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High Court Of Calcutta
PINAKI CHANDRA GHOSH
DIGVIJAY CEMENT CO.LTD. - Appellant
Versus
APPROPRIATE AUTHORITY - Respondent
W. P. 2886 Of 1994 And G. A. No. 2066 Of 1995
Decided On : 03/10/1998
INCOME TAX - TRANSFER OF PROPERTY - SECTION 269UC, 269UE, 269UL - TRANSFER OF INDUSTRIAL UNDERTAKING - NO OBJECTION CERTIFICATE - JURISDICTION OF APPROPRIATE AUTHORITY - HELD: APPROPRIATE AUTHORITY HAS JURISDICTION TO ADJUDICATE UPON THE LEGALITY OF THE TRANSACTION.
Fact of the Case:
The petitioner, a company, acquired the properties of a jute mill under Section 394(2) of the Companies Act, 1956. The mill was closed due to continuous non-viability, and the petitioner decided to dispose of it. The petitioner entered into an agreement with a private respondent to sell the mill as a going concern. The petitioner filed a statement in Form No. 37-1 under Section 269uc(3) of the Income-tax Act, 1961, for permission to transfer the property. The appropriate authority passed an order holding that the transfer was null and void under Section 5(3) of the Urban Land (Ceiling and Regulation) Act, 1976.
Finding of the Court:
The court held that the appropriate authority had jurisdiction to adjudicate upon the legality of the transaction. The court found that the transfer had already taken place before the submission of the statement in Form No. 37-1, and that the appropriate authority had acted fairly and exercised its jurisdiction properly.
Issues: 1. Whether the appropriate authority had jurisdiction to adjudicate upon the legality of the transaction. 2. Whether the transfer had already taken place before the submission of the statement in Form No. 37-1.
Ratio Decidendi: 1. The court held that the appropriate authority had jurisdiction to adjudicate upon the legality of the transaction because the transfer had already taken place before the submission of the statement in Form No. 37-1. The court found that the petitioner had admitted that the transferee had already taken possession of the mill, which was an act to be performed under the agreement in question. 2. The court held that the transfer had already taken place before the submission of the statement in Form No. 37-1 because the transferee had already taken possession of the mill. The court found that the petitioner had admitted that the transferee had taken over possession of the portion detailed in Schedule 'a' on March 7, 1991, and that this constituted a definite case of transfer of part of the property in question within the meaning of Section 269ua(f) for the purposes of the Income-tax Act.
Final Decision: The writ petition was dismissed.
( 1 ) THIS is an application filed by the writ petitioner, inter alia, challenging an order dated June 24, 1994, passed by the Appropriate Authority of Income-tax in proceedings bearing Case No. AA/cal/1022 of March, 1994.
( 2 ) THE case of the writ petitioner is that the writ petitioner submitted Form No. 37-1 in duplicate under Section 269uc (3) of the Income-tax Act, 1961, for permission of the concerned authorities to transfer the said property being the premises No. 15b, Hemanta Basu Sarani, Calcutta. Along with the said Form No. 37-1 the petitioner also filed the copy of the sale agreement which is also annexed to the writ petition being annexure-A. In this writ application, the writ petitioner prayed for a direction upon the respondents to issue the "no objection certificate" under Section 269ul (3) of the Income-tax Act in respect of the transfer of the industrial undertaking in terms of the agreement entered into between the writ petitioner and the private respondent being respondent No. 4.
( 3 ) MR. Bhattacharjee, learned senior advocate, appearing on behalf of the writ petitioner, submitted that the order which has been passed by the concerned appropriate authorities is illegal and they have passed the said order in excess of their jurisdiction. Furthermore, the said order specifically said that the transfer is null and vid under Section 5 (3) of the Urban Land (Ceiling and Regulation) Act, 1976. In passing the said order, the said authorities have acted in excess of their jurisdiction. He further submitted that the act of the appropriate authorities is illegal, mala fide and arbitrary.
( 4 ) THE facts of the case are as follows : by an order of this court in a company application the writ petitioner acquired all the properties, rights and interest of Hastings Jute Mill Limited which were transferred to and in favour of the petitioner under the provisions of Section 394 (2) of the Companies Act, 1956, and thereby the petitioner became the owner of all properties, assets, machinery, stores, etc. , of Hastings Jute Mills Ltd. He further submitted that no part of the said premises is vacant land within the meaning of the Urban Land (Ceiling and Regulation) Act, 1976. Since October 8, 1993, the said factory was lying closed. After careful consideration and in view of the continuous non-viability of Hastings Jute Mills, the board of directors of the writ petitioner decided to dispose of the said mill. After various proposals and negotiations amongst the parties the workers of the writ petitioner finalised the negotiations with respondent No. 4 to sell the said jute mill as a going concern on as is where is basis. The total sale price of the jute mill was fixed at Rs. 777. 50 lakhs.
( 5 ) IN view of the said negotiations on or about March 7, 1994, the petitioner entered into an agreement with respondent No. 4 where under it agreed to sell to respondent No. 4 the said factory excepting a division of the said company, including its lands and buildings, plant and machinery, etc. , as a going concern at the said price. Respondent No. 4 by virtue of the said March 7, 1994 agreement, was in possession of the said mill on the same date as a monthly lessee and a power of attorney was executed in favour of respondent No, 4 by the writ petitioner and a lease was granted for three years to respondent No. 4. Thereafter, on March 22, the writ petitioner filed a statement in statutory Form No. 37-1 in terms of Chapter XXC of the Income-tax Act, 1961, before the income-tax authorities for necessary permission and thereafter on July 4, 1994, the writ petitioner received the impugned order dated June 14, 1994, passed by respondent No. 1.
( 6 ) MR. Bhattacharjee, appearing on behalf of the writ petitioner, also submitted that the only right of respondent No. 1 under the said Chapter XXC of the said Act was either to make an order of purchase of the immovable property for an amount equal to the amount of appar
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