income-tax Act for the registration of a sale deed executed by an official assignee.
2. Applicability of Section 269UC and Section 269UL of the Income-tax Act to sales conducted by public auction by an official assignee.

Issue-wise Detailed Analysis:

1. Requirement of a no objection certificate (NOC) under Chapter XX-C of the Income-tax Act for the registration of a sale deed executed by an official assignee:

The applicants contended that the sale by an official assignee in a public auction should not require a no objection certificate (NOC) under Chapter XX-C of the Income-tax Act. They argued that the sale was not pursuant to any agreement but was decided through an open auction, which does not fall under the purview of Chapter XX-C, aimed at preventing property undervaluation and black money transactions. The official assignee also supported this view, stating that a NOC was not necessary for the registration of the sale deed.

The second respondent (Income-tax Department) countered that under Section 269UL of the Income-tax Act, any transfer of immovable property exceeding Rs. 10 lakhs requires a NOC from the appropriate authority. They maintained that the sale by the official assignee was not exempt from this requirement, and a joint application signed by both the vendor (official assignee) and the purchasers (applicants) was necessary.

2. Applicability of Section 269UC and Section 269UL of the Income-tax Act to sales conducted by public auction by an official assignee:

The court examined the applicability of Section 269UC and Section 269UL of the Income-tax Act. Section 269UC restricts the transfer of immovable property exceeding Rs. 5 lakhs unless an agreement for transfer is entered into between the transferor and transferee. Section 269UL prohibits the registration of such transfers without a NOC from the appropriate authority.

The court noted that the sale in favor of the applicants was conducted through a public auction, not based on any agreement between the parties. The auction was a compulsory sale under the Presidency-Towns Insolvency Act, where the official assignee acts independently of the judgment-debtor. The court emphasized that the provisions of the Transfer of Property Act do not apply to such compulsory sales, which are akin to court auctions.

The court referenced previous judgments, including Abdus Samat Haji Adam Kantharia v. Union of India [1982] 135 ITR 177 (Bom) and A. Harikrishnan v. Registrar [1991] 192 ITR 391 (Mad), which held that the provisions of Chapter XX-C of the Income-tax Act do not apply to auction sales where the transfer price is not determined by an agreement between the transferor and transferee.

The court concluded that since the sale was not based on an agreement and the official assignee conducted the auction without the judgment-debtor's consent, Section 269UC of the Income-tax Act did not apply. Consequently, Section 269UL, which requires a NOC for registration, was also inapplicable. The court directed the Sub-Registrar, Mylapore, to register the sale deed without insisting on a NOC from the Income-tax Department.

Conclusion:

The court ruled that the sale conducted by the official assignee through public auction did not require a no objection certificate under Chapter XX-C of the Income-tax Act. It directed the Sub-Registrar to register the sale deed without further delay, thereby resolving the issue in favor of the applicants.

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