1990 (11) TMI 98 - HC - Income Tax

Summary

Issues Involved:

1. Constitutional validity of Chapter XX-C of the Income-tax Act, 1961.
2. Applicability of Chapter XX-C of the Act to the transfer of property.
3. Validity of the possession receipt and its impact on the transfer.
4. Registration of the sale deed and its implications.
5. Effect of the non-issuance of a certificate under section 230A(1) of the Act.
6. Entitlement to interest ordered by an interim order.

Issue-wise Detailed Analysis:

1. Constitutional Validity of Chapter XX-C of the Income-tax Act, 1961:
The petitioner initially challenged the constitutional validity of Chapter XX-C of the Income-tax Act, 1961, but later withdrew this challenge as recorded in the Supreme Court's order dated May 2, 1990. The petitioner also gave up the contention regarding the rule of audi alteram partem being read into section 269UD of the Act.

2. Applicability of Chapter XX-C of the Act to the Transfer of Property:
The petitioner argued that since the sale deed was executed and lodged for registration on May 30, 1989, and Chapter XX-C came into force on June 1, 1989, the provisions of Chapter XX-C could not apply. However, the court held that the ownership of the property was not intended to be transferred until the entire consideration was paid, as evidenced by the post-dated cheques. Therefore, no transfer of property had taken place prior to June 1, 1989, making Chapter XX-C applicable.

3. Validity of the Possession Receipt and Its Impact on the Transfer:
The petitioner claimed that possession was handed over on May 31, 1989, under a possession receipt, making it a deemed transfer before June 1, 1989. The court found no reference to the possession receipt in the Form No. 37-I filed on June 14, 1989, and concluded that the possession was not transferred prior to June 1, 1989. The court also noted that section 53A of the Transfer of Property Act does not transfer title but provides protection against the transferor.

4. Registration of the Sale Deed and Its Implications:
The court emphasized that under section 54 of the Transfer of Property Act, the sale of immovable property is not complete without registration. Since the sale deed was not registered before June 1, 1989, no transfer of property occurred. The court cited Supreme Court precedents to support this view, stating that the document's registration is essential for the transfer to be effective.

5. Effect of the Non-issuance of a Certificate under Section 230A(1) of the Act:
The court noted that no certificate under section 230A(1) was issued before June 1, 1989, preventing the Sub-Registrar from registering the document. The Income-tax Officer's letter dated July 4, 1989, indicated that the certificate issued on June 2, 1989, was to be treated as canceled.

6. Entitlement to Interest Ordered by an Interim Order:
The petitioner argued for the refund of interest paid under an interim order. The court held that the interim order dated October 25, 1989, which was upheld by the Supreme Court, made the interest non-refundable irrespective of the petition's outcome.

Conclusion:
The court concluded that no transfer of property occurred before June 1, 1989, and the provisions of Chapter XX-C of the Act applied. The petition was dismissed, and the rule was discharged with no order as to costs.