1983 (3) TMI 49 - HC - Income Tax

Summary

Issues Involved:
1. Whether clause (ccc) inserted in the proviso to Section 60(1) of the Code of Civil Procedure by the Punjab Relief of Indebtedness Act, 1934, as amended, stands repealed after the passing of the Amendment Act, 104 of 1976.
2. The applicability of clause (ccc) in the Union Territory of Delhi.
3. The impact of Section 97(1) of the Amendment Act, 1976, on clause (ccc).
4. The validity of the tax recovery proceedings and attachment of the main residential house under the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Repeal of Clause (ccc) by the Amendment Act, 104 of 1976:
The core issue was whether clause (ccc) inserted in the proviso to Section 60(1) of the Code of Civil Procedure by the Punjab Relief of Indebtedness Act, 1934, as amended, stands repealed after the Amendment Act, 104 of 1976. Section 97(1) of the Amendment Act, 1976, states: "Any amendment made, or any provision inserted in the principal Act by a State Legislature or a High Court before the commencement of this Act shall, except in so far as such amendment or provision, is consistent with the provisions of the principal Act as amended by this Act, stand repealed." The Revenue argued that clause (ccc) was inconsistent with the amended Code, as the principal Act did not provide an exemption for the attachment of a main residential house. However, the court held that Section 97(1) of the 1976 Act only purports to repeal amendments made by a State Legislature or a High Court, and since the extension to Delhi was by a notification of the Central Government, it is deemed to be an Act of Parliament, thus outside the ambit of Section 97(1).

2. Applicability of Clause (ccc) in the Union Territory of Delhi:
The court examined whether clause (ccc) continued to apply in Delhi. The Punjab Relief of Indebtedness Act, 1934, was extended to Delhi by a notification in 1956. The court held that when a State Act is extended to a Union Territory by the Central Government, it derives its force from the Union Territories (Laws) Act, 1950, enacted by Parliament. Therefore, the insertion of clause (ccc) in Delhi is considered an Act of Parliament. Thus, clause (ccc) remains applicable in Delhi.

3. Impact of Section 97(1) of the Amendment Act, 1976, on Clause (ccc):
The court analyzed whether Section 97(1) of the Amendment Act, 1976, repealed clause (ccc) in Delhi. It concluded that Section 97(1) only applies to amendments made by State Legislatures or High Courts. Since the extension of clause (ccc) to Delhi was by the Central Government, it is considered a Parliamentary Act and not subject to repeal under Section 97(1). The court also rejected the argument of implied repeal, stating that inconsistency does not lie in the mere co-existence of two laws that can be simultaneously obeyed.

4. Validity of Tax Recovery Proceedings and Attachment of Main Residential House:
The petitioners challenged the tax recovery proceedings and the attachment of their main residential house under the Income Tax Act, 1961. The court noted that Rule 10 of the Second Schedule to the Income Tax Act exempts properties from attachment and sale if they are exempt under the Code of Civil Procedure. Since clause (ccc) of the proviso to Section 60(1) of the Code exempts the main residential house, the court held that the petitioners could invoke this exemption. However, the court emphasized that the determination of whether the property is the main residential house requires evidence and an inquiry by the Tax Recovery Officer (TRO).

Conclusion:
The court allowed the writ petitions, holding that clause (ccc) in the proviso to Section 60(1) of the Code of Civil Procedure continues to be applicable in Delhi and has not been repealed by Section 97(1) of the Amendment Act, 1976. The TRO must investigate whether the property in question qualifies as the main residential house under clause (ccc). The court granted a certificate for leave to appeal to the Supreme Court, recognizing the substantial question of law involved. The attachment of the property will continue to subsist for three months or until the TRO's decision, whichever is later.