TMI Blog1990 (3) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... rty belongs to a Hindu undivided family consisting of the petitioners, and for the purpose of developing the said property, the petitioners demolished the old building standing thereon and obtained a planning permission and building permit sanctioned by the M. M. D. A. and the Corporation of Madras for construction of a new building. M/s. Sree Builders have undertaken the construction work with the purchasers of undivided share/interest in the said property. In the course of their business, the petitioners entered into about 10 agreements in respect of undivided share of the property (365/13180). The petitioners in W. P. Nos. 1525 and 1526 of 1990 have entered into an agreement of sale in favour of one Vasantha Rajamanickam for the sale of the property in No. 11, Crescent Park 11 Road, Adyar, Madras, for a total consideration of Rs. 13,00,000. In view of clause 9 of the agreement, the petitioners' power of attorney holder has executed five sale deeds in respect of the undivided share in the said property. The grievance is common in all these writ petitions. For the purpose of deciding these cases, it is not necessary to state the facts in extenso, except to say that the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected to ignore the circular. It is also stated that the circular issued on May 29, 1989, is contrary to law, that the said circular, compelling the parties to a document to make an application to the Appropriate Authority, Income-tax Department, Madras, for a no objection certificate despite the fact that the transfer relates to a property less than Rs. 10 lakhs, in effect, overrides and nullifies the provisions of Chapter XXC of the Income-tax Act, 1961 (sections 230A and 269UC of the said Income-tax Act, 1961 ), that the provisions of section 269UA contemplate the transfer of a part of the property or a building and unless such transfer of a part or portion of the property exceeds Rs. 10 lakhs, there is no requirement of the parties to apply for and obtain a "no objection certificate" from the appropriate authority, Income-tax Department. It is further stated that in all those cases, the apparent consideration of the sale deeds is far below the amount specified in Chapter XXC and as such there is no need to provide a "no- objection certificate" from the appropriate authority. It is also stated in the affidavit that the provisions of section 269UC are attracted only if the appare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest or share which is valued at less than rupees two lakhs, on account of the fact that the property transferred or conveyed is not a specific one but only a common interest. It is further claimed in the counter-affidavit that the term "property" referred to in section 230A of the Income-tax Act covered the whole property in the case of transfer of the undivided right or share therein, that in the case of a sale of an undivided interest, the consideration for the whole property has to be taken into account for obtaining a "no-objection certificate" under Chapter XXC of the Income-tax Act, that the contention that the sale, consideration for an undivided interest alone has to be taken into account for the purpose of obtaining "no-objection certificate" is not sustainable under law, that a single owner may split up the transaction to avoid obtaining "no-objection certificate" under the Income-tax Act, that the said action is not permissible under the Act and that, therefore, as emanating from the provisions of section 230A and Chapter XXC of the Income-tax Act, the impugned circulars have been issued. It is further submitted in the counter-affidavit that the Inspector-General o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sub-divided and sold to various individuals to avoid going before the appropriate authority that it will not take the transfer out of the purview of Chapter XXC and that if the petitioners could file the necessary forms before the appropriate authority, and if the appropriate authority is satisfied, it would issue a "no-objection certificate" under section 269UL of the Income-tax Act. It is further claimed in the counter-affidavit that the impugned circulars are just and valid. Mr. K. C. Rajappa, learned counsel appearing for the petitioners, contends that the Inspector-General of Registration has no power, under the statute to issue both the circulars, especially with regard to the applicability of the Income-tax Act. Referring to section 230A and Chapter XXC, learned counsel further contends that no certificate is necessary if the value of the property falls below the value fixed under the Income-tax Act, that under section 230A of the Income-tax Act, 1961, the value should be more than Rs. 2 lakhs and that the authorities are concerned only to see whether the agreement of sale can come under section 230A of the Income-tax Act, 1961. Learned counsel further argues that ex fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is aggrieved, it is only the vendors. Learned counsel further contends that the entire property is sold by dividing into undivided shares and as such the entirety has to be taken into account and not the single sale deed. Learned counsel refers to section 230A of the Income-tax Act. She further refers to section 60 of the Registration Act and contends that the Inspector-General of Registration has got the power to issue circulars, especially when the vendors decided to divide the shares and try to get over Chapter XXC. Learned counsel further argues that if all the sale deeds are to be aggregated it exceeds Rs. 10 lakhs and as such there is no arbitrariness in issuing the said circulars. Learned counsel further contends that only to curb the tendency of sellers in dividing the property into so many plots in the undivided shares to evade revenue, the present circulars are issued. Learned counsel further argues that in so far as the certificate under section 230A is concerned, it can go on though Chapter XXC may not apply. The argument of learned counsel appearing for the Appropriate Authority, Income-tax Department, is that the circulars which are impugned in these writ petitions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Special Government-Pleader, learned counsel appearing for the Inspector-General of Registration. The question which falls for consideration in these cases is within a short compass. It is necessary to refer to certain statutory provisions of the Incometax Act, 1961, to understand the cases on hand. Section 230A of the Income-tax Act, 1961, provides for certain restrictions on registration of transfers of immovable property in certain cases and reads as follows : "230A(1) : Notwithstanding anything contained in any other law for the time being in force, where any document