1993 (3) TMI 19 - HC - Income Tax

Issues Involved:
1. Justification of the appropriate authority under Chapter XX-C of the Income-tax Act, 1961, in not disposing of the petitioners' statement under Form No. 37-I.
2. Requirement for a no objection certificate if the transaction is not covered by Chapter XX-C.
3. Consideration of the definition of immovable property under section 269UA of the Act.
4. Jurisdiction of the appropriate authority to file the statement without taking a stand.
5. Issuance of a no objection certificate under section 269UL(3) of the Act.

Detailed Analysis:

Issue 1: Justification of the Appropriate Authority
The central issue was whether the appropriate authority was justified in not disposing of the petitioners' statement under Form No. 37-I. The petitioners had entered into an agreement to transfer their industrial undertaking to Lipton India Ltd. and submitted Form No. 37-I under section 269UC of the Income-tax Act. The appropriate authority argued that the transaction included not just immovable property but also other assets and liabilities, which were outside the scope of Chapter XX-C. The authority refused to process the form, citing defects and lack of a separate break-up of the consideration for land and buildings.

Issue 2: Requirement for a No Objection Certificate
The petitioners contended that if the appropriate authority believed the transaction was not covered by Chapter XX-C, it was obligated to issue a no objection certificate to enable the registration of the transfer. The court agreed, noting that the authority must either recommend purchase by the Central Government or issue a no objection certificate. The authority's failure to take a definitive stand left the petitioners in a legal limbo, potentially exposing them to penal action for non-compliance with section 269UL.

Issue 3: Definition of Immovable Property
The petitioners argued that the transaction fell within the definition of immovable property under section 269UA(d) of the Act. The court concurred, stating that the definition was broad enough to include the composite transfer of land, buildings, machinery, and other assets. The court emphasized that the legislative intent was to cast a wide net to cover all possible modes of property transfer, including composite transactions like the one in question.

Issue 4: Jurisdiction of the Appropriate Authority
The petitioners asserted that the appropriate authority had no jurisdiction to merely file the statement without taking a stand. The court supported this view, stating that the authority was required to either accept or reject the statement within the prescribed time frame. By failing to do so, the authority neglected its statutory duty, thereby necessitating the issuance of a no objection certificate.

Issue 5: Issuance of a No Objection Certificate
The court held that the appropriate authority's failure to exercise its jurisdiction and make a timely decision under section 269UD mandated the issuance of a no objection certificate under section 269UL(3). The court referenced the Supreme Court's decision in C. B. Gautam v. Union of India, which clarified that the Central Government's right under section 269UD is a pre-emptive one and must be exercised within the statutory period. The court directed the appropriate authority to issue the no objection certificate forthwith.

Conclusion:
The court quashed the impugned order of the appropriate authority and directed it to issue a no objection certificate under section 269UL(3) of the Act within two weeks. The court emphasized that the appropriate authority had failed to exercise its jurisdiction and had misinterpreted the definition of immovable property. The court also highlighted the statutory obligation to either recommend purchase or issue a no objection certificate, leaving no room for a third alternative. The writ application was allowed, and no order as to costs was made.

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