1991 (9) TMI 65 - HC - Income Tax

Summary

Issues:
1. Challenge to the order of appropriate authority under the Income-tax Act, 1961, for not granting permission to the petitioner.
2. Interpretation of provisions of section 269UC, 269UD, and 269UL.
3. Jurisdiction of the appropriate authority to buy the property or issue a "No objection certificate."
4. Timelines for exercising the right to buy the property under section 269UC.

Detailed Analysis:
1. The writ petition challenged the order of the appropriate authority dated March 15, 1990, for not granting permission sought by the petitioner through an application in Form No. 37-1 under the Income-tax Act, 1961. The appropriate authority did not grant a "no objection certificate" or exercise the right of pre-emptive purchase due to the creation of certain rights in favor of the transferee under section 53A of the Transfer of Property Act. The appropriate authority found a breach of Chapter XX-C of the Income-tax Act and concluded that the pre-emptive right to purchase had been defeated by the parties.

2. The petitioner relied on the decision in Tanvi Trading and Credits Pvt. Ltd. v. Appropriate Authority [1991] 188 ITR 623 (Delhi), which interpreted sections 269UC, 269UD, and 269UL. The court held that the appropriate authority, upon receiving an application under section 269UC, must either buy the property or issue a "no objection certificate." The Supreme Court in Appropriate Authority v. Tanvi Trading and Credits P. Ltd. [1991] 191 ITR 307 (SC) confirmed that the appropriate authority's options are limited to buying the property or issuing a "No objection certificate."

3. The judgment clarified that the appropriate authority has no jurisdiction to file an application under section 269UC but must choose between buying the property or issuing a "No objection certificate." The authority must exercise this right within a specific period, typically within two months from the end of the month in which the statement under section 269UC is filed. Failure to act within this period results in the loss of the government's right to purchase the property.

4. Following the precedent set by the court's decision in Tanvi Trading and Credits Pvt. Ltd., the writ petition was allowed, and the impugned order was quashed. A writ of mandamus was issued directing the appropriate authority to issue a "no objection certificate" to the petitioners and respondent No. 4 within four weeks, in accordance with section 269UL(3). The petition was disposed of with no orders as to costs.