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Judgment
Since common questions of law and facts are involved in these two writ petitions by Cooperative Societies of Varanasi in which common prayers have also been made and they stand tagged we dispose of them by this common judgment in which tour fold prayers have been made:
(i) To quash the order dated 2481990 passed by the Additional Collector (Finance and Revenue) District Varanasi as contained in Annexure3.
(ii) To declare Section 230A of the Income Tax Act, 1961 as invalid.
(iii)To command the respondents not to refuse registration of the saledeeds executed by the petitioners societies to its members on ''no profit and no loss basis'' to its members.
(iv)The respondents be directed not to insist the petitioners in obtaining no objection certificate from the Income Tax Department for transferring the lands, valuing less than the prescribed limit under Section 230A of the Income Tax Act, 1961.
A perusal of the impugned order shows that the Additional Collector (Finance and Revenue) District Varanasi held valid the suspension of registration of that deeds by the Deputy Registrar, Ram Nagar in the backdrop of his explanation (copy not appended), Enquiry Report of the Deputy Commissioner, Stamp (copy not appended) Letter No. 2904/4=323 dated 16589 of the I.G. Registration, Allahabad (Copy not appended) and Letter No. P.O. 534/Comm/CIT(C)/KNP/T/8889/12144 dated 2831989 of the Income Tax Commissioner (Central), Kanpur (appended as Annexure1).
I Relevant Part of Annexure1 reads thus:
�It has been brought to the notices to the under signed that M/s. Bharat Sewak Samaj Sahkari Grih Nirman Samiti, Varanasi is undertaking the sales of land and these saledeed are being registered by the SubRegistrar without insisting of Income Tax clearance certificate required under Section 230A of the Income Tax Act, 1961. Similar is the petition in respect of various other societies. Some of which are M/s. Bhartiya Sahkari Awas Samiti Ltd. Both are situated at Varanasi, since the landed property of these housing societies exceeds the prescribed limit, it is obligatory on the societies to obtain Income Tax clearance certificate under Section 230A of the Income Tax Act, 1961. Before getting the saledeeds of land registered before the SubRegistrar. I also understand that areawise market rates have been fixed by the District Authorities in each District and stamp duty is charge on the basis of these rates. But the Cooperative societies are exempted from stamp duty and therefore they are making misuse of this facility and not taking Income Tax clearance certificate under Section 230A of the Income Tax Act, 1961. If the land holding or the sale deed to be registered or the price of the land as obtainable on the basis of fixed circle rates exceeds the limit of Rs. 2,00,000 of the societies are required to obtain Income Tax clearance certificate under Section 230A before the actual registration of the saledeeds. It may also be mentioned here that originally the limit under Section 230A was Rs. 60,000 only and w.e.f. 141988 this limit has been sized to Rs. 2,00,000.
The registration of plot is, contravention of the provisions of Section 230A of the Income Tax Act, 1961 besides being illegal, leads to evasion of right full Income lax also. I am therefore writing to you to please consider the advisability of directing all SubRegistrars of the State of U.P. to get the required clearance certificate from the Income Tax Department of the respective places before Registering sale deed.�
2.2 The Petitioners have appended as Annexure2 copy of Letter bearing F. No. 230A/9091 dated 18th May, 1990 of the Assistant Commissioner of Income Tax, Varanasi addressed to the Registrar, Varanasi which reads thus:
�This is to clarify that Section 230A prohibits registration of a document purporting to transfer, assign, limit, or extinguish the right, title, or interest of any person to or in any property valued at more than Rs. 2 lakhs by a registering authority unless the Income Tax Officer/Asstt. Commissioner of Income Tax certifies that registration of such document will not prejudicially affect the recovery of any existing liability under the Direct Taxes, or the person transferring the property has paid or made satisfactory arrangement for payment of the existing liabilities.
