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High Court Of Calcutta
Vinod Kumar Gupta, Bhaskar Bhattacharya
MURLIDHAR RATANLAL EXPORTS LTD - Appellant
Versus
APPROPRIATE AUTHORITY - Respondent
A. P. O. 198 Of 1998
Decided On : 08/28/1998
INCOME TAX - PRE-EMPTIVE PURCHASE OF IMMOVABLE PROPERTY - APPROPRIATE AUTHORITY - JURISDICTION - TRANSFER OF PROPERTY - DEFINITION - SECTION 269-UA(F) - SCOPE - FORM 37-I - SUBMISSION - APPROPRIATE AUTHORITY'S OPTIONS - NO OBJECTION CERTIFICATE OR PRE-EMPTIVE PURCHASE - APPROPRIATE AUTHORITY'S POWER TO TREAT FORM 37-I AS NON-EST - LEGALITY.
Fact of the Case:
The Appropriate Authority rejected the statement in Form 37-I submitted by the parties seeking permission/no objection for the sale of a property, treating it as invalid and non-est, on the grounds that the transfer had already taken place and came under the purview of section 5(3) of the Urban Land (Ceiling and Regulation) Act, 1976.
Finding of the Court:
The Appropriate Authority's reliance on section 269-UA(f) to define 'transfer' was misplaced. The possession of the property was handed over to the vendee as a lessee, not as a purchaser, and the agreement for sale and the agreement for lease were distinct. The Appropriate Authority's act of treating Form 37-I as non-est and not acting upon it was beyond its jurisdiction and in violation of law.
Issues: 1. Whether the Appropriate Authority has the option to treat Form 37-I as non-est and not act upon it, upon finding that the transfer of property has already taken place. 2. Whether the Appropriate Authority's reliance on section 269-UA(f) to define 'transfer' was correct in the given circumstances.
Ratio Decidendi: 1. The scheme of Chapter XX-C of the Income Tax Act, particularly sections 269-UC, 269-UD, and 269-UL, leaves the Appropriate Authority with no choice or option but to either issue a 'no Objection' Certificate to the parties submitting Form 37-I or to pass an order in terms of section 269-UD of the Act resorting to pre-emptive purchase of the property. No other option is available to the Appropriate Authority. 2. Section 269-UA(f) defines 'transfer' in relation to immovable property as transfer by way of sale, exchange, or lease for a term of not less than twelve years, including allowing possession to be taken or retained in part performance of a contract under section 53a of the Transfer of Property Act, 1882. In this case, the possession was handed over as a consequence of the agreement for lease, not the sale agreement, and the lease period was for three years, not twelve years or more. Therefore, the Appropriate Authority's reliance on section 269-UA(f) was incorrect.
Final Decision: The appeal was allowed. The judgment of the learned Single Judge was set aside. Consequently, the order of the Appropriate Authority dated 24-06-94 impugned in the writ application was quashed and set aside. The Appropriate Authority was directed to issue a 'no Objection' Certificate in favor of the appellant and respondent No. 4 without any delay.
( 1 ) THIS appeal under the Letters Patent is directed against a judgment dated 10th March, 1998 by a learned Single Judge of this Court whereby the writ application filed by Respondent No. 4 in this appeal has been dismissed. Respondent No. 4 had filed writ petition No. 2886 of 1994 along with G. A. No. 2066 of 1995 wherein he had challenged the order dated 24-06-94 passed by Respondent No. 1, the Appropriate Authority consituted under section 269-UB of the Income Tax Act. In the writ application the appellant herein Murlidhar Ratanlal Exports Limited and Digvijay Cement Company Ltd. , Respondent No. 4 herein, had entered into an agreement of sale on 7th March, 1994 in their capacities as proposed Vendee and Vendor respectively in respect of the sale of a Mill known as "hasting Jute Mill" situated at G. T. Road, Rishra as a going concern, inclusive of assets and liabilities as per the terms and conditions contained in the said Agreement. The property included land measuring 105 bighas and 18 cottahs and the structures raised thereon along with all errections etc. , inclusive of fixitures and fittings and various plants and machineries. The total consideration by way of agreed sale price in respect of the entire property was fixed at Rs. 777. 50 lacs free from all encumbrances and charges etc. Since the value of the proposed sale transaction exceeded the prescribed limit as per section 269-UC of the Income Tax Act, 1961 (Act for short), Form No. 37-I in terms of the said section and he Rules made under the Act was submitted before Respondent No. 1 on 22nd March, 1994 along with the copy of the aforesaid Agreement dated 7th March, 1994 seeking permission/no objection from Respondent No. 1 in respect of the sale of the said property. However, respondent No. 1 neither granted the "no objection" certificate, nor passed any order of taking recourse to the exercise of the power of pre-emptive purchase of the property by the Central Government, as aviailable to it under section 269-UD of the Act and instead disposed of the application of the vendor and the vendee by passing the following Order:"considering the facts and circumstances of the case that the transfer has already taken place according to the definition of transfer under section 269ua (f) and it also comes under the purview of section 5 (3) of Urban Land (Ceiling and Regulation) Act, 1976, we hold that the statement in Form No. 37-I filed before Appropriate Authority, Calcutta is invalid and therefore it cannot be acted upon. The said Form No. 37-I is treated as non-est and filed as such. "
( 2 ) IT was the aforesaid Order of respondent No. 1 which was the subject-matter of challenge in the writ application filed by respondent No. 4, the Vendor in the aforesaid agreement for sale which, as observed earlier, came to be dismissed by the learned Single Judge vide his judgment dated 10th March, 1988.
( 3 ) AT the outset we may observe that in the impugned order of 24-06-94 passed by the respondent No. 1, one ground for not granting the no objection certificate was the so called violation of the provisions of Urban Land (Ceiling and Regulation) Act, 1976 since, according to respondent No. 1, the land in question exceeded the limit/ceiling prescribed under section 5 (3) of the Act. However, it was very fairly and very frankly conceded before us by the learned advocate appearing for respondent No. 1 that this part of the Order dated 24-06-94 is not sustainable in law at all and he would not press for the same. It may also be noted that the learned Single Judge also in the judgment under appeal did not deal with this part of the Order at all and restricted himself only to the question of the transfer of ownership/possession of the land, which actually was the reason for dismissing the writ application.
( 4 ) THE only point which therefore arises for consideration in this appeal is, as to whether upon the submission of Form 37-I in terms of section 269-UC of the
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