Flat allotment continuation and family substitution did not create a fresh transfer under Chapter XX-C

Later flat-allotment documents that merely continued an earlier attorney-based arrangement, without novation of the underlying bargain, were treated as part of the original transaction, so Chapter XX-C did not apply and the matter remained within Chapter XX-A. Substitution of the allottee's brother within the same family was treated as a nominee or assignment under the original allotment terms, not as a fresh transfer attracting Chapter XX-C. Rule 48L could not validate the order because it operated only where Chapter XX-C applied and had no retrospective reach to an earlier agreement. The compulsory purchase order was therefore unsustainable.

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Issues: (i) whether the transaction for purchase of the flat was governed by Chapter XX-C of the Income-tax Act, 1961, or was only a continuation of the earlier allotment falling under Chapter XX-A; (ii) whether the substitution of the allottee's brother by the petitioner amounted to a fresh transfer attracting Chapter XX-C; and (iii) whether rule 48L of the Income-tax Rules, 1962 applied so as to validate the impugned order.

Issue (i): whether the transaction for purchase of the flat was governed by Chapter XX-C of the Income-tax Act, 1961, or was only a continuation of the earlier allotment falling under Chapter XX-A.

Analysis: The earlier allotments were traced to the 1979 arrangement under which the builder acted as attorney of the registered owner and issued allotment letters on that basis. The later tripartite arrangement did not extinguish the original rights of the flat-buyers; instead, the successor builder stepped into the shoes of the former builder and proceeded on the same underlying commitment. The revised letters of allotment merely altered certain terms, such as price and area, but did not create a new bargain by novation. The Court treated the 1990 documents as a continuation of the earlier arrangement and held that the original contractual and proprietary framework remained decisive.

Conclusion: Chapter XX-C was not applicable and the transaction was governed only by Chapter XX-A.

Issue (ii): whether the substitution of the allottee's brother by the petitioner amounted to a fresh transfer attracting Chapter XX-C.

Analysis: The change of name was treated as substitution of a nominee or assign within the original arrangement. The right of the original allottee was recognised and transferred to his brother within the family. The Court held that such a transfer was supported by the original allotment terms and, in substance, was a transfer on account of natural love and affection, not a new transfer defeating the earlier rights.

Conclusion: The substitution of the petitioner did not attract Chapter XX-C.

Issue (iii): whether rule 48L of the Income-tax Rules, 1962 applied so as to validate the impugned order.

Analysis: Rule 48L was held to operate only where Chapter XX-C applied. Since the Court found that Chapter XX-C had no application on the facts, the rule could not be invoked. The Court also held that the rule had no retrospective operation to cover an agreement already in existence before the relevant date.

Conclusion: Rule 48L did not apply.

Final Conclusion: The compulsory purchase order was unsustainable, and the writ petition succeeded with directions to grant the statutory permission sought by the petitioner and other flat owners.

Ratio Decidendi: Where later allotment documents merely continue and implement an earlier pre-existing flat-allotment arrangement executed through an attorney of the owner, without novation of the underlying transaction, Chapter XX-C does not apply; a family substitution of the allottee as nominee or assign does not create a fresh taxable transfer, and a procedural rule framed for Chapter XX-C cannot apply retrospectively or independently of that chapter.

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