Chapter XX-C limitation and permissive possession: late communication held invalid, and no objection certificate entitlement upheld.

Under Chapter XX-C of the Income-tax Act, the appropriate authority had to decide within the statutory period whether to issue a no objection certificate or order pre-emptive purchase. The communication issued after expiry of that period was held invalid and unsustainable. On merits, the materials did not establish delivery of possession in part performance so as to amount to a transfer under section 269UA(f); the purchaser's possession was treated as permissive possession for alterations, not possession under section 53A of the Transfer of Property Act, 1882. The cited precedents were found inapplicable because they involved admitted delivery of possession in part performance.

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Issues: Whether the communication lodging the Form No. 37-I application was valid, and whether the petitioners were entitled to a no objection certificate under Chapter XX-C of the Income-tax Act, 1961.

Analysis: Chapter XX-C required the appropriate authority to decide within the statutory period whether to grant a no objection certificate or to make an order for pre-emptive purchase. The Court found that the authority did not pass any order within the prescribed period and instead issued the impugned communication after expiry of limitation. On the merits, the Court held that the materials did not show delivery of possession in part performance of the agreement so as to constitute a transfer within section 269UA(f) of the Act. The possession described by the purchaser was treated as permissive possession for making alterations, not possession under section 53A of the Transfer of Property Act, 1882. The authorities' reliance on the cited precedents was held inapplicable because those cases involved admitted delivery of possession in part performance.

Conclusion: The impugned lodging of the application was illegal and unsustainable, and the petitioners were entitled to the no objection certificate.

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