N.C. Rangesh and others vs Inspector General of Registration and others

This Judgment has been overruled by : Appropriate Authority and Commissioner Income Tax Vs. Smt. Varshaben Bharatbhai Shah

and Others, AIR 2001 SC 1339 : (2001) 166 CTR 373 : (2001) 248 ITR 342 : (2001) 3 JT 468 : (2001) 2 SCALE 411 : (2001) 4 SCC

1 : (2001) 2 SCR 349 : (2001) AIRSCW 3174 : (2001) AIRSCW 1069 : (2001) 2 Supreme 305 : (2001) 6 Supreme 327

K.S. Bakthavatsalam, J.—The common question involved in all these writ petitions is about the validity of the circular issued by the

Inspector-General of Registration dated May 29, 1989, and the circular dated March 11, 1977, issued by the same authority.

The petitioners in W.P. Nos. 408, 409, 1466 to 1470 of 1990 are purchasers of land from the one and the same owner Mrs. Subhalakhsmi

Each of the abovementioned purchasers purchased a different extent of undivided interest from the said owner, Mrs. Subhalakshmi, in No. 15,

Venkatarama Iyer Street, T. Nagar, Madras-17. Each of the petitioners entered into an agreement individually and has paid an advance of

Rs.1,001 and the sale consideration agreed by the parties in each transaction exceeds rupees one lakh.

The petitioner in W.P. No. 1389 of 1990 purchased a property measuring an extent of five grounds 1180 sq. ft. in T.S. No. 47, Block No. 37

of Kottur Village, and that property 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 agreement 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 II 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 petitioners in W.P. Nos. 1389, 1525 and 1526 of 1990 have come to this court when the sale deeds are not registered in

view of the impugned circulars by the registering authority.

The same complaint is being made by the vendee/purchasers, the petitioners in W.P. Nos. 408, 409 and 1466 to 1470 of 1990.

The complaint of the petitioner in W.P. No. 408 of 1990 is that a circular dated March 11, 1977, has been issued by the Inspector-General of

Registration requiring the production of a tax clearance certificate under the provisions of section 230A of the Income Tax Act, in the case of a

transfer of a part of the property or an undivided share or interest in the property, even if the consideration for such transfer is less than Rs. two

lakhs. It is also stated by the petitioner that the Inspector-General of Registration purported to issue a circular dated May 29, 1989, which is

impugned in these cases, to all District Registrars of Madras, Madurai and Coimbatore. It is also alleged in the affidavit that in pursuance of circular

letter dated May 29, 1989, wherever any document of sale is presented for registration, conveying only a portion or undivided interest carved out

of a larger extent of land (property) despite the contract of sale agreed to between the parties, for a transfer or conveyance of a specific interest or

a share of the vendor''s property, the Sub-Registrars in Tamil Nadu are insisting on production of no-objection certificate from the Appropriate

Authority, Income Tax Department. It is alleged by the petitioner that both the circulars dated March 11, 1977, and May 29, 1989, are ex-facie

arbitrary, illegal and without jurisdiction. It is also stated that section 230A(1) of the Income Tax Act, 1961 (as amended by the Finance Act,

1988), provides that a tax clearance certificate is necessary, if the valuation of the property transferred exceeds Rs. two lakhs, that the said value

of the transfer being less than Rs. two lakhs, section 230A as it stands today is not at all attracted, that the mischief or illegality brought by the

circular issued by the Inspector-General of Registration runs counter to the plain terms of section 230A of the Income Tax Act, 1961 and that the

circular cannot purport two give directions contrary to the enacted provisions of law and that the Inspector-General of Registration and the Sub-

Registrars functioning under him have to be directed 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 the 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 apparent consideration agreed and stated in the document exceeds Rs. 10 lakhs, that

section 269UC clearly supersedes the provisions of the Transfer of Property Act and the Indian Registration Act, 1908, that the said circular dated

May 29, 1989, clothed with powers under the Registration Act, 1908, interferes with and fetters the quasi-judicial functions performed by the

District Registrar and Sub-Registrars in the matter of registering doncuments. A reference to a Judgment of a Division Bench of this court in Park

View Apartment Builders v. State of Tamil Nadu [1989] TLNJ 375 is made in the affidavit. It is also stated in the affidavit that the circular dated

