Separate co-owner shares cannot be aggregated to invoke pre-emptive purchase under Chapter XX-C

Where co-owners each hold a distinct legal share in inherited property, a single agreement executed jointly does not by itself create one composite transfer for purposes of Chapter XX-C of the Income-tax Act, 1961. The value of each co-owner's share must be examined separately, and the pre-emptive purchase machinery cannot be triggered by aggregating the value of separate shares when each falls below the statutory threshold. On that basis, the pre-emptive purchase order was found unsustainable and was quashed, with consequential relief granted to the petitioners.

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Issues: Whether a single agreement executed by several co-owners, each having a definite share in the property, could be treated as one composite transfer attracting pre-emptive purchase under Chapter XX-C of the Income-tax Act, 1961.

Analysis: The property devolved on the sellers as heirs of the original owner, and each co-owner held a distinct share in the property in law. The mere fact that the co-owners executed one common agreement did not convert their separate interests into a single indivisible transaction. For the purpose of the pre-emptive purchase provisions, the value of each co-owner's share had to be considered separately. Since the individual shares were below the statutory monetary threshold, the machinery of pre-emptive purchase could not be invoked on the basis of the aggregate value of the entire property.

Conclusion: The pre-emptive purchase order was not sustainable and was quashed, with consequential relief granted in favour of the petitioners.

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