1992 (7) TMI 64

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....e sale cannot take place and hence Form No. 37-1, which is filed, is treated as invalid. The agreement of sale in respect of the immovable property in question is between a public trust which is registered under the Bombay Public Trusts Act, 1950, and the purchasers who are the petitioners. Under section 36 of the Bombay Public Trusts Act, no sale of any immovable property belonging to a public trust registered under the Act " shall be valid without the previous sanction of the Charity Commissioner Section 269UC of the Income-tax Act, 1961, provides that no transfer of immovable property of value exceeding Rs. 5 lakhs shall be effective except after an agreement of transfer is entered into as prescribed therein, at least three months bef....

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....makes the sale of immovable property of a public trust invalid without the sanction of the Charity Commissioner. If section 269UD can be brought into operation before the sanction of the Charity Commissioner is obtained, the consequences of an agreement for sale of the property of a public trust for consideration less than the market value of the property may be visited on the public trust. The income-tax authorities would pay the apparent consideration which is less than the market value to the public trust to acquire the property. The beneficiaries of the public trust would be the losers. They would lose the protection which section 36 of the Bombay Public Trusts Act gives them. In our view such is not the intention of sections 269UC a....

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.... mind, inter alia, to the price at which the property is to be sold under the agreement. The Charity Commissioner has the power, in a given case, to come to the conclusion that the price at which the trustees have agreed to sell the property is not the price which would secure adequate benefit to the trust and he may reject the agreement on that ground. Even the terms of the agreement of sale which the trustees may have entered into are liable to be examined by the Charity Commissioner at the time when he grants his sanction. Approval by the Charity Commissioner ensures the reasonableness of the agreement of sale. These factors will also have to be borne in mind by the income-tax authorities while exercising their power under section 269UD.....