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Case Number

Writ Petition No. 8857 of 1984

Judges

K.S Puttaswamy, J.

Acts

provisions of clause (a) to clause, (e) of sub-section (1) of section 17 of the Indian Registration Act, 1908 (XVI of 1908),
s. 230A of the I.T Act, 1961 (hereinafter referred to as the Act)
Indian Registration Act of 1908,
provisions of sub-section (1)

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Smart Summary

Structured Summary of the Opinion (Puttaswamy, J.)

Factual and Procedural Background

The respondent No. 3 owned a house property (No. 307, Someswara Extension, Tumkur City) and on October 17, 1982 entered into an agreement to sell it to the petitioner. On July 22, 1983 respondent No. 3 executed a sale deed in favour of the petitioner and presented it the same day before the Sub-Registrar, Tumkur for registration. The petitioner asserts she paid the balance of sale price and registration charges and that endorsements to that effect were made in the original document. The Sub-Registrar refused registration because respondent No. 3 had not produced a certificate under section 230A of the Income-tax Act, 1961. The vendor (respondent No. 3) challenged that refusal in an appeal before the District Registrar; that appeal remained pending.

While prosecuting the appeal, the petitioner applied on December 30, 1983 to the Income-tax Officer (ITO), Tumkur, for issuance of a certificate under section 230A in the name of respondent No. 3. The ITO rejected that application by order dated February 18, 1984 (annexure A). The petitioner instituted this writ petition under Article 226 of the Constitution seeking a mandamus directing the ITO to issue the certificate.

The matter was treated as listed for final hearing and heard before Puttaswamy, J.

Legal Issues Presented

Whether an application under section 230A of the Income-tax Act, 1961 for issuance of the certificate required for registration of documents can be made by a transferee (vendee) seeking the certificate in the name of the transferor (vendor), or whether only the transferor / person who purports to transfer or create interest ("such person") is entitled to apply under section 230A;
Whether the ITO's refusal to issue the certificate to the petitioner (applied for in the name of respondent No. 3) was illegal or unreasonable such as to warrant issuance of a writ of mandamus directing the ITO to issue the certificate;
Whether, in the circumstances, the court should direct the ITO to issue a certified copy of any certificate, if issued, in favour of respondent No. 3.

Arguments of the Parties

Appellant / Petitioner's Arguments (Sri V. H. Upadhyaya)

The ITO illegally and unreasonably refused to issue the certificate sought by the petitioner in the name of respondent No. 3.
Reliance was placed on the decision of Varadarajan J. in Mrs. Helen Jayaraj v. Sub-Registrar of Mylapore, [1983] 139 ITR 942 (Mad), which was argued to support the petitioner's entitlement to seek the certificate.

Respondents' Arguments (Sri K. Srinivasan)

An application for a certificate under section 230A can only be made by the owner/vendor of the property (the person who purports to transfer or create interest), and not by the vendee; hence the petitioner's application as a vendee was not maintainable.
The ITO's order rejecting the application on that ground (that it was not maintainable) was legally valid even though the ITO's order was cryptic and did not expressly state reasons.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Mrs. Helen Jayaraj v. Sub-Registrar of Mylapore, [1983] 139 ITR 942 (Mad)	The High Court (Varadarajan J.) held that a third party (vendee) could maintain an application under s. 230A for issuance of the certificate even though the form and sub-section language refer to the person who purports to transfer; the I.T. Department should consider the overall picture and could issue certificate to the petitioner where no tax arrears were shown against the transferor.	The court considered this decision but explicitly disagreed with its conclusion. The opinion finds that Helen Jayaraj's reading runs counter to the plain language of s. 230A and declines to follow it.
Cape Brandy Syndicate v. IRC, [1921] 2 KB 403 (CA) 414	Principle of statutory construction in taxing Acts: interpretation must be strictly textual — “in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. Nothing is to be read in and nothing is to be implied. One can only look fairly at the language.”	The court applied this textualist principle to s. 230A, using it to support the view that the words “such person” must be read as referring to the transferor only and not as creating an entitlement for a transferee to apply for the certificate.