May 29, 1989, is contrary to the scheme of the Income Tax Act, 1961 (Chapter XXC) and purports to enlarge and confer powers on the

Appropriate Authority, Income Tax Department, Madras, to go into the question of grant of no-objection certificate or sanction even in respect of

a transfer whose value is less than Rs. 10,00,000. It is further stated by the petitioner that the Inspector-General of Registration is bound to act in

conformity with the provisions of the Income Tax Act and the Indian Registration Act, 1908, that the Inspector-General of Registration is not

empowered to insist on the production to two certificates under the Income Tax Act, 1961, for the purpose of registering a ""sale or transfer, one

being section 230A clearance certificate and another being ""no-objection"" certificate in a case where the apparent consideration for the transfer

does not exceed Rs. 10 lakhs. It is further stated in the affidavit that the Inspector-General of Registration is under a legal duty and obligation to

give effect and follow the object and spirit of the Indian Registration Act, 1908, read with the Income Tax Act, 1961, and to proceed to register

the documents presented.

A counter-affidavit has been filed by the Inspector-General of Registration stating that the circulars, which were impugned in these writ petitions,

are only clarificatory in nature, that they have not laid down any law and that the circulars have only reiterated the legal consequences that flow

from section 230A of the Income Tax Act, 1961, and the provisions of Chapter XXC of the Income Tax Act, 1961. It is further claimed in the

counter-affidavit that the provisions of section 230A and Chapter XXC are applicable to the transfer of the undivided 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

while 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 of Registration as the supervising authority under the law is competent to issue clarificatory circular for the guidance of the registering

authorities. It is also stated that the provisions of section 230A of the Income Tax Act and Chapter XXC are independent provisions, that the

circulars issued are in conformity with the provisions of the Indian Registration Act and the Income Tax Act and that the circulars which are

impugned in these writ petitions do not interfere with the quasi-judicial functions of the registering authorities.

In W.P. No. 1389 of 1990 the Appropriate Authority, Income Tax Department, Madras, has filed a counter-affidavit. Mrs. Nalini

Chidambaram, learned counsel appearing for the Appropriate Authority, Income Tax Department, submits that since the question involved in all

these writ petitioners is one and the same, the counter-affidavit filed in W. P. No. 1389 of 1990 may be treated as counter-affidavit in all other

cases also on behalf of the Income Tax Department. It is also claimed in the counter-affidavit that Chapter XXC of the Income Tax Act has been

introduced under the Income Tax Act in order to discourage persons from undervaluing properties at the time of transfer, that it has now come to

the notice of the Income Tax authorities that in order to avoid filing the necessary forms before the appropriate authority and obtain the ""no-

objection certificate"" a single property is truncated into several parts to deliberately reduce the value of the property to less than Rs. 10 lakhs. A

reference to section 269UL of the Income Tax Act, 1961, has been made in the counter-affidavit. It is further claimed that u/s 60 of the Indian

Registration Act, the Inspector-General Registration shall exercise the power of general superintendence over all registration officers, that it is the

duty of the Inspector-General of Registration to ensure that the provisions of section 269UC of the Income Tax Act are complied with by the

Registrars all over Tamil Nadu and, as such the impugned circulars have been issued. It is further claimed in the counter-affidavit that the tabular

statement given by the petitioners shows that the value of the property to be transferred exceeds Rs. 10 lakhs, that the provisions of Chapter XXC

are clearly applicable to the property, that it came to the notice of the appropriate authority that a single property is 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"" u/s 269UL of the Income Tax Act. It is further claimed in the counter-affidavit that he 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 u/s 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 u/s 230A of the Income Tax Act, 1961. Learned counsel further argues that ex facie, section 230A of the Income

Tax Act does not warrant a clearance certificate, and that the impugned circulars drive the parties to the Income Tax Department to get the

Income Tax clearance certificate. Learned counsel further refers to section 3 of the Indian Stamp Act, 1899, and the definition of the term

conveyance"" defined in item No. 23, Schedule I read with section 2(10) of the Indian Stamp Act, 1899. What is conveyed is a part of a larger

extent. Learned counsel further relies upon the decision of a Division Bench of this court in Park View Enterprises Vs. State Government of Tamil

