@JUDGMENTTAG-ORDER
K.S. Bakthavatsalam, J.@mdashThe common question involved in all these writ petitions is about the validity of the circular issued by the
Inspector General of Registration dated 29.5.1989 and the Circular dated 11.3.1977, issued by the same authority.
2. 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. Subbulakshmi.
Each of the above mentioned purchasers purchased different extent of undivided interest form the said owner Mrs. Subbulakshmi, in No. 15,
Venkatarama Iyer Street, T. Nagar, Madras-17. Each of the petitioner 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 Rs.1 lakh.
3. The petitioners 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 the property belongs to Hindu undivided family consisting of petitioners, that for the purpose of developing the said property
the petitioners demolished the old building standing therein and obtained a planning permission and building permit sanctioned by M.M.D.A. and
Corporation of Madras for construction of a new building. M/s. Sree Builders have undertaken the construction work with the purchasers of
undivided share interest in the said property. In the course of their business the petitioners entered into about 10 agreements of undivided share of
the property (365/13180).
4. 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 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 has executed five sale deeds in respect of undivided share in the said property.
5. 0The 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 issued by the registering authority.
6. The same complaint is being made by the vendee, purchasers, the petitioners in W.P. Nos. 408, 409 and 1466 to 1470 of 1990.
7. The complaint of the petitioner in W.P.No.408 of 1990 is that a Circular dated 11.3.1977 has been issued by the Inspector General of
Registration, requiring the production of a Tax Clearance Certificate under the provisions of Section 230-A of 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. 2 lakhs.
It is also stated by the petitioner that the Inspector General of Registration purported to issue a Circular dated 29.5.1989, 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 the Circular letter
dated 29.5.1989, 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 of 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 11.3.1977 and 29.5.1989 are ex facie arbitrary,
illegal and without jurisdiction. It is also stated that Section 230-A(1) of the Income Tax Act, 1961, (as amended by Finance Act, 1988) provides
that a Tax Clearance Certificate is necessary, if the valuation of the property transferred exceeds Rs. 2 lakhs, that said value of the transfer being
less than Rs. 2 lakhs, Section 230-A 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 230-Aof the Income Tax Act, 1961 and that the Circular cannot
purport to 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 20.5.1989 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 XX-C of Income Tax Act, 1961 (Sections.269-UA and 269-UC of the said Income Tax Act, 1961) that the provisions of Section
269-UA contemplate the transfer of a part of the property or a building and unless such transfer of a part or portion of the property is exceeding
Rs. 10 lakhs, there is no requirement of the parties to apply for and obtain a ''No Objection Certificate'' from the Appropriate Authority Income
Tax Department. It is further stated that in all these cases, the apparent consideration of the sale deeds is far below the amount specified in Chapter
XX-C and as such there is no need to provide ''No objection certificate'' from the Appropriate Authority. It is also stated in the affidavit that the
provisions of Section 269-UC are attracted only if the apparent consideration agreed and stated in the document exceeds Rs. 10 lakhs, that
Section 269-UC clearly supersedes the provisions of the Transfer of Property Act and Indian Registration Act, 1908, that the said circular dated
29.5.1989 clothed with powers under the Registration Act, 1908 interferes with and fetters the quasi-judicial functions performed by the District
and Sub Registrars in the matter of registering documents. A reference to a judgment of a Division Bench of this Court in M/s. Park View
Enterprises v. State of Tamil Nadu 1989 T.L.N.J. 375 is made in the affidavit. It is also stated in the affidavit that the circular dated 29.5.89 is
contrary to the. scheme of Income Tax Act, 1961 (Chapter XX-C) 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 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 and the Indian Registration Act, 1908, that the Inspector General of Registration, is not empowered to insist on the production of
two certificates under the Income Tax Act, 1961 for the purpose of registering a sale or transfer, one being Section 230-A clearance certificate
and another being an application for ''No objection'' 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 Indian Registration Act, 1908 read with Income Tax Act, 1961 and proceed to register the documents presented.
8. A counter affidavit has been filed by the Inspector General of Registration stating that the circulars, which are 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 legal consequences that flow from
Section 230-A of Income Tax Act, 1961 and the provisions of Chapter XX-C of the Income Tax Act, 1961-. It is further claimed in the counter
affidavit that the provisions of Section 230-A and Chapter XX-C are applicable to the transfer of undivided interest or share which is valued less
than Rs. 2 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 230-A of the Income Tax Act covered the whole property in the
case of transfer of undivided right or share therein, the consideration of the whole property has to be taken into account for obtaining ''No
objection certificate'' under Chapter XX-C 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 230-A and Chapter XX-C 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 classificatory circulars for the guidance of the Registering Authorities. It is also stated that the provisions of Section 230-A of
the Income Tax Act and Chapter XX-C are independent provisions, that the circulars issued are in conformity with the provisions of the Indian
Registration Act and 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.
