1994 (9) TMI 11 - HC - Income Tax

Tax Court Rules on Jurisdiction Issue for Immovable Property Transfer

The Court ruled in favor of the petitioners, finding that the appropriate authority under Chapter XX-C of the Income-tax Act, 1961 lacked jurisdiction to ... Appropriate Authority, Immovable Property By Central Government, Income Tax Act, Movable Property Issues:Challenge to order under Chapter XX-C of the Income-tax Act, 1961 regarding transfer of immovable property exceeding Rs. 10 lakhs without requisite permission from State Government.Analysis:The petitioners challenged an order passed by the appropriate authority under Chapter XX-C of the Income-tax Act, 1961. The first petitioner, a company engaged in business as builders and developers, entered into an agreement with landowners for the sale of immovable property subject to a 'no objection certificate' under the Act. The appropriate authority treated the application as 'non est' due to a prohibition on transfer under the Urban Land (Ceiling and Regulation) Act, leading to a review application being rejected. The petitioners contended that the appropriate authority failed to act within the stipulated period, extinguishing its jurisdiction to direct purchase by the Central Government, and they were entitled to a 'no objection certificate' under section 269UL(3) of the Act. The petitioners relied on judgments affirming this interpretation.Analysis:The respondents argued that if the agreement for transfer of immovable property is contrary to law, the appropriate authority can treat the application as 'non est.' They cited a judgment supporting this stance. However, the exemption order under the Urban Land (Ceiling and Regulation) Act allowed for obtaining permission post-agreement, and the absence of prior permission did not render the agreement void. Section 269UD of the Act empowers the appropriate authority to order purchase by the Central Government, not to adjudicate on the legality of the transaction. The authority's refusal to grant the certificate sought by the seller based on alleged legal infringements, while not passing a purchase order, was deemed impermissible.Analysis:The Court found no merit in the argument that the agreement was void due to lack of prior permission, as post-agreement permission was permissible under the exemption order. Section 269UD does not grant authority to determine the legality of the transaction, only to order purchase by the Central Government. Failure to pass a purchase order within the stipulated period obligates the authority to issue the certificate under section 269UL(3) of the Act. The judgment cited by the respondents was deemed inapplicable, and the decision was made in favor of the petitioners, granting the requested relief without costs. The application for stay was refused.