Clearance certificate under tax law must turn on outstanding liability alone, not unrelated acquisition litigation.

A clearance certificate under section 230A(1) had to be decided on the statutory test of whether any tax liability remained outstanding under the specified enactments, or whether satisfactory provision had been made for payment. Refusal based only on the pendency of possible Supreme Court proceedings in separate acquisition litigation was irrelevant to that inquiry. The refusal was therefore unsustainable as it rested on extraneous considerations, and the matter was remitted for reconsideration strictly on the section 230A(1) criteria, with a certificate to be granted if no liability was outstanding or proper provision had been made.

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Issues: Whether the Income-tax Officer could refuse to grant a certificate under section 230A(1) of the Income-tax Act, 1961, on the ground that acquisition proceedings in respect of the property were under challenge before the Supreme Court and whether such refusal was based on irrelevant considerations.

Analysis: The application for the certificate was accompanied by a statement that no tax was outstanding under the relevant enactments referred to in section 230A, and this assertion was not denied. The refusal was founded only on the pendency of possible proceedings before the Supreme Court in acquisition litigation. The clearance certificate under section 230A turns on whether there is any outstanding tax liability under the specified Acts, or whether satisfactory provision has been made for its payment. A possible future special leave petition in a different proceeding was not a matter germane to that inquiry.

Conclusion: The refusal was unsustainable as it rested on extraneous and irrelevant considerations. The impugned order was set aside and the Income-tax Officer was directed to reconsider the application only on the statutory test under section 230A(1) and, if satisfied that no liability was outstanding or proper provision had been made, to grant the certificate.

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