TaxTMI 
TaxTMI 
1950 (12) TMI 35
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.... from 1st January, 1949, of a number of properties situate in Calcutta at a rent of Rs. 2,400 per month. By another indenture of lease, dated 4th January, 1949, the petitioner also obtained a lease from the respondents Nos. 4 and 6 for a period of 99 years Commencing from 1st January, 1949, at a rent of Rs. 1,000 per month of certain properties situate at Cawnpore. By a third indenture of lease, dated the 20th December, 1948, the petitioner obtained a lease of certain properties in Delhi from the respondent No. 4, Mohamad Amin, for a period of 99 years commencing from 1st January, 1949, at a rent of Rs. 100 per month. After partition of India and on 7th February, 1948, an Ordinance being Ordinance No. III of 1948, was passed by the Government of India. Under the said Ordinance to Registering Officer should register any document which is required to be registered under clauses (a), (b), (c) and (e) of sub-section (1) of Section 17 of the Registration Act, unless a certificate had been obtained from the Assistant Commissioner of Income-tax, to the effect that the person making such transfer is not liable to taxation under the Indian Income-tax Act, the Excess Profit....
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....Section 2 thereof, was made applicable to "any person who, on account of the setting up of the Dominions of India and Pakistan, or on account of civil disturbances or the fear of such disturbances, leaves or has, since the 14th day of August, 1947, left any place in the Provinces of India for any place outside India, or who, since the said date, has been residing in any place outside India; or (ii) who, in the opinion of any of the Income-tax authorities specified in sub-section (1) of Section 5 of the Indian Income-tax Act, 1922 (XI of 1922), or a Custodian of Evacuee Property or a Collector, is likely to leave the Provinces of India with the intention of setting in any place outside the Provinces of India, and in respect of whom a declaration that he is a person to whom this Act applies has been received from any such Income-tax authority, Custodian of Evacuee Property or Collector by the registering officer of the area in which any property belonging to such person is situate". Section 3, 4 and 9 of the said Act are material. Section 3 runs as follows :- "Payment of taxes before registration of documents :- (1) Where any document req....
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....es in respect of all or any of the parties to the transfer........" Section 9 runs as follows :- "Effect of expiry of Ordinance XXI of 1948 - On the expiry of the Payment of Taxes (Transfer of Property) Ordinance, 1948 (XXI of 1948), Section 6 of the General Clauses Act, 1897 (X of 1897), shall apply as if the Ordinance had then been repealed by a Central Act." At the time of the granting of the leases in favour of the petitioner by the respondents Nos. 4 and 5 hereinbefore mentioned, the Ordinance XXI of 1948 was already in force. On 16th May, 1950, the respondent No. 1, C. S. Peters, who was then the Income-tax Officer, acting on behalf of the Indian Union, issued diverse notices to the lessors, in relation to the properties leased out to the petitioner, under Section 4 (1) of the Payment of taxes (Transfer of Property) Act. The material portions of the said notices are as follows :- "Whereas you are a person to whom the Payment of Taxes (Transfer of Property) Act, 1949 (Act XXII of 1949), applies within the meaning of Section 2 of the said Act, and (2) Whereas your right, title and interest in the movable properties m....
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.... an important point of constitutional law, but, having regard to the view which I have taken of the other points urged by Mr. Chaudhuri, it would not be necessary for me to decide this question on this application. If it were necessary, and if I had come to the conclusion that the other contentions raised on behalf of the petitioner cannot be sustained and he can succeed only if he can establish before me that the Act itself is ultra vires the Constitution of India, then I would have referred to the matter to the Honble Chief Justice for constituting a Special Bench to decide this question, as, in my opinion, it would be much more satisfactory to have it decided by a Bench of three Judges. But, as I have already said, it would not be necessary for me for the purpose of deciding this application to go into that question. The third contention of Mr. Chaudhuri is that under Section 9 of the said Act the provisions of Section 6 of the General Clauses Act have been made operative as if the Ordinance had then been repealed by a Central Act. Mr. Chaudhuris contention is that because of that reason the Ordinance still applies and if that is so, then the action o....
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....arise in cases of transfers as mentioned in Section 3 of the said Act. That indicates to my mind that "the transfers" referred to in Section 4 are the kinds of transfers to which the Act would have applied if it had been in force and in respect of which certificates were necessary in terms of Section 3. In this connection it would be helpful to refer to the material provisions of the previous Ordinances, being Ordinance III of 1948 and Ordinance XXI of 1948. Section 3 of Ordinance III runs as follows :- Section 3. "Registration of documents. - No Registering Officer, Revenue Officer, Custodian or other officer appointed to deal with property shall register any document, relating to property other than agricultural land, which is required to be registered under the provisions of clause (a), (b), (c) or (e) of sub-section (1) of Section 17 of the Indian Registration Act, 1908 (XVI of 1908), unless it is certified by the Inspecting Assistant commissioner of Income-tax of the area in which the property is situate in respect of every person whose right, title or interest in the property is or will be transferred, assigned, limited or extinguished und....
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....s of the present Act that while in the Ordinances the words used were "any transfer", the words used in the present section are "the transfer", and "movables" which were included in the relevant sections of the Ordinances have been omitted from Section 4 of the Act in question. The operation of Section 4 of the present Act has also been restricted to certain areas of the Indian Dominion and to certain classes. Again, the words "if the Act had been in force on the date the Transfer was made" are not to be found in the said Ordinances; and if the construction, which the learned Advocate-General wants me to put on Section 4 of the present Act, is to be accepted, then I see no reason why these words are introduced in the said section of the present Act. Apart from any reference to the provisions of the previous Ordinances, on a proper consideration of the section itself and also as read with other provisions of the Act, it seems to me that Section 4 of the Act applies to the class of transfers mentioned in Section 3. The heading of the Act, the preamble of the Act and the heading of the section itself also support the view which I have ta....
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....ed. One of the terms of such certificate, as mentioned in Section 3, is that the Income-tax Officer is satisfied that the registration of the document will not prejudicially affect recovery of existing or anticipatory liability. But if the contention of the Advocate-General is to be accepted, then even in the case of documents creating leases for one year or less than a year and which do not require any registration at all the Income-tax Officer would be able to issue a notice under Section 4 of the Act. On a full consideration of the matter, I have come to the conclusion that Section 4 (1) does not authorise the Income-tax Officer to act in the case of leases, and this being a case of a lease he is not entitled to issue the notices which have been issued. I am fully aware of the possibility of dishonest parties avoiding the provisions of the Act by taking resort to leases instead of transfers. But I have to interpret the Act as it has been enacted, and if on such interpretation the leases do not come within the purview of Section 4 (1) of the said Act, then the Income-tax Officer cannot take the action under the said section. With regard to....