High Court Of Madras
CIT vs. A. Hari Krishnan & Ors.
R. Jayasimha Babu & A.K. Rajan, JJ.
Writ Appeal No. 1019 of 1991
12th October, 2000
R. JAYASIMHA BABU, J. :
The question required to be decided in this appeal is whether a Court sale is subject to the provisions of Chapter XX-C of the IT Act, 1961. Chapter XX-C of the Act is intended to protect the interests of the Revenue by preventing evasion of tax in property dealings.
2. When a sale is effected by the Court by way of public auction, the value of the property is determined by the highest bid obtained at such auction. There is no question of the property being undervalued as the sale is by public auction, and anyone interested in the purchase of the property, is permitted to come and offer his bid. The sale so effected is further subject to the approval of the Court. In the event of the sale being vitiated on any of the grounds referred to in O. XXI of the CPC, 1908, the sale is liable to be set aside.
The object for which Chapter XX-C was enacted in the IT Act is in no way relatable to the disposal of the property by the Court. The extent of the applicability of the several provisions in that Chapter has to be determined with reference to the object for which those provisions are introduced. The question of evasion of income-tax in a Court sale by reason of the property being undervalued does not arise. Moreover, the authorities under the IT Act cannot sit in judgment over the Courtâs decision in the matter of determination of the price at which the property should be sold. In the case of Hindustan Petroleum Corporation Ltd. vs. Elite Optical Industries (1995) 1 LW 67 it has been held by this Court that when a sale deed is executed pursuant to an order made by the Court under s. 9(1) of the Madras City Tenants Protection Act, at the price determined by the Court in accordance with the provisions of the Act, the document is required to be registered by the registering authority without reference to Chapter XX-C of the IT Act.
The learned single Judge has rightly held that Chapter XX-C of the Act is inapplicable to Court sales. Writ appeal is dismissed.
[Citation : 249 ITR 343]