Chapter XXC applies until legal transfer is completed; completed pre-emptive purchases and auction sales remain undisturbed.

Chapter XXC of the Income-tax Act applies to an agreement for sale even if the agreement was executed before the chapter came into force, so long as the contemplated transfer was not completed by a registered deed. A prior agreement, including one supported by possession in part performance, does not by itself amount to the transfer governed by the chapter; compliance through Form No. 37-I and Rule 48L remains relevant. The note also states that the clarification in C. B. Gautam does not disturb completed pre-emptive purchases where possession has been delivered, the order has been acted upon, and the property has already been sold by public auction and transferred onward.

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Issues: (i) Whether Chapter XXC of the Income-tax Act, 1961 applied to an agreement for sale executed before the chapter came into force but not culminated in a registered transfer deed by the relevant date; (ii) Whether the rule in C. B. Gautam v. Union of India applied to the completed pre-emptive purchase and subsequent auction sale.

Issue (i): Whether Chapter XXC of the Income-tax Act, 1961 applied to an agreement for sale executed before the chapter came into force but not culminated in a registered transfer deed by the relevant date.

Analysis: The relevant scheme required an agreement for transfer to precede the intended transfer and contemplated compliance through Form No. 37-I and Rule 48L even in cases where the agreement had been entered into before Chapter XXC was brought into force in the area concerned. A mere prior agreement, even if accompanied by possession in part performance, did not itself amount to the transfer contemplated by Chapter XXC, which governed the actual transfer by deed. The contention that prior agreements were outside the chapter was rejected.

Conclusion: Chapter XXC was held applicable to the transaction, and the issue was decided against the petitioner.

Issue (ii): Whether the rule in C. B. Gautam v. Union of India applied to the completed pre-emptive purchase and subsequent auction sale.

Analysis: The clarification in C. B. Gautam excluded interference in completed transactions where possession had been delivered, the order had been acted upon, and the property had been sold in public auction. On the facts, possession had been delivered voluntarily, the property had been auctioned, the auction purchaser had paid the price and taken possession, and the property had thereafter been transferred further. These features brought the case within the excluded category of completed transactions.

Conclusion: The rule in C. B. Gautam was held inapplicable, and the issue was decided against the petitioner.

Final Conclusion: The writ petition failed because the statutory pre-emptive purchase stood undisturbed and no relief could be granted against the completed chain of transfer.

Ratio Decidendi: Chapter XXC governs a transaction until the actual transfer is completed in law, and the hearing-related rule in C. B. Gautam does not unsettle completed pre-emptive purchases followed by possession, auction sale, and consequential transfers.

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