Section 230A of the I.T Act, however imposes no restriction upon the registering authority to register any document under Section 17 of the Indian Registration Act, 1908 where the value of the immovable property in question is less than Rs. 2 lakhs. You are, therefore, requested not to insist for a tax clearance certificate under Section 230A of I.T. Act, 1961 in those cases where the value of the property to be transferred is less than Rs. 2 lakhs presented by any person, be it an individual, a HUF or a Cooperative society etc.�
Mr. Awadhesh Kumar Singh, the learned Counsel appearing on behalf of the petitioners states that the prayer No. (ii) for declaring Section 230A of the Income Tax Act, 1961 as invalid is not being pressed.
This prayer is, accordingly, dismissed as not pressed. These writ petitions in this regard stands dismissed.
In regard to the remaining three prayers the submissions of Mr. Singh are as follows:
On a bare perusal of Section 230A of the Income Tax Act, it is clear that registration of transfer of any immovable property in cases where the value of property is more than the prescribed limit then only the vendor is required to obtain a ''no objection certificate'' of the Taxation Authority. Where the value of the property, which is sought to be transferred by the registered instrument, is below the prescribed limit then no such ''no objection certificate'' is required to be obtained to be produced before the Registering Authority.
Mr. H.R. Mishra, learned Standing Counsel appearing on behalf of Respondent Nos. 2 to 5, on the other hand, contended that the order impugned by the petitioner is in consonance with Section 230A of the Income Tax Act and thus the writ petitions are liable to be dismissed. If a deed is presented for its registration in respect of properties valued below the prescribed limit then there is no necessity of obtaining a no objection certificate of the Assessing Officer. The necessity of passing the order impugned arose because the Cooperative societies, who were exempted from payment of stamp duty, were misusing this facility and executing deeds and presenting for registration by lowering the valuation of the property visavis even the circle rate of the lands.
Mr. C.K. Parekh, the learned Standing Counsel of the Union followed Mr. Mishra.
Section 230A of the Income Tax Act, as it then was, reads thus:
�230A. Restrictions on registration of transfers of immovable property in certain cases.(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 subsection (1) of Section 17 of the Indian Registration Act, 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 the Assessing Officer certifies that
(a) such person 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 Act, 1947, the Indian Income Tax Act, 1922, the Wealthtax Act, 1957 the Expendituretax Act, 1957 (the Gifttax Act, 1958, the Super Profits Tax Act 1963 and the Companies (Profits) Surtax Act, 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 subsection (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) The provisions of subsection (1) shall not apply in a case where the person referred to in that subsection 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.�
Earlier the limit was Rs. 50,000 which was raised by Section. 4 of Finance Act (26 of 1988) to Rs. 2 lakhs and by Finance Act (22 of 1995) it is now Rs. 5 lakhs. A bare perusal of the aforementioned provisions leaves no manner of doubt in our mind that the no objection certificate of the Assessing Officer is required when the value of the property sought to be transferred exceeds the permissible limit.; In Swastic Sahkari Awas Samiti Ltd. and another v. State of U.P. and Ors., (1991) 18 ALR369: (1991) 191ITR 443, a Division Bench of our own High Court has disposed of a similar controversy in following words:
�We are of the opinion that the letters of the Income Tax Department contained in Annexures 1 and 2 are clear in that the no objection certificate will be required from the Incometax Department under Section 230A of the Act only in cases where the value of the property to be transferred is more than Rs. 2 lakhs. The SubRegistrar before whom a saledeed is presented for registration will, therefore, first determine the value of the property sought to be transferred in accordance with the circle rates fixed by the Collector concerned and in case the'' value of the property sought to be transferred is more than Rs. 2 lakhs, he will insist on production of a noobjection certificate under Section 230A of the Act. In other cases, where the value of the property according to the circle rates fixed by the Collector concerned does not exceed Rs. 2 lakhs, there would be no insistence on production of the no objection certificate under Section 230A of the Act.�
Accordingly, we are of the view that there is no flaw at all in. the order impugned. The impugned order is fully in consonance with the terms and spirit of Section 230A of the Act in question.
In the result, these writ petitions are dismissed. However, in the peculiar facts and circumstances we make no order as to cost.
The office is directed to handover a copy of this order within one week to Sri Parekh, learned Standing Counsel for the Union as well as to Sri H.R. Mishra, learned Standing Counsel for the State each for its intimation to the authorities concerned. Petition dismissed.