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Andhra Pradesh High Court
Judges : J.ESWARA PRASAD, M.JAGANADHA RAO
Sooni Rustam Mehta - Appellant
Versus
Appropriate Authority, Income-tax Department - Respondent
Decided On : 04-26-91
INCOME TAX - Compulsory Acquisition - Deposit of consideration - Dispute as to title - Interpretation of section 269ug(3) of the Income-tax Act, 1961 - Whether the filing of a writ petition challenging the provisions of the Act and the order of vesting amounts to a dispute as to the title to receive the consideration - Held, yes.
Fact of the Case:
The petitioners, executors under the will of the late Mrs. Z. R. Ranji, filed a writ petition challenging the order passed by the Income-tax Department under section 269ud(1) of the Income-tax Act, 1961, ordering the purchase of the property by the Central Government for a discounted price and vesting the property in the second respondent under section 269ue(1). The petitioners contended that the deposit made by the second respondent under section 269ug(3) was not a valid deposit as the conditions mentioned in the section were not present and that, therefore, the provisions of section 269uh came into play, resulting in the revesting of the property in the petitioners.
Finding of the Court:
The court held that the filing of a writ petition challenging the provisions of the Act and the order of vesting amounted to a dispute as to the title to receive the consideration within the meaning of section 269ug(3) of the Income-tax Act, 1961. The court reasoned that a person challenging the validity of the provisions relating to compulsory acquisition or the order of vesting could not claim to receive the apparent consideration as a matter of right or unconditionally before a decision is rendered as to the validity of the provisions or the order of vesting. Therefore, the authorities were justified in not tendering the amount but in depositing the same under section 269ug(3) before the appropriate authority.
Issues: 1. Whether the filing of a writ petition challenging the provisions of the Income-tax Act, 1961, and the order of vesting amounts to a dispute as to the title to receive the consideration under section 269ug(3) of the Act? 2. Whether the deposit made by the second respondent under section 269ug(3) was a valid deposit?
Ratio Decidendi: The court interpreted section 269ug(3) of the Income-tax Act, 1961, to mean that a dispute as to the title to receive the consideration includes a dispute as to the entitlement of the person to receive the consideration. The court held that a person challenging the validity of the provisions relating to compulsory acquisition or the order of vesting is not unconditionally entitled to receive the apparent consideration before a decision is rendered as to the validity of the provisions or the order of vesting. Therefore, the authorities are justified in not tendering the amount but in depositing the same under section 269ug(3) before the appropriate authority.
Final Decision: The writ petition was dismissed, subject to the direction that the first respondent invest the amount of Rs. 1,31,640 in appropriate units under the Unit Trust of India which are statutorily recognized for the purpose of investment in the capital gains/units.
( 1 ) THE petitioners who claimed to be executors under the will of the late Mrs. Z. R. Ranji, have filed the present writ petition for the issue of a writ of mandamus directing the appropriate authority, Income-tax Department, Bangalore (1st respondent), directing him, (i) to make a declaration under section 269uh (2) of the Income-tax Act, 1961, that the order passed by him on 16/02/1990, stands abrogated with effect from 1/04/1990, and the property stands revested in the petitioners and to grant copies of the said order and also deliver back possession of the premises and further issue a certificate of no objection under section 269ul (3 ).
( 2 ) THE following facts have to be stated : Mrs. Z. R. Ranji who is said to be the owner of the immovable property in Sardar Patel Road, Secunderabad, dies on 29/10/1988. It is said that she had executed a will on 22/05/1987, and appointed the petitioners as executors and had directed them to dispose of the property and distribute the sale proceeds among certain named charities. It is said that the petitioner entered into an agreement of sale dated 14/12/1989, with the third respondent for a consideration of Rs. 15,60,000. Inasmuch as the apparent consideration was above Rs. 10 lakhs, the petitioners submitted the said agreement to the first respondent at Bangalore as required by section 269uc of the Act. By an order under section 269ud (1), the first respondent ordered the purchase of the said property by the Central Government for the discounted price of Rs. 15,31,640 and the property stood vested in the second respondent under section 269ue (1) with effect from 16/02/1990, free from all encumbrances. The petitioners were directed to deliver possession of the property to the second respondent within 15 days from the date of receipt of the said order. At the stage, the petitioners vendors filed W. P. No. 2978 of 1990 questioning the validity of the said order. It appears that the provisions of the Act relating to compulsory acquisition have been challenged in the said writ petition. That writ petition was admitted on 8/03/1990, and is still pending. Possession of the property was taken by the second respondent on 22/03/1990.
( 3 ) IT is the case of petitioners that the second respondent had neither tendered the money to the petitioners as required by section 269ug (2) nor deposited the money in accordance with section 269ug (3) and that, therefore, there was no valid deposit as per the provisions of the Act and the property stands revested in the petitioners under section 269uh.
( 4 ) THE factual position however is that the second respondent obtained the demand draft dated 29/03/1990, and made the required deposit under section 269ug (3) on 30/03/1990, before the first respondent. While making the said deposit, the second respondent considered that the facts of the case fitted into sub-section (3) of section 269ug. It is the case of the writ petitioners that the conditions mentioned in section 269ug (3) were not present and that, therefore, the deposit made by the second respondent on 30/03/1990, before the first respondent cannot be treated as deposit made under section 269ug (3) and that, therefore, the provisions of section 269uh in the regard to revesting of the property in the petitioners come into play. Inasmuch as the order dated 30/03/1990, is, therefore, in question, it is necessary to extract the same in full and examine its correctness. "in this connection, it is pointed out to you that, on the scrutiny of the documents submitted by you it showed that the original will dated May 22, 1987, has not been handed over by you. Further, you have not taken a probate to execute the will of the late Z. R. Ranji. In addition, you have filed a Writ Petition No. 2978 of 1990 challenging - (1) the provisions of sections 269ug and 169ud and other relevant provisions contained in Chapter XXC of the Income-tax Act. (2) to quash the order of the appropriate authority
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