P K YUSUF Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THE two petitioners, father and son, are the owners of two continuous plots of land in Survey No. 985/8 of Thoppumpady village, with extents of 7.5 and 8 cents, respectively. The petitioners have jointly constructed a three-storeyed building on the property, after taking a loan of Rs. 5 lakhs from the bank. The petitioners state that they have subsequently explained to the income-tax authorities their source of funds for the acquisition of the property and the construction of the building thereon. The petitioners entered into an agreement, exhibit P-3, dt. 8th Oct., 1991, with one A.A. Joseph to sell the 15.5 cents of land and the building thereon for a consideration of Rs. 12.75 lakhs. On getting information about this agreement, the first respondent-ITO queried by his communication exhibit P-4, whether the proposal to transfer the property had been communicated to the appropriate authority under s. 269UC of the IT Act, 1961 ("the Act"). The petitioners replied by their letter exhibit P-5 that the agreement to sell related to their separate rights in the properties, the consideration for which was less than Rs. 10 lakhs and, therefore, the provisions of Chapter XX-C of the Act were not applicable. The petitioners thereafter approached the Dy. CIT, the second respondent, with a request to issue appropriate directions to the first respondent to enable him to obtain the necessary clearance certificate under s. 230A of the Act. Pursuant thereto, the petitioners were informed by the first respondent by his letter exhibit P-8 that they had to approach the Appropriate Authority under Chapter XX-C of the Act. The writ petition was then filed challenging this view taken by the respondents.

(2.) SUB -s. (1) of s. 269UC in Chapter XX-C of the Act, r/w r. 48K of the IT Rules, 1962, mandates that notwithstanding anything contained in the Transfer of Property Act, 1882, or in any other law for the time being in force, no transfer of any immovable property of value exceeding Rs. 10 lakhs shall be effected except after an agreement for transfer is entered into between the transferor and the proposed transferee in accordance with the provisions of sub-s. (2) at least three months before the intended date of the transfer. Sub-ss. (2) and (3) require the agreement to be in the form of a statement as specified therein, and the statement has to be furnished to the Appropriate Authority by the parties to the transaction in the manner and within the time prescribed. Sub-s. (1) r/w r. 48K speaks of the transfer of immovable property of value exceeding Rs. 10 lakhs. Immovable property is defined for the purposes of this Chapter in s. 269UA(d) read with the Explanation as meaning, inter alia, any land, or any building or part of a building including any rights therein. The petitioners are separate owners of parcels of the land, and co-owners of the building with an equal share therein (vide exhibit P-6). There is no controversy of these facts. What they are seeking to convey is their separate right in the land and the building, which constitutes immovable property under s. 269UA(d). The consideration for the sale of the right of each one of them does not exceed Rs. 10 lakhs. The immovable property dealt with by each of the petitioners belongs to him and he has got the right to transfer it separately and without reference to the other co-owner. Its value is less than the prescribed limit. Sec. 269UC has therefore no application to the sale though the total consideration for the transfer along with the other co-owner exceeds Rs. 10 lakhs. The fact that a consolidated sale deed of the rights of both the co-owners is proposed to be executed is irrelevant in this context, so long as the separate, though undivided, share of each of the co-owners is of value less than Rs. 10 lakhs. The contention of standing counsel for the Revenue that the co-owners constitute an assessable entity as an AOP appears feeble and does not appeal to me as each of the petitioners has got a separate defined right, and in any case, the status of AOP appears irrelevant so far as a building is concerned by virtue of s. 26 of the Act.

(3.) THE direction contained in exhibit P-8 that the petitioners should approach the Appropriate Authority under Chapter XX-C of the Act is not, therefore, valid in law. The original petition is allowed and exhibit P-8 is quashed. Any application for a clearance certificate under s. 230A will be dealt with in the light of the observations contained in this judgment. There will be no order as to costs.