Registration of transfers of immovable properties u/s Section 230A of Income Tax Act. - Income Tax - 481/CBDT

INSTRUCTION NO. 481/CBDT November 25, 1972 Section(s) Referred: 230A Statute: Income - Tax Act, 1961 Attention is invited to the provisions of Section 230A of the I.T.Act which restrict the registration of transfers of immovable properties in certain cases. 2. The Board have considered the scope of the words "existing liability" occurring in section 230A of the I.T.Act. They are advised that the expression "existing liability" occurring in clause (a) of sub-section (1) of Section 230A would not only include a tax liability which has been ascertained and is payable upon an assessment order, but would also include a tax liability which accrues under the chargeable section although in the latter case, the tax liability to pay the tax would still be there. Thus if the wealth-tax proceedings are pending against the vendor of the property at the time when the ITO issues the certificates, it is open to the latter to take into account the estimated tax liability on account of wealth-tax and consider whether by the sale of the immovable property the vendor of the property would be left with any assets from which the said liability could possibly be fully recovered. If the vendor has no other property left to meet such liability, it would be open to the ITO to refuse to issue the certificate unless the vendor makes satisfactory provision for the payment of that liability. This would also be in consonance with the ratio of the decision of the Supreme Court in the case of Kesoram Industries and Cotton Mills Ltd. vs. Commissioner of Wealth-tax(59 ITR 767), wherein it was held that a liability to pay income-tax was a present liability, though the tax became payable after it was quantified in accordance with ascertainable date. 3. The Board desire that all the contents of the instructions should be brought to the notice of all officers working in your charge.