2014 (7) TMI 1278 - HC - Income Tax

Possession of immovable property - The Central Government, by its order under Section 269UD(1) of the Act, on 26.3.1997, purchased the entire premises, including the tenanted premises. - The petitioner seeks to retain the right to reside in the premises on account of her long standing association and attachment with the house, as well as her old age, and consequently desires a settlement with the Appropriate Authority, with payment of appropriate purchase value. Held that - The silence of the Act on modes of disposal of property that are pre-emptively purchased under Chapter XX-C cannot be, by any stretch, presumed to limit or constrain the Government s discretion in disposal of the property. For the above reasons, the petitioner cannot claim any relief in these proceedings. At the same time, the Court is of the opinion that the CBDT or the appropriate department of the Central Government ought to consider the best manner to dispose of the property, preferably through public auction.

Summary

Issues:
Challenge to CBDT instruction discriminating between public sector undertakings and individuals for purchasing immovable property under Chapter XX-C of the Income Tax Act, 1961.

Analysis:
1. The petitioner challenged the CBDT instruction no. 1908 of 19.7.1993, claiming discrimination between public sector undertakings and individuals in purchasing government-owned properties under Chapter XX-C of the Income Tax Act, 1961. The petitioner, a tenant in the disputed premises, had faced eviction proceedings which were dismissed twice, leading to a series of legal actions culminating in the Central Government's pre-emptive purchase of the property. The petitioner's contention was that the impugned circular favored public entities over private individuals in negotiating property sales, violating Article 14 of the Constitution.

2. The court examined the petitioner's argument that the CBDT circular discriminated against private individuals by allowing negotiations for property disposal only with public sector undertakings and government departments. The court noted that the circular was an administrative instruction under Section 119 of the Income Tax Act, and its challenge was based on alleged violation of Article 14. However, the court found that the circular reflected a policy decision of the Central Government, not subject to judicial review unless proven unreasonable or arbitrary. The petitioner's claim of violation of Article 14 due to selective classification was deemed impermissible in the context of a policy decision.

3. The court emphasized that no argument of arbitrariness was presented regarding the impugned circular. It clarified that the government had discretion in choosing the mode of property disposal, even for properties acquired through Chapter XX-C proceedings. While public auction was a prescribed mode for certain properties under the Act, it did not restrict the government from choosing public auction for other acquired properties. The court concluded that the petitioner could not obtain relief in the present proceedings but directed the CBDT or the relevant government department to decide on the property's disposal within four months, preferably through public auction, without altering the petitioner's existing obligations.

4. In summary, the court dismissed the petitioner's challenge to the CBDT instruction, emphasizing the government's discretion in property disposal methods. The court directed the government to decide on the property's disposal within a specified timeframe, maintaining the petitioner's obligations as per previous orders.