IMPORTANT

F Please Note: 1. Provisions of section 230A deleted w.e.f. 1-6-2001 by Finance Act, 2001. Accordingly, there is no need to insist upon a certificate U/s. 230A while registering any immovable property.

[I.G.R. Circular No.RGN 27/2001-02, dated 2-6-2001.]

ABSTRACT OF THE INCOME-TAX ACT, 1961

PURCHASE BY CENTRAL GOVERNMENT OF IMMOVABLE PROPERTIES IN CERTAIN CASES OF TRANSFER

ABSTRACT OF THE INCOME - TAX RULES, 1962

Forms

ABSTRACT OF THE INCOME-TAX ACT, 1961

BEARING ON REGISTRATION OF DOCUMENTS

Restrictions on registration of transfers of immovable property in certain cases.

1Section - 230-A. (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 2[Five lakh rupees,] no registering officer appointed under that Act shall register any such document, unless the Assessing Officer certifies that -

(a) such 3person has either paid or made satisfactory provision for payment of all existing liabilities under this Act, the Excess Profits Tax Act, 1940 (15 of 1940), the Business Profits Tax Act, 1947 (21 of 1947), the Indian Income-tax Act, 1922 (11 of 1922), the Wealth-tax Act, 1957 (27 of 1957), the Expenditure-tax Act, 1957 (29 of 1957), the Gift-tax Act, 1958 (18 of 1958), the Super Profits Tax Act, 1963 (14 of 1963), and the Companies (Profits) Surtax Act, 1964 (7 of 1964), or

(b) the registration of the document will not prejudicially affect the recovery of any existing liability under any of the aforesaid Acts.

(2) The application for the certificate required under sub-section (1) shall be made by the person referred to in that sub-section and shall be in such form and shall contain such particulars as may be prescribed.

(3) 4The provisions of sub-section (1) shall not apply in a case where the person referred to in that sub-section is any such institution, association or body, or belongs to any such class of institutions, associations or bodies, as the Board may, for reasons to be recorded in writing, notify in this behalf, in the Official Gazette.

(Also refer Income-tax Rules, 1962 Rule 44A, 44B; Form - 34A)

Please Note:-

1. Inserted by Direct Taxes (Amendment) Act, 1964 w.e.f. 6-10-1964.

2. Substituted for "two lakhs" by Finance Act, 1995 w.e.f.1-7-1995.

3. (a) Form 34A can be made only by the transferor and not by transferee Smt Indira Vs ITO [1984] 150 ITR>

(b) Production of I.T.C. Lease deeds - clarified that what is relevant for the purpose of section 230A is the value of the property and not the value of the interest which is transfered. Documents purporting to transfer, assign, limit or extinguish the right, title or interest of any person to or in any property should not be registered by registering officers without a certificate U/s 230A if the value of the property exceeds 1 Rs.50,000. No.TR>

(c) Tax clearance Certificate U/s 230A applicability to the partition deeds of muslims undivided families clarified that the exemption from the production of Income-tax clearance Certificate for registration of partition deeds is allowed only in regard to partition deeds of Hindu undivided family and not to others. - I.G.R.s Ir.No.RGN 158/79-80 dated 28-2-1980 addressed to D. R. Kolar.

(d) Registration of Lease-cum-sale deed in respect of land allotted by Industrial Area Development Board. Section 230A is not applicable to Housing Boards and Quasi Government bodies because these bodies are not Income Tax assessee. - I.G.R. memo No.159/79-80, dt. 5-3-80

(e) For the purpose of sec.230A, each sale deed has to be treated independently. Cumulative value of documents need not be taken into account for obtaining Income-tax clearance Certificate. IGR Ir. No. RGN 124/80-81 dated 5-8-80 addressed to DR, Kolar).

(f) Sale certificate issued by a Recovery officer of the Income-tax Department need not be registered U/s 17 (2) (xii) of the Registration Act, Under Government letter No.RD17EST 73, dated 24-8-73.

(g) Production of I.T.C. in respect of Deposit of Title Deeds cannot be insisted for its registration as per section 230A - I.G.R.s Letter No. RGN/94/73-74 dated 1-1-1974.