9. In W.P. No. 1389 of 1990, the Appropriate Authority, Income Tax Department, Madras has filed a counter affidavit. Mrs. Nalini
Chidambaram, the learned Counsel appearing for the Appropriate Authority, Income Tax Department, submits that since the question involved in
all these writ petitions are one and the same., the counter affidavit filed in W.P. No. 1389 of 1990 may be treated as a counter affidavit in all other
cases also on behalf of the Income Tax Department. It is also claimed in the counter-affidavit, that Chapter XX-C of the Income Tax Act has been
introduced under the Income Tax Act, in order to discourage persons from under-valuing the 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 the several parts to deliberately reduce the value of the property less than Rs. 10
lakhs. A reference to Section 260-UL of the Income Tax Act, 1961 has been made in the counter-affidavit. It is further claimed that u/s 69 of the
Indian Registration Act, the Inspector General of Registration shall exercise the power of general superintendence over all the registration officers,
that it is the duty of the Inspector General of Registration to ensure that the provisions of Section 269-UC of 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 XX-
C are clearly applicable to the property that it came to the notice of the Appropriate Authority that a single property is subdivided 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 XX-C 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 269-UL of the Income Tax Act. It is further claimed in the counter affidavit that the impugned circulars are just and valid.
10. Mr. K.C .Rajappa, the 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 230-A and Chapter
XX-C, the 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 230-A 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 230-A of the Income Tax Act, 1961. The learned Counsel further argues that ex facie Section
230-A of the Income Tax Act does not warrant a clearance certificate, and that the impugned circulars drive the parties to the Income Tax Act
does not warrant a clearance certificate, and that impugned circulars drive the parties to the Income Tax department, to get the Income Tax
Clearance certificate. That learned Counsel further refers to Section 3 of the Indian Stamp Act, 1899 and the definition of the term ''conveyance''
defined in Item 23 schedule I read in the Section 2(10) of the Indian Stamp Act, 1899. What is conveyed is a part of larger extent. The learned
Counsel further relies upon the decision of a Division Bench of this Court which is reported in M/s. Park view Enterprises v. State Government of
Tamil Nadu 1989 W L.R 1. The learned Counsel referring to Sections 269-UA, 269-UC and 269-UL of Income Tax Act, 1961, contends that if
the value of the property exceeds Rs. 10 lakhs then alone those abovementioned sections will apply and that on facts in all these cases, it will not
apply. The learned Counsel further argues that the Inspector General of Registration cannot enlarge the scope of the Income Tax Act, 1961. The
learned Counsel refers to the decision in Aphali Pharmaceuticals Ltd. Vs. State of Maharashtra and Others, , with regard to the power of issuing
circulars under an enactment. The sum and substance of the argument of the 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 purchases an undivided share in the property and that what all the registering authority is to consider is to see whether
the value of the property mentioned in the sale deed or in agreement of sale is in accordance with the market value and nothing more. The learned
Counsel further argues that if the Registering Authority feels doubt about the market values, it is open to them to take action under the Registration
Act and without doing so they cannot bluntly 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 facts of each
case.
11. Mrs. Nalini Chidambaram, the 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 vendors. The learned Counsel further contends that the entire property is sold
by dividing into the undivided shares and as such the entirety has to be taken into account and not the single sale deed. The learned Counsel refers
to Section 230-A of the Income Tax Act. She further refers to Section 69 of Registration Act and contends that the Inspector General of
Registration has got the powers to issue circulars, especially when the vendors decided to divide the shares and try to get over Chapter XX-C.
The learned Counsel further argues that if all the sale deeds are to be calculated it exceeds Rs. 10 lakhs and as such there is no arbitrariness in
issuing the said circulars. The learned Counsel further contends that only to curb the tendency of sellers to divide the property into so many plots in
the undivided shares to evade revenue, the present circulars are issued The learned Counsel further argues that in so far as the certificate u/s 230-A
is concerned, it can go on though Chapter XX-C may not apply. The argument of the learned Counsel appearing for the Appropriate Authority,
Income Tax Department is that the circulars, which are impugned in these writ petitions are valid.
12 Mr. V. Sridevan, the 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 they are classificatory in nature. The learned Counsel contends that Section 269-
UL of the Income Tax Acts, casts a mandate on the Registering Authorities, that what the Registrar have 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. The learned Counsel
further argues that there was some inconvenient circumstance to the petitioners herein and that there is no tax involvement in these cases.
