2022 (12) TMI 1385 - HC - Income Tax

Recovery proceedings - want of conversion of leasehold right to ownership so as to enable dealing with the land for liquidating demands outstanding against the estate of Nanu Ram Agrawalla, since deceased - HELD THAT - Clients seek conversion of lease hold to ownership. His clients are entitled to such conversion under the Act and the Rules. The fee for conversion stands deposited. In spite thereof, by impugned communication dated 20th February, 2019, the application for conversion was rejected as at this stage. Rejection purportedly at this stage is on allegation of his clients being involved in which subsequently there has been clarification that the property is not subject matter thereof. Furthermore, his clients have income tax dues and if the property is converted to ownership, recovery of those dues by sale of the property is likely to fetch better consideration. Learned advocate appears on behalf of Revenue and opposes the writ petition. He submits, his client has filed counter. Additional Government Advocate appears on behalf of State and prays for adjournment to obtain instructions. List for hearing and disposal on 4th January, 2023.

Summary

Issues Involved:
Conversion of leasehold to ownership under the Act and Rules; Rejection of conversion application based on alleged involvement in another case; Consideration of income tax dues in conversion decision.

Conversion of Leasehold to Ownership:
The petitioners, descendants of a previous owner, sought conversion of a plot from leasehold to ownership under the Act and Rules. They had deposited the required fee for conversion. However, their application was rejected through a communication citing the stage of the process as the reason for rejection. The petitioners argued that they were entitled to the conversion and had fulfilled all necessary requirements.

Rejection Based on Alleged Involvement in Another Case:
The rejection of the conversion application was allegedly linked to the petitioners' involvement in a separate case from 2008, which was clarified not to be related to the property in question. The petitioners contended that this should not be a valid reason for rejection and that the property's conversion to ownership could potentially aid in better consideration for the recovery of income tax dues they owed.

Consideration of Income Tax Dues in Conversion Decision:
The issue of income tax dues was raised, suggesting that converting the property to ownership might facilitate the recovery of these dues through the sale of the property. The petitioners argued that this aspect should not impede the conversion process and that their entitlement to conversion should be considered independently of their tax obligations.

The court scheduled a hearing and disposal of the case for January 4, 2023. The advocates representing the petitioners, Revenue, and the State presented their arguments, with the State seeking an adjournment to obtain further instructions. The judgment highlighted the key contentions regarding the conversion of leasehold to ownership, the alleged connection to a previous case, and the consideration of income tax dues in the decision-making process.