(h) The registration of a document of partition of Joint Hindu family does not require production of a Tax clearance certificate U/s 230A. Letter No. Ass(SIB) 716-37/74 CIT(1) dated 24-12-74 from Commissioner of Income Tax.

(i) Non-compliance of provisions of section 230A will render the Sub-Registrar for disciplinary action. I.G.Rs circular No.2014 RGN 101/71-72 dated 12-8-75.

(j) Registering authorities cannot take cognizance of attachment order, or orders treating the transactions as void. The only is the civil court. Hence no action need be taken by the Sub-Registrars in the matter. I.G.R.s letter No.RGN 86/80/81 dated 23-6-1980 addressed to D. R. Hassan.

(k) Registration of Document - Tax Clearance Certificate - Value of Property shown in the document less than Rs. 2 lakhs - Registering authority has no power to enquire into actual value of property and reject registration on ground that tax clearance certificate not produced.Held Section 45-A of the Karnataka Stamp Act, 1957, does not empower the registering authority to decline to register a document on the ground that the market value of a property has not been truly disclosed in the deed in question. If he has reason to believe that the property has not been properly valued in the instrument, he may refer the document to the Deputy Commissioner for proper valuation after registering the document. The power vested in the registering authority to make a reference is not an arbitrary power but a power to be exercised provided he as valid reason to believe that the property has been undervalued.

Short note Contd....

1. Now it is 5 lakhs.

Section 230A of the Income-tax Act, 1961, is a provision found in a fiscal legislation. It shall have to be understood by reference to the language used and not with the supposed intention behind the provision. If a document purports to transfer any right in any property valued at more than Rs.2 lakhs, section 230A is attracted. The section does not say that, where any document purports to transfer any right in any property "value of which" is more than Rs.2 lakhs, then the section is attracted; instead, it says that the requisite certificate is necessary when the property is valued at more than Rs.2 lakhs. There is a difference between the meaning conveyed by the phraseology which says that the "property valued at" and the phraseology "property value of which is". In the latter case, it is the actual value of the property that shall have to be taken into consideration while, in the former, it is the valuation that has been done by someone who is concerned with the property or the transaction in question. A plain reading of section 230A conveys the idea that if the document purports to transfer any property valued at more than Rs.2 lakhs, the said provision would be attracted. If the valuation is less than Rs.2 lakhs, the registering authority is not given the power to enquire into the actual value of the property. Section 230A now here provides for an enquiry by the registering authority at all. Therefore, the registering authority has no competence to reject the registration of a document only on the ground that a tax clearance certificate under section 230A had not been produced [M.Mohan Shet Vs State of Karnataka ILR - Page 174, Vol. 206 1994.]

(l) If the registering public is ready to pay stamp duty as per the value assessed by the Registering Authority produent only on the ground that a tax clearance certificate under section 230A had not been produced [M.Mohan Shet Vs State of Karnataka ILR - Page 174, Vol. 206 1994.]

(l) If the registering public is ready to pay stamp duty as per the value assessed by the Registering Authority production of Income Tax Clearance Certificate is not necessary [IGR Order No.RGN180/90-91 dt. 12-3-1991]

4 (a) Section 230A of the Income-tax Act, 1961 Whether certificate required when Government is transferor.

The Board have considered the question whether an Income-tax Clearance Certificate under section 230A of the Income-tax Act, 1961, is necessary in a case where the Government is a transferor. They are advised that the expression "person" appearing in section 230A has been used only in the context of those entities which are required to pay income-tax and taxes under various Acts mentioned in clause (a) of sub-section (1) thereof. It, therefore, follows that section 230A is not applicable to those cases which involve registration of documents in which the Government is a transferor.

(b) Notification under section 230A(3) notifying institutions, associations or bodies to which the restrictive provisions of section 230A(1) shall not apply.

(i) to an authority as is referred to in clause (20A) of section 10 of the said Act, namely, an authority constituted in India by or under any law enacted either for the purpose of dealing with satisfying the need for housing accommodation of cities, towns and villages or for both. [Source: Notification No. S.O. 143, dated 21st May, 1974.]

