Madras High Court
N.C. Rangesh And Others vs Inspector General Of Registration And ... on 22 March, 1990
Equivalent citations: [1991]189ITR270(MAD), (1991)IMLJ233
JUDGMENT K.S. Bakthavatsalam, J.
1. 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.
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. 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.
3. 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).
4. 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.
5. 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.
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 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.
8. 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.
9. 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 under section 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" under section 269UL of the Income-tax Act. It is further claimed in the counter-affidavit that he impugned circulars are just and valid.
10. 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 under section 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 under section 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 v. State Government of Tamil Nadu [1991] 189 ITR 192; [1989] WLR (Suppl.) 1. 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, , 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.
11. 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 under section 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.
12. Mr. V. Sridevan, Special Government Pleader appearing for the Inspector-General of Registration, contends that the circulars which are impugned here are issued under section 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.
13. 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.
14. 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.
15. 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.
16. It is necessary to refer to certain statutory provisions of the Income-tax Act, 1961, to understood the cases on hand.
17. 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. . ."
18. 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;. . ."
19. 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 :"
20. 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."
21. 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 under section 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 therefor 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."
22. 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. . ."
23. 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."
24. Item No. 23 of the Schedule I of the Indian Stamp Act, 1899, defines "conveyance" as follows :
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Description of instrument Proper stamp duty
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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.
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25. 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",
26. 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 under section 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 therefor 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.
27. 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 under section 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.
2. Inspector-General's proceedings No. 95473/Ca/76-1, dated 21-1-1977.
3. 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.
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. . ."
28. 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 under section 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 v. State of A.P. . 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.
29. A Division Bench of this court in a decision in Park View Enterprises v. State Government of Tamil Nadu [1991] 189 ITR 192; [1989] W.L.R. (Suppl.) 1, 42, 43 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 under section 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. . ."
30. Again at p. 256 of 189 ITR, 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 under section 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. . ."
31. 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.
32. 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, , may be made.
33. Though the Inspector-General of Registration can issue executive directions under section 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.
34. S. Ramalingam J. has held recently in an unreported decision in K. V. Kishore v. Appropriate Authority, Income-tax Department - since reported in [1991] 189 ITR 264 (Mad) (W.P.No. 4537, of 1988 dated 15-3-1990), 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.
35. 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.
36. In the result, all the writ petitioners are allowed. However, there will be no order as to costs.