1997 (7) TMI 106 - HC - Income Tax

Issues Involved:

1. Validity of the pre-emptive purchase order under Section 269UD(1) of the Income-tax Act, 1961.
2. Non-observance of the provisions of Section 269UG regarding the tendering of the consideration amount to the seller.
3. Existence of a dispute relating to the title to receive the amount of consideration.
4. Consequences of non-compliance with Section 269UG and applicability of Section 269UH.

Issue-wise Detailed Analysis:

1. Validity of the Pre-emptive Purchase Order:
The petitioner challenged the order dated January 31, 1995, passed by the Appropriate Authority of Income-tax, Calcutta, under Section 269UD(1) of the Income-tax Act, 1961. This order facilitated the pre-emptive purchase of the property by the Central Government for Rs. 16,03,500. The petitioner initially raised multiple grounds against the order, but the case was ultimately argued on the sole ground of non-compliance with Section 269UG.

2. Non-observance of Section 269UG:
The petitioner argued that the respondents failed to tender the consideration amount to the seller within the prescribed period of one month from the end of the month in which the property vested in the Central Government, as mandated by Section 269UG. The respondents admitted this failure but justified it on several grounds, including the seller's non-compliance with requests to hand over possession and submit the original deed of conveyance, and an outstanding liability of Rs. 9.24 lakhs in municipal taxes.

3. Existence of a Dispute Relating to the Title:
The respondents contended that the filing of the writ petition by the vendee created a dispute regarding the title to receive the consideration amount, allowing them to deposit the amount with the appropriate authority under Section 269UG(3). However, the court found that the dispute mentioned in Section 269UG(3) pertains to the entitlement to receive the consideration, not merely the existence of a legal challenge. The case cited by the respondents, Mrs. Sooni Rustam Mehta v. Appropriate Authority, was distinguished as it involved a dispute raised by the vendor, unlike the present case where the vendee filed the petition.

4. Consequences of Non-compliance with Section 269UG:
The court emphasized that the provisions of Section 269UG are mandatory. The failure to tender the consideration amount to the seller within the specified period results in the abrogation of the pre-emptive purchase order under Section 269UD(1) and the revesting of the property in the transferor under Section 269UH. The court referenced the Supreme Court judgment in Prima Realty v. Union of India and other High Court decisions, which supported this interpretation.

Conclusion:
The court concluded that the respondents had no valid justification for not tendering the consideration amount to the seller as required under Section 269UG(1). The reasons provided by the respondents, including the filing of the petition and the outstanding municipal tax liability, were not relevant under the provisions of Section 269UG(3). Consequently, the court held that the pre-emptive purchase order dated January 31, 1995, stood abrogated, and the property revested in the transferor. The writ petition was allowed, and the impugned order was quashed and set aside with all consequential effects.

← Previous Next →