required to be registered under the provisions of clause (a) to clause (e) of sub-section (1) of section 17 of the Indian Registration Act, 1908 (16 of 1908), purports to transfer, assign, limit, or extinguish the right, title or interest of any person to or in any property valued at more than two lakhs rupees, no registering officer appointed under that Act shall register any such document unless.." Chapter XX-C consisting of sections 269UA to 269UO of the Incometax Act, 1961, has been introduced by the Finance Act, 1986 with effect from October 1, 1986. Section 269UA(b) defined "apparent consideration" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iting in the form of a statement by each of the parties to such transfer or by any of the parties to such transfer acting on behalf of himself and on behalf of the other parties. (3) Every statement referred to in sub-section (2) shall.... (i) be in the prescribed form ; (ii) set forth such particulars as may be prescribed ; and (iii) be verified in the prescribed manner, and shall be furnished to the appropriate authority in such manner and within such time as may be prescribed, by each of the parties to such transaction or by any of the parties to such transaction acting on behalf of himself and on behalf of the other parties." Section 269UL places certain restrictions on registration, etc., of documents in respect of transfer of immovable property and section 269UL(1) of the Act reads as follows : "Notwithstanding anything contained in any other law for the time being in force, no registering officer appointed under the Registration Act, 1908 (16 of 1908), shall register any document which purports to transfer immovable property exceeding the value prescribed under section 269UC unless a certificate from the appropriate authority that it has no objection to the tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 of the Indian Registration Act, if it purports to transfer, assign, limit, or extinguish the right, title or interest of any person to or in any property valued at more than rupees two lakhs, no registering officer shall register the said document, unless a certificate is obtained. A reading of section 269UL of the Income-tax Act also is to the effect that no registering officer shall register any document which purports to transfer immovable property exceeding the value prescribed under section 269UC unless certificate from the appropriate authority that it has no objection to the transfer of such property for an amount equal to the apparent consideration therefor as stated in the transfer of the immovable property is furnished. A reading of both sections mentioned above shows that no registering authority is permitted to register any document if the value of the said property exceeds Rs. 2 lakhs in the case of section 230A of the Income-tax Act and if the said value of the property exceeds Rs. 10 lakhs then Chapter XXC will apply. These provisions are enacted in the Income-tax Act, 1961, for the purpose of curbing the tendency of the vendors to evade the tax due to the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o doubt, section 60 of the Registration Act gives the power of superintendence to the Inspector-General of Registration. But, in my view, the Inspector-General of Registration cannot interfere with the quasi-judicial function of the registering authority. It cannot be disputed that the power is quasi-judicial in nature. In my view, the issuance of the said circulars are ex facie illegal and contrary to the provisions of the Income-tax Act, 1961, and interfere with the power of a quasi-judicial authority. When the Income-tax Act, 1961, prescribes the value of the property to obtain a certificate, in my view, the Inspector-General of Registration, purporting to act under the Registration Act, cannot read something into the Income-tax Act and require the subordinates to follow the same. In my view, the criterion to obtain a certificate either under section 230A of the Income-tax Act, 1961, or under Chapter XXC should be the value of the property or the interest of the person in such property that was sought to be transferred and it was only with respect to that extent that the income-tax clearance certificate could be insisted upon. As such, in my view, in all these cases before me, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act when it directs the registering authorities that, when sale deeds relating to sale of an undivided share in land come for registration, they must be kept pending and copies of them to be sent to the Inspector-General of Registration, and that the Deputy Inspector-General of Registration will inspect the properties and decide whether it comes under the Amendment Act 38 of 1987 and he will find whether there has been any suppression of facts relating to the consideration of market value as required under section 27, and communicate necessary orders to the concerned Registrar, so that the shortfall noticed in stamp duty could be collected and then only the documents should be registered. Therefore, this circular, in pith and substance, deals with documents relating to 'conveyance' which would come under article 23 of Schedule I to the Act, and in respect of them, as stated earlier, in view of section 47A, what the Inspector-General of Registration had directed is opposed to the provisions of the Act . . ." In the abovementioned case, the Division Bench of this court was considering a circular issued by the Registrar directing the registering authorities to keep the sale deeds ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Though the Inspector-General of Registration can issue executive directions under section 60 of the Registration Act, he cannot add something to the provisions of the Income-tax Act, 1961, and issue instructions. If the Revenue feels that there is a lot of tax evasion by resorting to such transactions, i.e., selling a property dividing into many shares, it is worthwhile to consider amending the Income-tax Act as well as the Registration Act. As the provisions exist on date, the writ petitioners are bound to succeed. S. Ramalingam J. has held recently in an unreported decision in K. V. Kishore v. Appropriate Authority, Income-tax Department-since reported in [1991] 189 ITR 264 (Mad) (W. P. No. 4537 of 1988 dated 15-3-1990), that Chapter XXC of the Income-tax Act, 1961, cannot be applied taking the total consideration of the collective shares. In that case, the value of each share was less than Rs. 10 lakhs and what was sold was the individual undivided share in the said property. In view of my conclusion arrived at, I hold that the circulars issued in these cases are ex facie illegal and as such the impugned circulars are declared illegal and invalid. In the result, all th ..... 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