(ii) (a) a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949);

(b) the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955);

(c) a subsidiary bank as defined in clause (k) of section 2 of the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959); and

(d) a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970). [Source:- Notification No. S.O. 144, dated 9th July, 1974.]

(iii) (a) a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956); and

(b) a corporation established by or under a Central, State or Provincial Act. [Source:- Notification No. S.O. 1534, dated 24th March, 1976.]

CHAPTER- XX-C

PURCHASE BY CENTRAL GOVERNMENT OF IMMOVABLE PROPERTIES IN CERTAIN CASES OF TRANSFER

Commencement of Chapter.

Section-269U. The provisions of this Chapter shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different areas.

Definitions.

Section-269UA. In this Chapter, unless the context otherwise requires, -

(a) "agreement for transfer" means an agreement, whether registered under the Registration Act, 1908 (16 of 1908) or not, for the transfer of any immovable property;

(b) "apparent consideration", -

(1) in relation to any immovable property in respect of which an agreement for transfer is made, being immovable property of the nature referred to in sub-clause (I) of clause (d), means, -

(i) if the immovable property is to be transferred by way of sale, the consideration fot such thing or things would ordinarily fetch on sale in the open market on the date on which the agreement for transfer is made;

(B) in a case where the consideration for the transfer consists of thing or things and a sum of money, the aggregate of the price that such thing or things would ordinarily fetch on the sale in the open market on the date on which the agreement for transfer is made, and such sum;

(iii) if the immovable property is to be transferred by way of lease, -

(A) in a case where the consideration for the transfer consists of premium only, the amount of premium as specified in the agreement for transfer;

(B) in a case where the consideration for the transfer consists of rent only, the aggregate of the money (if any) payable by way of rent and the amounts for the service or things forming part of or constituting the rent, as specified in the agreement for transfer;

(C) in a case where the consideration for the transfer consists of premium and rent, the aggregate of the amount of the premium, the moneys (if any) payable by way of rent and the amounts for the service or things forming part of or constituting the rent, as specified in the agreement for transfer.

and where the whole or any part of the consideration for such transfer is payable on any date or dates falling after the date of such agreement for transfer, the value of the consideration payable after such date shall be deemed to be the discounted value of such consideration, as on the date of such agreement for transfer, determined by adopting such rate of interest as may be prescribed in this behalf;

(2) in relation to any immovable property in respect of which an agreement for transfer is made, being immovable property of the nature referred to in sub-clause (ii) of clause (d), means,

(i) in a case where the consideration for the transfer consists of a sum of money only, such sum;

(ii) in a case where the consideration for a transfer consists of a thing or things only, the price that such thing or things would ordinarily fetch on sale in the open market on the date on which the agreement for transfer is made;

(iii) in a case where the consideration for the transfer consists of a thing or things and a sum of money, the aggregate of the price that such thing or things would ordinarily fetch on sale in the open market on the date on which the agreement for transfer is made, and such sum,

and where the whole or any part of the consideration for such transfer is payable on any date or dates falling after the date of such agreement for transfer, the value of the consideration payable after such date shall be deemed to be the discounted value of such consideration, as on the date of such agreement for transfer, determined by adopting such rate of interest as may be prescribed in this behalf;

(c) "appropriate authority" means an authority constituted under section 269UB to perform the functions of an appropriate authority under this Chapter;

(d) "immovable property" means -

(i) any land or any building or part of a building, and includes, where any land or any building or part of a building is to be transferred together with any machinery, plant, furniture, fittings or other things, such machinery, plant, furniture, fittings or other things also.

Explanation: For the purposes of this sub-clause, "land, building, part of a building, machinery, plant, furniture, fittings and other things" include any rights therein;

(ii) any rights in or with respect to any land or any building or a part of a building (whether or not including any machinery, plant, furniture, fittings or other things therein) which has been constructed, or which is to be constructed accruing or arising from any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement of whatever nature), not being a transaction by way of sale, exchange or lease of such land, building or part of a building;

(e) "persons interested", in relation to any immovable property, includes all persons claiming, or entitled to claim, an interest in the consideration payable on account of the vesting of that property in the Central Government under this Chapter;

(f) "transfer", -

(i) in relation to any immovable property referred to in sub-clause (I) of clause (d), means transfer of such property by way of sale or exchange or lease for a term of not less than twelve years, and includes allowing the possession of such property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882).