13. Replying to the arguments of Mrs. Nalini Chidambaram, the learned Counsel appearing for the Appropriate Authority, Madras, and Mr.
Sridevan, the learned Counsel appearing for the Inspector General of Registration, Mr. K.C. Rajappa, the learned Counsel for the petitioners
states that the purchasers are also aggrieved inasmuch as the sellers are expected to do the same under the Act. The learned Counsel also
contends that Section 69 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 transferee 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. The learned Counsel at the time, 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 circulars under the Registration Act. The learned Counsel
further replies that for the part of the property (undivided share) either Section 230-A of the Income Tax Act, 1961 or Chapter XX-C, will not
apply and as such both the circulars are illegal and void in law.
14. The argument of Mr. K.C. Rajappa, the learned Counsel appearing for the petitioners in W.P. Nos. 408, 409 and 1389 of 1990 had been
adopted by other counsel appearing for other petitioners.
15. I have considered the arguments of Mr. K.C. Rajappa, the learned Counsel appearing for the petitioners in W.P. Nos. 408,409 and 1389 of
1990, the arguments of Mrs. Nalini Chidambaram, the learned Counsel appearing for Appropriate Authority, Income Tax Department, Madras,
Mr. V. Sridevan, Special Government Pleader, the learned Counsel appearing for Inspector General of Registration. The question which falls
under consideration in these cases is within a short campass.
16. It is necessary to refer to certain statutory provisions of the Income Tax Act, 1961 to understand to cases on hand.
17. Section 230-A of the Income Tax Act, 1961 provides for certain restrictions on registration of transfers of immovable property in certain cases
which reads as follows:
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 of 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.
Chapter XX-C consisting of Sections.269-U to 269'' VO of Income Tax Act, 1961 has been introduced by the Finance Act, 1986 with effect
from 1.10.1986. Section 269-UA(b) defines ''apparent consideration'' and it runs as follows:
(b) appareht 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 269-UA(d) defines ""immovable property"" which is to the followings effect:
I 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, 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 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 byway of
becoming a member of, or acquiring snares 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 269-UC of the Income Tax Act, places certain restrictions on transfer of immovable property which is to the following effect:
269-UC (1): Notwithstanding anything contained in the Transfer of Property Act, 1882 (4 of 1982), or in any other law for the time being in force,
no transfer of any immovable property of such value exceeding 5 lakhs 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 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 acting on behalf of himself and on behalf of the other parties...
Section 269-UL places certain restrictions on registration etc., of documents in respect of transfer of immovable property and Section 260-UL(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 269-UC 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 property in respect of which it has received a statement under
Sub-Section (3) of Section 260-UC, is furnished along with such document.
Section 3 of the Indian Stamp Act, 1899, speaks of instruments chargeable with duty and Section 3(a) of the said Act reads as follows:
(a)... 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 23 schedule I of the Indian Stamp Act 1890 defines ""conveyance"" as follows:
_____________________________________________________________________
Description of Proper Stamp dut
instrument
_____________________________________________________________________
Conveyance as defined
by Section 2(10), not
being a Transfer charged
or exempted under N. 62-
(a) of immovable property situated Eight Rupees for every
within the Cities of Madras and Rs.100 or part thereof of
Madurai and Municipal Towns of the market value of the
Coimbatore, Salem property which is the
and Tiruchir appalli. subject matter of conveyance;
(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 269-UA also defines ''agreement for transfer'' which is to the following effect:
...(a) agreement of transfer"" means an agreement, whether registered under the Registration Act, 1908 (16 of 1908) or not, for the transfer of any
immovable property...
18. A reading of Section 230-A 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 of any person to or in any
property valued at more than Rs. 2 lakhs, no registering officer shall register the said document, unless a certificate is obtained. A reading of
Section 269-UL 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 269-UC 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 property. A reading
of both the sections, mentioned above, shows that no registering authority is permitted from registering any document if the value of the said
property exceeds Rs. 2 lakhs in the case of Section 230-A of the Income tax Act and if the said value of the property exceeds Rs. 10 lakhs then
Chapter XX-C 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 230-A of the Income Tax Act, 1961 is that such person has either paid or made
satisfactory provision for payment of liabilities under various taxing enactments. The purpose for the introduction of Chapter XX-C was to enable
the Central Government to purchase the immovable property in certain cases of transfer. Various sections under this Chapter XX-C of Income
Tax Act provide for obtaining a ''No objection Certificate'' for the property valued and 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.
