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TMI Blog1988 (3) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... cottahs 13 chittacks and 18 sq. ft. and unfinished brick buildings and structures thereon on an "as is where is" basis for a consideration of Rs. 9 lakhs. A sum of Rs. 5 lakhs was paid by the said trustees by way of earnest money by seven several cheques. The said agreement dated June 9, 1986, was entered into by and amongst the vendors of the said property, on the one hand, and Dinesh Chandra Bajoria, Suresh Kumar Bajoria, Arvind Bajoria, Smt. Sharda Bajoria, Smt. Kanta Bajoria and Smt. Lata Bajoria, the trustees to the said trust in their individual capacities, inasmuch as the vendors of the said property refused to enter into any transaction with respondent No. 1, a charitable trust. On September 30, 1986, six several conveyances were executed whereby the vendors transferred 1/6th undivided share in the said property separately to the following persons : (a) Smt. Kanta Bajoria, (b) Smt. Lata Bajoria, (c) Radha Organics, registered partnership firm, (d) Radha Properties, also a registered partnership firm, (e) Smt. Sharda Bajoria and (f) Radha Udyog, also a registered partnership firm. The said Dinesh Chandra Bajoria, Suresh Chandra Bajoria, Arvind Bajoria, Smt. Lata Bajo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in respect thereof in favour of respondent No. 1. On or about September 26, 1987, respondent No. 1 entered into an agreement for sale of the said property in its entirety with the Indian Bank in its Zonal Office at 24, Park Street, Calcutta, at the price of Rs. 42,67,200. Suresh Kumar Bajoria, as one of the trustees of respondent No. 1, signed the said agreement on behalf of respondent No. 1. On or about September 28, 1987, respondent No. 1 made an application under section 230A(1) of the Income-tax Act, 1961, before the Income-tax Officer, "A" Ward, Trust Circle, Calcutta, appellant No. 1, in the prescribed form for issue of a certificate under the said section 230A(1) of the said Act. Pursuant to the directions of appellant No. 1, respondent No. 1 also produced before the former a certificate under section 269UL of the Income-tax Act, 1961. It was stated in the said certificate by the appropriate authority that it had no objection to the transfer of the said property by respondent No. 1 to the Indian Bank. Thereafter, on or about November 23, 1987, an inspector deputed by the appellants inspected the said property as also the relevant documents including the declarati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Income-tax Act, 1961, on the basis of the conveyance submitted to him in the name of respondent No. 1 represented by the trustees on or before February 12, 1988. The Indian Bank was directed to keep the offer for purchase of the said property open till February 15, 1988. All parties were directed to act on a signed copy of the minutes of the said order. The present appeal is against the said order dated February 1, 1988. On February 12, 1988, this appeal was admitted. Learned advocate for the appellants prayed for interim stay of the operation of the order dated February 1, 1988, under appeal, which we declined to grant. Detailed submissions were made on behalf of the parties who invited us to adjudicate on the merits of the controversy. It was directed that the matter would appear for judgment subsequently. At the hearing of this appeal, learned advocates for the parties reiterated the respective contentions of the parties in their pleadings. Learned advocate for the respondents submitted that since the inception of the transaction involving the said property, respondent No. 1 intended to acquire the said property and the trustees called upon the vendors to sell the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant No. 1 had no jurisdiction, authority or competence to pass the impugned order dated November 26, 1987, and withhold the grant of the clearance certificate under section 230A(1) of the said Act. Respondent No. 1, through the trustees, had duly made the said application under section 230A(1) of the said Act in compliance with rule 44B of the Income-tax Rules, 1962. Under the agreement dated September 26, 1987, it was respondent No. 1 who intended to transfer the said property to the added respondent, namely, the Indian Bank, and the draft conveyance records that respondent No. 1 would transfer the said property to the Indian Bank. It was not the case of the appellant that the transfer would prejudicially affect the recovery of any existing tax liability of respondent No. 1. It was submitted that under section 230A of the said Act, the authority concerned was only called upon to ascertain whether an application had been made by the intended transferor concerned and in the form prescribed and further whether the intended transfer would prejudicially affect the interests of the Revenue. The authority concerned had no jurisdiction or authority to adjudicate or decide questions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral purchasers that they were only benamidars of the trust had no legal effect as they could not confer any title on respondent No. 1. It was submitted that the said property was initially purchased by the said several purchasers for a total consideration of over Rs. 42 lakhs. This would result in short-term capital gain of Rs. 27 lakhs which would be taxable in the hands of the individual trustees and the said partnership firms, the original purchasers, but not in the hands of respondent No. 1 which claims to be a charitable trust. It was submitted that the transaction in respect of which a certificate under section 230A of the said Act was being sought was nothing but device to evade liability to tax. It was further submitted that, in any event, the said three individual trustees and the said partnership firms were not entitled to obtain tax clearance certificate under section 230A of the said Act from appellant No. 1 nor had appellant No. 1 any jurisdiction to issue such certificate to the said individuals and partnership firms. Learned advocate for the respondents relied on and cited the following decisions in support of his contentions. (a) Panchanan Das v. ITO [197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty valued at more than fifty thousand rupees, no registering officer appointed under that Act shall register any such document, unless the Income-tax Officer certifies that (a) such person has either paid or made satisfactory provision for payment of all existing liabilities under this Act, the Excess Profits Tax Act, 1940, the Business Profits Tax Act, 1947, the Indian Income-tax Act, 1922, the Wealth-tax Act, 1957, the Expenditure-tax Act, 1957, the Gift-tax Act, 1958, the Super Profits Tax Act, 1963, and the Companies (Profits) Surtax Act, 1964 ; or (b) the registration of the document will not prejudicially affect the recovery of any existing liability under any of the aforesaid Acts. (2) The application for the certificate required under sub-section (1) shall be made by the person referred to in that sub-section and shall be in such form and shall contain such particulars as may be prescribed." It is to be noted that the above section is not intended to validate any transfer or to ensure the recording of any valid transfer. The certificate from the Income-tax Officer is necessary to register any document which purports to transfer any immovable property. The certifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owner or purchaser of the said property. On the basis of the aforesaid, respondent No. 1 has sought to make title to the said property in its favour. The Indian Bank, the added respondent, appears to be satisfied with the title. Respondent No. 1 has obtained certificate under section 269UL of the Income-tax Act, 1961. In any event if respondent No. 1 has no title to the said property, mere registration of the conveyance would not create a title in favour of respondent No. 1 and no title would pass to the Indian Bank, the purchaser. In the facts as aforesaid, it appears to us that all that appellant No. 1, the Income-tax Officer concerned, is required to do is to ascertain whether the transferor, namely, respondent No. 1, has any existing tax liability and whether sufficient provision has been made for payment of such existing tax liabilities, if any, and whether the registration of the conveyance would prejudicially affect the recovery of any existing tax liability. Beyond that, appellant No. 1 is not called upon or empowered to launch into an enquiry on the title of respondent No. 1 in the said property. Under section 41 of the Transfer of Property Act, 1882, if an osten ..... X X X X Extracts X X X X X X X X Extracts X X X X
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