Explanation: For the purposes of this sub-clause, a lease which provides for the extension of the term thereof by a further term or terms shall be deemed to be a lease for a term of not less than twelve years, if the aggregate of the term for which such lease is to be granted and the further term or terms for which it can be so extended is not less than twelve years;

(ii) in relation to any immovable property of the nature referred to in sub-clause (ii) of clause (d), means the doing of anything (whether by way of admitting as a member of or by way of transfer of shares in a co-operative society or company or other association of persons or by way of any agreement or arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, such property.

x x x x x

Restrictions on transfer of immovable property.

Section - 269-UC. (1) Notwithstanding anything contained in the Transfer of Property Act, 1882 (4 of 1882), or in any other law for the time being in force no transfer of any immovable property in such area and of such value exceeding five lakh rupees, as may be prescribed, shall be effected except after an agreement for transfer is entered into between the person who intends transferring the immovable property (hereinafter referred to as the transferor) and the person to whom it is proposed to be transferred (hereinafter referred to as the transferee) in accordance with the provisions of sub-section (2) at least four months before the intended date of transfer.

(2) The agreement referred to in sub-section (1) shall be reduced to writing 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.

(4) Where it is found that the statement referred to in sub-section (2) is defective, the appropriate authority may intimate the defect to the parties concerned and give them an opportunity to rectify the defect within a period of fifteen days from the date of such intimation or within such further period which, on an application made in this behalf, the appropriate authority may, in its discretion, allow and if the defect is not rectified within the said period of fifteen days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Chapter, the statement shall be deemed never to have been furnished.

Order by appropriate authority for purchase by Central Government of immovable property.

Section - 269UD. (1) Subject to the provisions of sub-sections (1A) and (1B), the appropriate authority after the receipt of the statement under sub-section (3) of section 269UC in respect of any immovable property, may, notwithstanding anything contained in any other law or any instrument or any agreement for the time being in force, make an order for the purchase by the Central Government of such immovable property at an amount equal to the amount of apparent consideration:

Provided that no such order shall be made in respect of any immovable property after the expiration of a period of two months from the end of the month in which the statement referred to in section 269UC in respect of such property is received by the appropriate authority:

Provided further that where the statement referred to in section 269UC in respect of any immovable property is received by the appropriate authority on or after the 1st day of June, 1993, the provisions of the first proviso shall have effect as if for the words "two months", the words "three months" had been substituted:

Provided also that the period of limitation referred to in the second proviso shall be reckoned, where any defect as referred to in sub-section (4) of section 269UC has been intimated, with reference to the date of receipt of the rectified statement by the appropriate authority.

Provided also that in a case where the statement referred to in section 269UC in respect of the immovable property concerned is given to an appropriate authority, other than the appropriate authority having jurisdiction in accordance with the provisions of section 269UB to make the order referred to in this sub-section in relation to the immovable property concerned, the period of limitation referred to in the first and second proviso shall be reckoned with reference to the date of receipt of the statement by the appropriate authority having jurisdiction to make the order under this sub-section.

Provided also that the period of limitation referred to in the second proviso shall be reckoned, where any stay has been granted by any Court against the passing of an order for the purchase of the immovable property under this Chapter, with reference to the date of vacation of the said stay.

(1A) Before making an order under sub-section (1), the appropriate authority shall give a reasonable opportunity of being heard to the transferor, the person in occupation of the immovable property if the transferor is not in occupation of the property, the transferee and to every other person whom the appropriate authority knows to be interested in the property.

(1B) Every order made by the appropriate authority under sub-section (1) shall specify the grounds on which it is made.

(2) The appropriate authority shall cause a copy of its order under sub-section (1) in respect of any immovable property to be served on the transferor, the person in occupation of the immovable property if the transferor is not in occupation thereof, the transferee, and on every other person whom the appropriate authority knows to be interested in the property.