19. Now, the circulars, which are impugned in these cases, can be looked at. Circular dated 11.3.1977 issued by Inspector General of
Registration reads as follows:
Sub Registration procedure-LT.Clearance Certificate u/s 230-A of the I.T. Act, - Deeds affecting portions of properties - Liabilities revised order
issued. Ref: No. 1 Inspector General''s proceedings D.Dis. No. l2053/B3/76 dated 6.3.1976.
2. Inspector General''s proceedings No. 95473/ C2/76-1, dated 21.1.1977
3. Government Letter No. 10707/V/(1)/76-6 C.T.7 R.L., dated 15.2.1977. (Communicated in I.G.''s proceedings No. R.Dis. 609/B3/C2/76,
dated 22.2.1977.
In modification of the orders contained in Inspector General''s proceedings second read above the Registering Officer are informed that in respect
of transfer etc., of Specified separate 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 230-
Aof the Income Tax Act.
2. District Registrars are requested to bring this to the notice of all Sub Registrars forthwith.
3. The receipt of this circular should be acknowledged forthwith..
circular dated 29.5.1989, which is one of the impugned orders, states that if a property which is valued for 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 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 Income Tax Act, 1961 prescribes the value of property to
obtain a certificate, in my view, the Inspector General of Registration purporting to act Under 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 230-A of the Income
Tax Act, 1961 or under Chapter XX-C should be the value of the property or the interest of the person in such property that was sought to be
transferred and it was only with respect to that extent that the Income Tax clearance certificate could be insisted upon. As such, in my view, in all
these cases before me, neither Section 230-A of the Income Tax Act, 1961 nor Chapter XX-C will apply especially when 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-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 3/40lh share was only Rs. 21,775 the learned single Judge has held that Section 230-A 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 above
mentioned case. In my view, it is the proper construction to be put forth on the provisions of the Income Tax Act with which we are concerned.
20. A Division Bench of this Court in a decision in M/s. Park View Enterprises v. State Government of Tamil Nadu 1989 WL.R. 1 has considered
what are the duties of the registering authority under Registration Act, when a document is presented for registration. In that case, with regard to
the powers of registering authority, the Division Bench has observed as follows:
... 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 clarified,
and what proper stamp duty is payable thereon. As far as valuation is concerned, if it is a document which comes u/s 47-A; and if he finds that the
market value has not been properly set forth in the instrument, and then refer such a document to the Collector determining the correct market
value and recover the property duty payable thereon. In respect of any other instrument listed in Schedule I, Section 47-A procedure cannot be
followed...
Again at page 43, 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 Amendment Act 38 of 1987 and he will find whether there has been any suppression of facts relating to the
consideration of market value as required u/s 27, and communicate necessary orders to the concerned Registrar, so that the short fell 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 47-A, what the Inspector General of Registration had directed is opposed to the provisions of the Act.
In the above mentioned case, the Division Bench of this Court was considering a Circular issued by the Registrar, directing the Registering
Authorities to keep the sale deed made on the undivided share of land pending in order to collect short fall 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 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 duty alone will apply. 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 47-A of the Act. In the above mentioned 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 the land, its registration cannot be refused on the ground
that an agreement which would come under Article 5(1) exists as between them and that it had not been duly stamped or registered. Applying the
principles laid down in the above mentioned decisions, lam of the view, that the circulars, which are impugned in these writ petitions cannot stand.
21. Coming to the point with regard to the nature of the circulars, I am of the view that the said circulars are not classificatory in nature, as
contended by Mr. Sridevan, the 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 any power is fettered, it is only by
Section 230-A and Section 269-UL of the Income Tax Act, 1961. Once the Registering Authority has come to the conclusion that the deeds
produced before them are out of the purview of both these sections, mentioned above, I do not think that they can rely upon the circulars and
refuse the 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 conflicted with the provisions of the enactment or rules. If authority is needed, a reference to
the decision in Aphali Pharmaceuticals Ltd. Vs. State of Maharashtra and Others, may be made.
22. 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 Indian Income Tax Act, 1961 and issue instructions. If the revenue feels that there is lot of tax evasion by resorting to such
transactions, i.e., selling a property dividing into any shares, it is Worthwhile to consider about amending the Income Tax Act as well as the
Registration Act. As the provisions exist on date, the writ petitioners are bound to succeed.
23. S. Ramalingam, J. has held recently in an unreported decision in K.V. Kishore v. The Appropriate Authority Income Tax Department, Madras
and others, W.P. No. 4537 of 1988, dated 15.3.1990, that Chapter XX-C of Income Tax Act, 1961 cannot be applied taking the total
consideration of the collective shares. In the case, the value of each share was less than Rs. 10 lakhs and what was sold was the individual
undivided share in the said property.
24. 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 as illegal and invalid.
25. In the result, all the writ petitions are allowed. However, there will be no order as to costs.
