1979 (12) TMI 44 - HC - Income Tax

Summary

Issues Involved:
1. Validity of acquisition orders due to non-service of notices to individual members of co-operative societies.
2. Definition and interpretation of "person interested" in the context of Chap. XX-A of the I.T. Act.
3. Determination of whether members of co-operative societies have an interest in the immovable property.

Summary:

1. Validity of Acquisition Orders:
The main argument before the Income-tax Appellate Tribunal was that the acquisition orders were vitiated because individual members of the three transferee co-operative societies were not served with notices u/s 269D(1). The Tribunal held that these members were "persons interested" and thus required individual notices. Consequently, the Tribunal allowed the appeals and directed the competent authority to serve notices on individual members and dispose of the matter afresh.

2. Definition and Interpretation of "Person Interested":
The court examined the definition of "person interested" u/s 269A(g) of the I.T. Act, which includes all persons claiming or entitled to claim an interest in the compensation payable on account of the acquisition of property. The court referred to the interpretation in Dilworth v. Commissioner of Stamps and the Supreme Court's decision in Sunderlal v. Paramsukhdas, which clarified that a person becomes "interested" if they claim an interest in the compensation to be awarded.

3. Interest of Co-operative Society Members in Immovable Property:
The court analyzed whether members of the co-operative societies had an interest in the immovable property. Under the Gujarat Co-operative Societies Act, a co-operative society is a body corporate, and primarily, the society owns the land. Members have rights or interests in the land only if the society's bye-laws provide such interest. The court reviewed various precedents, including Sakarchand Chhaganlal v. CED, Ramesh Himmatlal Shah v. Harsukh Jadhavji Joshi, and Mulshankar Kunverji Gor v. Juvansinhji Shivubha Jadeja, to determine the nature of members' interests in different types of co-operative societies (tenant-ownership vs. tenant-co-partnership).

The court concluded that without the bye-laws or rules of the respective industrial co-operative societies, it could not ascertain whether the societies were tenant-ownership or tenant-co-partnership societies. Therefore, it could not determine if individual members had an interest in the immovable property proposed for acquisition.

Conclusion:
The court held that the Tribunal erred in requiring notices to be served on individual members without evidence of their interest in the property. The appeals were allowed, and the Tribunal's orders were set aside. The matter was remanded to the Tribunal for disposal on merits, with no order as to costs.