The main legal point established in the judgment is the limited powers of the Appropriate Authority under Chapter XX-C of the Income Tax Act, particularly in relation to the options available for dealing with applications for permission to transfer immovable property, and the distinction between permissive possession and possession in part-performance of a contract.

N.K.Sud, J.

1. The petitioner is aggrieved by the order dated 15-1-2002 (Annexure P-15), passed by respondent No. 2, whereby his application for permission in Form 37-I filed under Chapter XX-C of the Income Tax Act, 1961 (hereinafter referred to as the Act), has been rejected by treating its as non-maintainable. He prays that a writ in the nature of certiorari be issued quashing the order, Annexure P-15. He further prays for a direction to respondent No. 2 to either pass an order under section 269UD of the Act for purchasing the property or issue a No Objection Certificate for transfer of property as per the agreement (Annexure P- 1).

2. The petitioner along with his wife Smt. Saria Ahluwalia and two sons Punit Ahluwalia and Amit Walia, entered into an agreement for purchase of SCO No. 143-144, Sector 9C, Chandigarh, with one Shri Nirankar Singh, son of Shri Karam Singh, resident of House No. 632, Phase VI, S.A.S. Nagar (Mohali), Punjab. A copy of the agreement is attached as Annexure P-1 with the writ petition.

Shri Nirankar Singh had purchased this property in an open auction held on 2-1-1998, from the Municipal Corporation, Chandigarh. The allotment was made on leasehold basis for 99 years vide allotment letter dated 10-3-1998. As per the terms of allotment, 25 per cent of the amount being Rs. 44.75 lakhs was deposited by him and the balance was to be deposited in instalments payable over the next three years. He, however, did not deposit the instalments on the ground that the Municipal Corporation, Chandigarh, had failed to provide the requisite amenities. The Municipal Corporation initiated resumption proceedings against him on account of non-payment of instalments along with interest due thereon. Shri Nirankar Singh maintained that neither the instalments nor the interest was payable by him as no amenities had been provided by the Municipal Corporation. For this purpose, he along with some other persons filed CWP No. 959 of 1999 in this court which was disposed of vide order, dated 2-2-2001. It was held that the Municipal Corporation, Chandigarh, was not entitled to recover interest and ground rent until the necessary amenities have been provided by it. The High Court further directed that the amenities be provided within three months from the date of the judgment whereupon the petitioners would make further payment of all the dues within three months thereafter. The necessary amenities were provided by the Chandigarh Administration by 13-6-2001 and intimation to this effect was sent to the allottees by the Municipal Corporation vide memorandum of the same date. As a result, the entire outstanding payment against the said property became payable by Shri Nirankar Singh by 12-9-2001.

During the pendency of the writ petition, the Municipal Corporation had passed the order of resumption against which Shri Nirankar Singh had filed an appeal. However, consequent upon the order of the High Court, the appeal was allowed. The order of resumption was set aside and the allottee was directed to deposit the entire amount within the stipulated period as ordered by the High Court.

3. It was in this background that Shri Nirankar Singh entered into the agreement to sell, dated 5-9-2001. As on that date, he had deposited Rs. 44.75 lakhs with the Municipal Corporation and had further spent a sum of Rs. 20 lakhs approximately for raising construction thereon which was incomplete. As per the agreement, the petitioner agreed to give Shri Nirankar Singh Rs. 65 lakhs invested by him and also undertook to discharge the liability of the Chandigarh Administration directly before the due date, i.e., 12-9-2001. On the date of agreement, the Special Leave Petition of the Municipal Corporation against the judgment of this court, dated 2-2-2001, was pending before the Supreme Court. The petitioner, therefore, also agreed to meet any future liability which might be determined against the said property in the event of the Special Leave Petition