Re-vesting of property in the transferor on failure of payment or deposit of consideration.

Section 269UH. (1) If the Central Government fails to tender under sub-section (1) of section 269UG or deposit under sub-section (2) or sub-section (3) of the said section, the whole or any part of the amount of consideration required to be tendered or deposited thereunder within the period specified therein in respect of any immovable property which has vested in the Central Government under sub-section

(1) or, as the case may be, sub-section (6) of section 269UE, the order to purchase the immovable property by the Central Government made under sub-section (1) of section 269UD shall stand abrogated and the immovable property shall stand revested in the transferor after the expiry of the aforesaid period:

Provided that where any dispute referred to in sub-section (2) or sub-section (3) of section 269UG is pending in any court for decision, the time taken by the court to pass a final order under the said sub-section shall be excluded in computing the said period.

(2) Where an order made under sub-section (1) of section 269UD is abrogated and the immovable property re-vested in the transferor under sub-section (1), the appropriate authority shall make, as soon as may be, a declaration in writing to this effect and shall

(a) deliver a copy of the declaration to the persons mentioned in sub-section (2) of section 269UD; and

(b) deliver or cause to be delivered possession of the immovable property back to the transferor, as the case may be, to such other person as was in possession of the property at the time of its vesting in the Central Government under section 269UE.

Restrictions on registration, etc., of documents in respect of transfer of immovable property.

Section - 269-UL. (1) 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 transfer of such property for an amount equal to the apparent consideration therefore as stated in agreement for transfer of the immovable property in respect of which it has received a statement under sub-section (3) of section 269UC, is furnished along with such document.

(2) Notwithstanding anything contained in any other law for the time being in force, no person shall do anything or omit to do anything which will have the effect of transfer of any immovable property unless the appropriate authority certifies that it has no objection to the transfer of such property for an amount equal to the apparent consideration therefor as stated in the agreement for transfer of the immovable property in respect of which it has received a statement under sub-section (3) of section 269UC.

(3) In a case where the appropriate authority does not make an order under sub-section (1) of section 269UD for the purchase by the Central Government of an immovable property, or where the order made under sub-section (1) of section 269UD stands abrogated under sub-section (1) of section 269UH, the appropriate authority shall issue a certificate of no objection referred to in sub-section (1) or, as the case may be, sub-section (2) and deliver copies thereof to the transferor and the transferee.

Section 269UO- Chapter not apply to certain transfer-

The provisons of this Chapter shall not apply to or in relation to any immovable property where the agreement for transfer of such property is made by a person to his relative on account of natural love and affection, if a recital to that effect is made in the agreement for transfer.

The term "relative" is defined in Sec.2(41) as stated below.-

(41) "relative", in relation to an individual, means the husband, wife, brother or sister or any leneal assendedant or descendant of that individual ;

JUDICIAL ANALYSIS

Purchase of immovable property by Central Government - [S. P. Bharucha, N.Santosh Hegde and Y.K.Subharwal., JJ] property subject matter of transfer - to be seen in real light and not in technical manner - co-owners -single agreement of transfer of property by co-owners - share of each owner definite - property to be transferred is entire property - provisions for pre-emptive purchase apply where apparent consideration of property exceeds specified limit - Income-tax Act, 1961, Ch. xx-c, ss. 269uc, 269ud - income-tax rules, 1962, r. 48k ; form no. 37-I.

For attracting the provisions of Chapter XX-C of the Income-tax Act, 1961, relating to pre-emptive purchase by the Central Government of immovable property, what has t be seen is : what is the property which is the subject-matter of transfer and what is the apparent consideration for such transfer. This has to be seen in a real light with due regard to the object of the chapter and not in an artificial or technical manner.

