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2011 (8) TMI 434 - HC - Income TaxAuction of property to recover the tax dues - leasehold property - DDA being the lessor demanded 50% unearned increase for mutation of the property in favour of the purchasers/respondent no.1. - Disputes arose as to the liability to pay unearned increase and whether the same was payable by the purchasers/respondent no.1 or by the Income-Tax Department or as claimed by the appellant by the original sub-lease i.e. the defaulter assessee. - held that:- The pre-condition or the restrictions imposed in the sub lease have to be complied with. This would include the pre-condition to pay 50% of unearned increase. Without the payment of the unearned increase the leasehold right, title and interest of the sub-lessee will not vest in the purchaser. - Thus, unearned increase is payable. The terms of auction did not stipulate that the original sub-lessee shall pay 50% unearned increase. The appellant (Income Tax Department) had agreed and promised to issue sale certificate to the auction purchaser, whose bid was accepted. It is only on payment of 50% unearned increase that an effective transfer can be made by the said sale certificate. In these circumstances, it is for the appellant (Income Tax Department) to make payment of unearned increase. Of course, in case its dues are still payable, it is open to them to take appropriate proceedings against the defaulter assessee in accordance with law.
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