Nadu, . Learned counsel referring to section 269UA, 269UC, and 269UL of the Income Tax Act, 1961, contends that if the value of a property

exceeds Rs. 10 lakhs then alone those abovementioned sections will apply and that, on facts in all these cases, it will not apply. Learned counsel

further argues that the Inspector-General of Registration cannot enlarge the scope of the Income Tax Act, 1961. Learned counsel refers to the

decision in Aphali Pharmaceuticals Ltd. v. State of Maharashtra : 1989(44)ELT613(SC) , with regard to the power of issuing circulars under an

enactment. The sum and substance of the argument of learned counsel is that if the value of the property in the sale deed is below Rs. 2 lakhs, and

that if the value of the property is below Rs. 10 lakhs, there is no necessity to obtain a certificate from the Income Tax authorities when the person

purchase an undivided share in the property and that all that the registering authority is to consider is to see whether the value of the property

mentioned in the sale deed or in the agreement of sale is in accordance with the market value and nothing more. Learned counsel further argues

that, if the registering authorities feel about the market value, it is open to them to take action under the Registration Act, and without doing so, they

cannot blindly follow the circulars which are impugned here, and issued by the Inspector-General of Registration, especially when they exercise

quasi-judicial function under the Registration Act and apply the provisions of the Indian Stamp Act on the facts of each case.

Mrs. Nalini Chidambaram, learned counsel, appearing for the Income Tax Department, contends that the vendee/purchasers cannot maintain

the writ petitions and if at all anybody 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 share to

evade revenue, the present circulars are issued. Learned counsel further argues that in so far as the certificate u/s 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 petition are valid in law.

Mr. V. Sridevan, Special Government Pleader appearing for the Inspector-General of Registration, contends that the circulars which are

impugned here are issued u/s 60 of the Registration Act and that these are clarificatory in nature. Learned counsel contends that section 269UL of

the Income Tax Act casts a mandate on the registering authorities, that what the Registrar has done is to ask the certificate from the Income Tax

Department and as such the said circulars are within the powers of the Registrar under the Registration Act. Learned counsel further argues that

there were some inconvenient circumstance to the petitioners herein and that there is no tax involvement in these cases.

Replying to the arguments of Mrs. Nalini Chidambaram, learned counsel appearing for the Appropriate Authority, Madras, and Mr. Sridevan,

learned counsel appearing for the Inspector-General of Registration, Mr. K. C. Rajappa, learned counsel for the petitioners, states that the

purchasers are also arrived inasmuch as the sellers are excepted to do the same under the Act. Learned counsel also contends that section 60 of

the Registration Act gives the power of general superintendence to the Inspector-General of Registration, that the said circulars direct the transfer

for a transfer to transferor which is not warranted under the Income Tax Act and as such, the power of the quasi-judicial authority''s function is

fettered by these circulars (sic.). Learned counsel, at the same time, points out that it may be open to the Income Tax Department to issue circulars

and that the Inspector-General of Registration cannot issue circulates under the Registration Act. Learned counsel further replies that, for the part

of the property (undivided share) either section 230A of the Income Tax Act, 1961, or Chapter XXC will not apply and as such both the circulars

are illegal and void in law.

The argument of Mr. K. C. Rajappa, learned counsel appearing for the petitioners in W.P. Nos. 408, 409 and 1389 of 1990 had been

adopted by the other counsel appearing for other petitioners.

I have considered the arguments of Mr. K. C. Rajappa, learned counsel appearing for the petitions in W.P. Nos. 408, 409 and 1389 of 1990,

the arguments of Mrs Nalini Chidambaram, learned counsel appearing for Appropriate Authority, Income Tax Department, Madras, and Mr.

V.Sridevan, 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 Income Tax Act, 1961, to understood 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 case

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 the Act shall register any such document unless. . .

Chapter XX-C consisting of sections 269UA to 269UO of the Income Tax Act, 1961, has been introduced by the Finance Act, 1986 with

effect from October 1, 1986. Section 269UA(b) defined ""apparent consideration"" and it runs as follows :

(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 for such transfer as specified in the agreement for transfer;. . .

Section 269UA(d) defines ""immovable property"" which is to the following effect :

''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 (where or not including any machinery, plant, furniture, fittings or

other things therein), which has been constructed or which is to be construed, accruing or arising from any transaction (whethre 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 :

Section 269UC of the Income Tax Act places certain restrictions on transfer of immovable property which is to the following effect :

269UC. (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 of such value exceeding five lakhs rupees as may be prescribed, shall be effect 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 three 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.