Under an agreement respondents Nos.2 and 3, two co-owners of immovable property situated in Ahmedabad, agreed to sell the property to respondent No.1 for the sum of Rs. 47 lakhs which was above the limit prescribed for application to the appropriate authority under section 269UC of the Income-tax Act, 1961. The appropriate authority came to the conclusion that the apparent consideration in respect of that property under the agreement was less than the market value thereof by 15 percent. or more and, after the respondents showed cause, an order of pre-emptive purchase was made. The respondents preferred a writ petition to the High Court challenging the validity of that order. The High Court held, inter alia, that the provisions of Chapter XX-C were not attracted because where co-owners had agreed to transfer their property rights and each co-owner was to be paid an amount of consideration, which was less than the amount specified, viz., Rs. 25 lakhs, each co-owner would get less than Rs. 25 lakhs under the agreement and to such a case Chapter XX-C would not apply. On appeal to the Supreme Court:

Held- reversing the decision of the High Court, that the agreement was for the sale of the immovable property and that the equal shares of respondents Nos. 2 and 3 therein were to be transferred to respondent No.1 was a necessary incident of such sale. The parties had also in Form No. 37-I correctly stated that what was being sold was the property and not the one-half shares of the transferors and that the total apparent consideration for the transfer was Rs.47 lakhs. All that was transferred was the immovable property and the consideration for such transfer was Rs. 47 lakhs. It was of no consequence that respondents Nos. 2 and 3 owned the property as tenants-in-common or that that was how they had shown their ownership in their income-tax returns. The provisions of Chapter XX-C applied.

Held- further, that even if the agreement of transfer had been so drawn as to show the transfer of the equal shares of respondents Nos. 2 and 3 in the property the result would be the same, for, looked at realistically, it was the immovable property which was the subject matter of transfer.

Jodhram Daulatram Arora v. m. b. kodnani [1996] 221 itr>

k.v.kishore v. appropriate authority [1991] 189 itr>over ruled.

decision of the gujarat high court in Smt.Varshaben Bharatbhai Vhah v. appropriate authority [1996] 221 itr>

Varshaben Bharatbhai Shah and others. (In the Supreme Court of India, March 13, 2001)

* Please Note:- The judgements narrated below are over ruled by the judgment narrated above.

1. Section - 269-UC Value of share of each co-owner not total value, to be taken into account even when property sold by all co-owners under one deed.

Question for consideration:-

When an immovable property owned by several persons is conveyed by all the co-owners together under one Sale Deed, whether it is the value of the entire property that has to be taken into consideration or the value of the share of each of the co-owners that has to be taken into consideration for the purpose of Section-269UC of the Act ? HELD : For all purposes, a co-owner will be a owner of his definite share in the property and he is entitled to alienate his share on his own account without the consent of other co-owners. The fact that all the co-owners together agree to sell the property to one or more persons and agree to convey it under one sale deed does not in any way make them as the joint owners of the property. The property may be one item; in other words, it may be a building, a piece of land, but in law it will have to be considered as consisting of as many different bits of properties as there are co-owners. The general law which is not over-rided by Section 269UC of the Act permits and recognises plurality of ownership. Therefore, for the purpose of Section 269UC of the Act the value of the share of each co-owner has to be taken into account and not the total value of the shares of the co-owners even when all of them together sell the property and convey the title under one deed. [Appropriate Authority, Income-Tax Department Vs J.S.A.Raghava Reddy W.A.No.1705 of 1992, dated 8th September 1992, I.L.R. 1992 KAR 3268 D:B]

2. Transfer of Immovable Property Tax Clearance Certificate under Section 230A of Income-tax Act, 1961, or no Objection Certificate under Chapter XXC To be obtained only if value of property or interest in property transferred is less than the prescribed limit Sale of Undivided Interest in land for a value below limit Value of entire property above limit Provisions do not apply Circulars contrary to provisions Not valid Income-Tax Act, 1961, Section 230A, CH. XXC Circulars issued by Inspector General of Registration dated 11-2-1977 and 29-5-1989.

Circulars Cannot contravene provisions of Act A circular cannot be issued contravening the provisions of a statute.

