1998 (9) TMI 26 - HC - Income Tax

Summary

Issues Involved:
1. Whether the sale of the property by the President of India to the petitioner is considered a first sale.
2. Whether the petitioner is liable to pay enhanced ground rent as demanded by the Land and Development Officer.
3. Whether the demand for enhanced ground rent offends Articles 14 and 300A of the Constitution of India.

Issue-wise Detailed Analysis:

1. First Sale and Ownership Rights:
The petitioner sought a declaration that the sale of property bearing No. C(C)-18, Kalkaji, New Delhi, purchased from the President of India via a registered sale deed dated April 5, 1989, should be considered a first sale, thereby vesting full ownership rights, title, and interest in the petitioner. The property was initially acquired by the Central Government under sections 269UD and 269UE of the Income-tax Act, 1961. The Central Government then put the property up for public auction, where the petitioner emerged as the highest bidder. The sale deed executed by the President of India transferred all rights, title, and interest in the property to the petitioner, making the petitioner the absolute owner of the property.

2. Liability to Pay Enhanced Ground Rent:
The Land and Development Officer demanded enhanced ground rent from the petitioner, treating the sale by the President of India to the petitioner as a second sale. The petitioner contended that the demand for enhanced ground rent was illegal and an abuse of power, as the sale by the President should be treated as a first sale. The court held that the sale deed executed by the President of India transferred all rights, title, and interest in the property to the petitioner, making the petitioner the absolute owner. Therefore, the demand for enhanced ground rent was illegal and liable to be struck down.

3. Demand Offending Articles 14 and 300A of the Constitution:
The petitioner argued that the demand for enhanced ground rent was an abuse of authority and offended Articles 14 and 300A of the Constitution. The court found that the Land and Development Officer's demand for enhanced ground rent was based on a misapprehension that the petitioner was merely a lessee, whereas the petitioner had acquired absolute ownership of the property. The court quashed the demand for enhanced ground rent, thereby upholding the petitioner's rights under Articles 14 and 300A.

Conclusion:
The court allowed the petition, quashing the impugned demand for enhanced ground rent contained in the letter dated January 11, 1991, by the Land and Development Officer. The petitioner was declared the absolute owner of the property, and the sale by the President of India was treated as a first sale. No order as to costs was made.