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Issues:
1. Rejection of application under section 269UC of the Income-tax Act for a certificate of no-objection. 2. Jurisdiction of the appropriate authority to reject the application and examine the validity of the agreement. 3. Interpretation of Chapter XX-C of the Income-tax Act regarding the power of the appropriate authority. 4. Legality of property sub-division and sale without prohibition under existing laws. 5. Exercise of discretionary rights under article 226 of the Constitution in the context of circumventing tax laws. Analysis: The case involved a dispute regarding the rejection of an application under section 269UC of the Income-tax Act for a certificate of no-objection. The petitioner had entered into an agreement to purchase a portion of a property and subsequently sought to buy the remaining portion. The appropriate authority rejected the application citing defects and inability to purchase the property. The petitioner argued that the authority had the power to either purchase the property or issue a no-objection certificate, and the rejection was without jurisdiction. The court analyzed the relevant provisions of the Income-tax Act, specifically sections 269UC, 269UD, and 269UL. It highlighted that if no order is passed within the prescribed time under section 269UD(1), a certificate under section 269UL(3) must be issued. The court opined that the authority should either exercise the right to purchase the property or issue a certificate of no objection, without delving into the validity of the agreement or property division beyond the scope of the Act. The legality of property sub-division and sale without prohibition under existing laws was also debated. The court considered the Indian Contract Act and relevant sections pertaining to the validity of agreements. It concluded that there was no law prohibiting the private sub-division and sale of property, emphasizing the absence of legal constraints at the agreement stage. Regarding the exercise of discretionary rights under article 226 of the Constitution, the court rejected the argument that it should not aid the petitioner in circumventing tax laws. It held that as long as the petitioner acted within the legal framework, there was no violation of public policy warranting denial of relief. The court allowed the writ petition, making the rule nisi absolute, with no order as to costs. The judgment underscored the necessity for lawmakers to address potential loopholes in tax laws and emphasized the court's role in interpreting statutes to serve the intended objectives without overstepping legislative boundaries.
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