The circulars dated February 11, 1977, and May 29, 1989, issued by the Inspector-General of Registration to the effect that, in cases where undivided interest in immovable property is sold, a certificate under section 230A of the Income-tax Act, 1961, or a no objection certificate under Chapter XXC from the appropriate authority will have to be obtained if the value of the entire property happens to be more than Rs.2 lakhs or Rs.10 lakhs, as the case may be, are outside the purview of the Registration Act and they are ex facie illegal and contrary to the provisions of the Income-tax Act, 1961. The Inspector-General of Registration purporting to act under the Registration Act cannot read something into the Income-tax Act and require his subordinates to follow the same. The criteria to obtain a certificate either under section 230A or under Chapter XXC should be the value of the property or the interest of the person in the property that is sought to be transferred and it is only with reference to that the income-tax clearance certificate could be insisted upon. When an undivided share is sold under a valid sale deed or a valid agreement of sale as provided in the Transfer of Property Act for a consideration which is below the limit prescribed under section 230A or Chapter XXC, the said provisions will not apply. [N.C.Rangesh and others Vs Inspector General of Registration and others:- Income-tax Reports, 1991, Volume No.189, page No. 270.]

3. Transfer of Immovable property Restrictions on Transfer not applicable to court auction sale of property Income-tax Act, 1961, ss. 269UC, 269UL.

Section 269UC of Chapter XX-C of the Income-tax Act, 1961, imposes certain restrictions on the transfer of immovable property of the types defined in section 269UA where the value of the property exceeds the prescribed limit. Section 269UL>made applicable to a court auction sale which does not require any registration. It is hardly possible to follow the procedure prescribed in Chapter XX-C in so far as the court auction sale is concerned. In a court auction sale, no one can contemplate that there would be an agreement of sale as contemplated under section 269UC of the Act. The judgment-debtor can never be an agreement holder by reason of the fact that his property is being compulsorily brought to sale by auction only at the instance of the decree-holder, and that the judgment-debtor who is not a willing seller is not a party to any agreement and that there is no agreement at all in so far as the judgment-debtor is concerned. Hence, section 269UC cannot be made applicable in so far as the court auction sale is concerned and section 269UL>

ABSTRACT OF THE INCOME - TAX RULES, 1962

Application for tax clearance certificate for registration for documents in certain cases.

44A. An application under sub-section (2) of section 230A for a certificate under sub-section (1) of that section shall be made in duplicate in Form No.34A to the Assessing Officer.

Grant of tax clearance certificate or refusal.

44B. Within 60 days of the receipt of the application referred to in rule 44A, the Assessing Officer shall -

(i) if he is satisfied that the applicant has either paid or made satisfactory provision for payment of all existing liabilities under the enactments specified in clause (a) of sub-section (1) of section 230A or that the registration of the document referred to in the application will not prejudicially affect the recovery of any such liability, grant the certificate and forward the same to the registering officer concerned; or

(ii) if he is not so satisfied, pass an order in writing refusing to grant the certificate, recording his reasons therefor.

x x x x x

P A R T - X-C

PURCHASE OF IMMOVABLE PROPERTIES UNDER CHAPTER XX-C

Rule - 48-I. Rate of interest for determination of discounted value of consideration.

The rate of interest for determination of the discounted value of consideration under sub-clause (1) or sub-clause (2) of clause (b) of section 269UA shall be eight per cent per annum.

x x x x x

Rule - 48-K. Value of immovable property -

The value of any immovable property for the purposes of sub-section (1) of section 269UC shall be, where the agreement for transfer prescribed under the said sub-section

(i) is entered into, on or before the 31st day of July, 1995, the apparent consideration of that property exceeding 10 lakh rupees;

(ii) is entered into, after 31st day of July, 1995, the apparent consideration of that property as specified in column (3) of the table>

x x x x

"114B. All documents pertaining to the transactions in relation to which permanent account number or General Index Register Number to be quoted for the purpose of clause (c) of sub-section (5) of section 139A. - Every person shall quote his permanent account number or General Index Register Number in all documents pertaining to the transactions specified below, namely:-

(a) Sale or purchase of any immovable property valued at five lakh rupees or more;

(b) Sale or purchase of a motor vehicle or vehicle, as defined in clause (28) of section 2 of the Motor Vehicle Act, 1988 (59 of 1988), which requires registration by a registering authority under Chapter IV of that Act.