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 u/s 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 the agreement for transfer of the immovable proportion respect of which it has received a statement under sub-section (3) of

section 269UC, is furnished, along with such document.

Section 3 of the Indian Stamp Act, 1899, relates to instruments chargeable with duty and section 3(a) of the said Act reads as follows :

every instrument mentioned in that Schedule which, not having been previously executed by any person, is executed in India on or after the first

day of July, 1899. . .

Section 2(10) of the Indian Stamp Act, 1899, defines ''conveyance'' as follows :

Conveyance :- ''Conveyance'' includes a conveyance on sale and every instrument by which property, whether movable or immovable, is

transferred inter vivos and which is not otherwise specifically provided for by Schedule I.

Item No. 23 of the Schedule I of the Indian Stamp Act, 1899, defines ""conveyance"" as follows :

-------------------------------------------------------------------

Description of instrument Proper stamp duty

-------------------------------------------------------------------

Conveyance as defined by section

2(10), not being a transfer

charged or exempted under

No. 62 -

(a) of immovable property Eight rupees for every Rs. 100

situated within the Cities of or part thereof of the market

Madras and Madurai value of the property which is

and Municipal Towns of the subject-matter of

Coimbatore, Salem and conveyance;

Tiruchirappalli.

(b) of any other property. Seven rupees for every Rs. 100

or part thereof of the market

value

of the property which is the

subject-matter of conveyance.

------------------------------------------------------------------

Section 269UA(a) also defines ""agreement for transfer"" which is tothe following effect :

(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"",

A reading of section 230A of the Income Tax Act, 1961, shows that where a document is required to be registered under the provisions of

section 17 of the Indian Registration Act, if it purports to transfer, assign, limit, or extinguish the right, title or interest or 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 u/s 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 the transfer of the immovable properties

furnished. A reading of both sections mentioned above shows that no registering authority is permitted to registered 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 exceed 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 Revenue. The purpose behind section 230A of the Income Tax Act, 1961, is to ensure that such person has either paid

or has made satisfactory provision for payment of liabilities under various taxing enactments. The purpose of the introduction of Chapter XXC was

to enable the Central Government to purpose the immovable properties in certain cases of transfer. Various sections under this Chapter XXC of

the Income Tax Act provide for obtaining a ""no-objection certificate"" for the property valued exceeding Rs. 10 lakhs. So, in my opinion, the

provisions of the Income Tax Act will apply only in a particular circumstances and as per the statute in the Income Tax Act itself.

Now, the circulars which are impugned in these cases can be looked at. Circular dated March 11, 1977, issued by the Inspector-General of

Registration reads as follows :

Sub : Registration procedure. - Income Tax Clearance Certificate u/s 230A of the Income Tax Act - Deeds affecting portions of properties-

Liabilities, revised orders issued.

Ref : No. 1. Inspector-General''s proceedings D. Dis. No. 13053/B3/76 dated March 6, 1976.

Inspector-General''s proceedings No. 95473/Ca/76-1, dated 21-1-1977.

Government Letter No. 10707/V/ (1) /76-6 C.T.7R.L. dated 15-2-1977

(communicated in I.G.''s proceedings No. R Dis. G.O. 609/B3/C2/76 dated 23-2-1977).

In modification of the orders contained in Inspector-General''s proceedings second read above, the registering officers are informed that, in respect

of transfer, etc., of specified separate portion of the portion of the property, the value of the portion of the property transferred alone should be

taken into account and that in cases where undivided right, such as 1/3 or 1/2 common share is transferred, the value of the whole property should

be taken into account for the purpose of section 230A of the Income Tax Act.

District Registrars are requested to bring this to the notice of all Sub-Registrars forthwith.

The receipt of this circular should be acknowledged forthwith. . .

