Chapter XX-C certificate duty cannot be refused by testing transfer validity under urban land law

Chapter XX-C of the Income-tax Act, 1961 confines the appropriate authority to a limited statutory function: it may order purchase of the immovable property under section 269UD within the prescribed time, or, if no such order is made, it must issue the certificate under section 269UL(3). The authority cannot treat the statement under section 269UC as non est or examine the legality of the proposed transfer by reference to alleged breach of the Urban Land (Ceiling and Regulation) Act, 1976. The absence of prior permission under that Act did not authorise refusal of the statutory certificate, and the no-objection certificate became mandatory when no purchase order was made in time.

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Issues: Whether the appropriate authority under Chapter XX-C of the Income-tax Act, 1961 could treat the statement filed under section 269UC as non est on the ground that the proposed transfer was allegedly void under the Urban Land (Ceiling and Regulation) Act, 1976, and whether, in the absence of an order for purchase under section 269UD within the prescribed time, the transferors were entitled to the no-objection certificate under section 269UL(3).

Analysis: The statutory scheme of Chapter XX-C confines the appropriate authority to the limited power of either ordering purchase of the immovable property under section 269UD or, where no such order is made within the prescribed period, issuing the certificate contemplated by section 269UL(3). The authority has no jurisdiction to adjudicate upon the validity or legality of the underlying transfer agreement on the basis of alleged breach of the Urban Land (Ceiling and Regulation) Act, 1976. The exemption condition requiring prior permission did not render the agreement void merely because such permission had not been obtained before execution, and the appropriate authority could not decline to act under Chapter XX-C by treating the application as non est.

Conclusion: The appropriate authority had no power to declare the application non est on the ground of alleged illegality under the Urban Land (Ceiling and Regulation) Act, 1976, and the petitioners were entitled to the certificate under section 269UL(3).

Final Conclusion: The impugned orders were quashed, and the statutory consequence under Chapter XX-C followed in favour of the transfer applicants.

Ratio Decidendi: An authority exercising powers under Chapter XX-C of the Income-tax Act, 1961 cannot refuse to issue the statutory no-objection certificate by examining the legality of the proposed transfer; its function is confined to the purchase decision within the statutory time limit, failing which issuance of the certificate becomes mandatory.

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