(c) A time deposit, exceeding fifty thousand rupees, with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);

(d) A deposit, exceeding fifty thousand rupees, in any account with Post Office Saving Bank;

(e) A contract of a value exceeding ten lakh rupees for sale or purchase of securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);

(f) Opening an account with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);

(g) Making an application for installation of a telephone connection (including a cellular telephone connection);

(h) Payment to hotels and restaurants against their bills for an amount exceeding twenty five thousand rupees at any one time;

Provided that a person shall quote General Index Register Number in the documents pertaining to transactions specified in above clauses (a) to (h) till such time the permanent account number is allotted to him;

Provided further that where a person, making an application for opening an account referred to in clause (f) of this rule, is a minor and who does not have any income chargeable to income tax he shall quote the permanent account number or General Index Register Number of his father or mother or guardian, as the case may be, in the document pertaining to the transaction referred to in said clause (f):

Provided also that any person, who has not been allotted a permanent account number or who does not have a General Index Register Number and who makes payment in cash or otherwise than by a crossed cheque drawn on a banker by a crossed bank draft in respect of any transaction specified in clauses (a) to (h), shall make a declaration in Form No.60 giving therein the particulars of such transaction.

114C. Class or classes of persons to whom provisions of section 139A shall not apply. - (1) The provisions of section 139A shall not apply to following class or classes of persons, namely:-

(i) The persons who have agricultural income and are not in receipt of any other income chargeable to income-tax:

Provided that such persons shall make declaration in Form No.61 in respect of transactions referred to in clauses (a) to (h) of rule 114B.

(ii) The non-residents referred to in clause (30) of section 2:

Provided that a non-resident, who enters into any transaction referred to in clauses (a) to (h) of rule 114B, shall furnish copy of his passport.

(2) Every person including:-

(a) A registering officer appointed under the Registration Act, 1908 (16 of 1908);

(b) A registering authority referred to in clause (b) of sub-rule (1);

(c) Any manager or officer of a banking company referred to in clause (c) of sub-rule (1);

(d) Post master;

(e) Stock, broker, sub-broker, share transfer agent, banker to an issue, trustee of a trust deed, registrar to issue, merchant banker, under writer, portfolio manager, investment adviser and such other intermediaries registered under section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);

(f) Any authority or company receiving application for installation of a telephone by it;

(g) Any person raising bills referred to in clause (h) of sub-rule (1);

(h) Any person who purchases or sells the immovable property or motor vehicle, receiving any document relating to a transaction specified under clauses (a) to (h) of sub-rule (1) of rule 114B shall ensure that permanent account number or General Index Register Number has been duly quoted in the document or declaration in Form No.60 or Form No.61, as the case may be, received by such person.

114D. Time and manner in which persons referred to in sub-rule (2) of rule 114C shall intimate the details of transaction to the Director of Income-tax (Investigation). - (1) Every person referred to in sub-rule (2) of rule 114C shall forward to the concerned Director of Income-tax (Investigation), the following documents, namely:-

(a) A statement indicating therein details of all documents pertaining to any transaction referred to in clauses (a) to (h) of rule 114B wherein the permanent account number or General Index Register Number is quoted;

(b) The statement referred to in clause (a) shall contain:-

(i) Name and address of the person entering into the transactions;

(ii) Nature and date of the transaction;

(iii) Amount of each transaction;

(iv) Permanent account number or General Index Register Number quoted in the documents pertaining to any transaction.

(c) Copies of declaration in Form No.60 referred to in third proviso to rule 114B;

(d) Copies of declaration in Form No.61 referred to in clause (a) of sub-rule (1) of rule 114C;

(e) Copies of passport referred to in proviso to sub-rule (1) of rule 114C.

(2) The statement, declaration and copies of passports referred to in sub-rule (1) shall be forwarded to the concerned Director of Income-tax (Investigation) by every person referred to in sub-rule (2) of rule 114C within one month of receipt of the same by such person. [Notification from Ministry of Finance, Department of Revenue C.B.D.T. SO 889(E) dated 9-10-1998]

Income Tax Department, New Delhi