Circular dated May 29, 1989, which is one of the impugned orders, states that if a property which is valued at more than Rs. 10 lakhs is

divided into parts and sold and if the sale consideration thereof is below Rs. 10 lakhs, a ""no-objection certificate"" is required. In my view, both the

circulars impugned herein are outside the purview of the Registration Act. No 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 u/s 230A of the Income Tax Act, 1961, or under Chapter XXC should be the value of the

proprietor 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, neither section 230A of the Income Tax Act,

1961, nor Chapter XXC will apply, especially when an undivided share is sold under a valid sale deed or under a valid agreement of sale as

provided in the Transfer of Property Act. This view of mine is supported by the view taken by a single judge of the High Court of Andhra Pradesh

which is reported in Samudrala Ganesh Rao Vs. State of Andhra Pradesh and Others, . In that case, when the valuation of the interest of 3/40 ths

share was only Rs. 21,775, the learned single judge has held that section 230A of the Income Tax Act is not applicable. With respect, I agree with

the view of the learned judge of the High Court of Andhra Pradesh, in the abovementioned case. In my view, it is the proper construction to be put

on the provisions of the Income Tax Act with which we are concerned.

A Division Bench of this court in a decision in Park View Enterprises Vs. State Government of Tamil Nadu, has considered what are the duties

of the registering authority under the Registration Act, when a document is presented for registration. In that case, with regard to the powers of the

registering authority, the Division Bench has observed as follows (at p. 254 of 189 ITR) :

This right is not conferred upon the registering authority. He could only find out whether the executants who appear before him are the persons

who have executed the document and on going through the document find out under what description in Schedule I it could be classified, and what

proper stamp duty is payable thereon. As far as valuation is concerned, if it is a document which comes u/s 47A and if he finds that the markets

value has not been properly set forth in the instrument, his first duty is to register the instrument and then refer such a document to the Collector for

determining the correct market value and recover the proper duty payable thereon. In respect of any other instrument listed in Schedule I, section

47A procedure cannot be followed. . .

Again at p. 189 ITR 256, the Division Bench has further observed as follows :

The role of the Collector is to find out the market value relating to the chargeability of the instrument and he has to go by the terms of the

document regarding the nature of the transaction. Hence, the impugned circular is contrary to the provisions of the 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 fact

relating to the consideration of market value as required u/s 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 made on the undivided share of land pending in order to collect shortfall of stamp duty. The Division Bench has

held that when a sale deed with a clear intention that only a share in the land is conveyed and that there is no transfer of interest between the parties

in relation to the building, if any, found thereon, then the chargeability to stamp duty could be confined only to the market value of the share of the

land and no other and that article 23 of the Stamp Act alone will apply. In the abovementioned case, the Division Bench has further held that

except the Collector, no authority of the Registration Department, in any other capacity, could fix the market value and decide upon the proper

stamp duty payable in respect of any instrument covered by section 47A of the Act. In the abovementioned case, the Division Bench has further

held that when a conveyance under article 23 is entered into between two parties in respect of a share in land, its registration cannot be refused on

the ground that an agreement which would come under article 5(i) exists as between them and that it had not been duly stamped or registered.

Applying the principles laid down in the abovementioned decisions, I am of the view that the circulars which are impugned in these writ petitions

cannot stand.

Coming to the point with regard to the nature of the circulars, I am of the view that the said circulars are not clarificatory in nature, as

contended by Mr. V. Sridevan, learned Special Government-Pleader appearing for the State. In my view, the registering authorities are duty

bound to register the documents produced if there is no prohibition in the Income Tax Act, 1961. If at all the power is fettered, it is only by section

230A and section 269UL of the Income Tax Act, 1961. Once the registering authority has come to the conclusion that the deeds produced before

them are outside the purview of both these sections mentioned above, I do not think that they can rely upon the circulars and refuse registration. In

my view, the circulars purported to have been issued in these cases have no legs to stand and they have no legal basis also. It is also well settled

that the circulars cannot be in conflict with the provisions of the enactment or the Rules. If authority is needed, a reference to the decision in Aphali

Pharmaceuticals Ltd. v. State of Maharashtra, : 1989(44)ELT613(SC) , may be made.

Though the Inspector-General of Registration can issue executive directions u/s 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

transaction, i.e., selling a property dividing into many shares, it is worth-while to consider amending the Income Tax Act as well as the Registration

Act. As the provision exist on date, the writ petitioner are bound to succeed.

S. Ramalingam J. has held recently in an unreported decision in K.V. Kishore and another Vs. Appropriate Authority and others

OVERRULED, , 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 then 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 the writ petitioners are allowed. However, there will be no order as to costs.