Court's Reasoning and Analysis

The court examined the text and structure of section 230A of the Income-tax Act, 1961. Section 230A, on its face, conditions registration (for certain documents transferring interests in property valued over Rs. 50,000) upon production of a certificate by the Income-tax Officer certifying either payment or satisfactory provision for payment of liabilities, or that registration will not prejudice recovery of liabilities. Sub-section (2) states that the application for the certificate "shall be made by the person referred to in that sub-section" (i.e., the person referred to in sub‑section (1)).

The court parsed the phrase "such person" appearing in the section and concluded that it refers to the transferor or person creating the interest (the person who proposes to transfer, assign, limit or extinguish his right, title or interest), not to the transferee. The court reasoned that, in context, "such person" cannot be read to include both transferor and transferee. The statutory scheme requires production of the certificate by the person proposing to transfer or create an interest; hence the entitlement to obtain the certificate is conferred on that person alone.

The court emphasized that it cannot, by interpretation, create rights for a class of persons (transferees) that the legislature did not confer: doing so would amount to legislation under the guise of interpretation, which is impermissible. To support a strict textual approach in tax statutes, the court relied on the classic statement of Rowlatt J. in Cape Brandy Syndicate v. IRC, which mandates looking at what is clearly said in a taxing Act, leaving no room for intendment or implication.

The court noted that the prescribed form for application under s. 230A is consistent with this reading and that subordinate Rules cannot extend or abridge the statutory scope. On this basis the court concluded that the petitioner's application (filed as a vendee seeking a certificate in the name of respondent No. 3) was not maintainable under s. 230A.

The court directly addressed the earlier Madras High Court decision in Helen Jayaraj, which permitted a third party application in circumstances where the transferor was not shown to be an income‑tax assessee. The present court found that reasoning unsound and contrary to the plain language of s. 230A and therefore declined to follow it.

Although the ITO's order rejecting the petitioner's application was cryptic and did not set out reasons, the court inferred from the context that the ITO rejected the application on the ground of non‑maintainability. Having resolved the statutory interpretation question against the petitioner, the court held that the ITO was justified in refusing the application even though he had not articulated the detailed reasons the court itself used in reaching that conclusion.

Separately, the petitioner sought an order directing the ITO to issue a certified copy of any certificate, if one had been issued to respondent No. 3. The court declined to issue such a writ because the petitioner had not made any application to the ITO for a certified copy; the court observed that if the petitioner did make such an application, the ITO would examine and issue the certified copy on payment of necessary charges.

Holding and Implications

Holding: The court's final decision was to dismiss the writ petition. The core ruling may be summarized as:

DISMISSED — the writ petition under Article 226 is dismissed and the rule issued in the case is discharged.

Implications:

Direct effect on the parties: The court held that an application under section 230A must be made by the person who proposes to transfer or create an interest (the transferor) and not by the transferee; therefore the petitioner's application as a vendee (seeking a certificate in the name of respondent No. 3) was not maintainable, and the ITO's refusal was justified.
On the petitioner's request for a certified copy of any certificate issued to respondent No. 3, the court declined to make a direction; instead it indicated that the petitioner should apply to the ITO for a certified copy, which the ITO would be expected to issue on payment of prescribed charges.
Costs: The court directed that each party shall bear their own costs.
Broader precedent: The court explicitly disagreed with the Madras High Court's decision in Helen Jayaraj on the point that a third party may obtain a certificate under s. 230A in the name of another. The opinion rests on a textual construction of s. 230A supported by the taxation‑statute construction principle from Cape Brandy Syndicate. The opinion itself applies those interpretive rules to resolve the dispute before the court. Beyond the direct effects on the parties in this case, the opinion does not assert any additional broader implications beyond its statutory interpretation and the dismissal of the petition.

Outcome

The writ petition was dismissed, the rule issued in the case was discharged, and the parties were directed to bear their own costs.

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Srimathi Indira v. Income-Tax Officer, Tumkur Circle, And Others.

Puttaswamy, J.:— This case was posted before me today for orders. But, as agreed to by both sides, this case is treated as listed for final hearing today and is accordingly heard.

2. A house property bearing No. 307 situated at Someswara Extension, Tumkur City, was owned by respondent No. 3, who on October 17, 1982, entered into an agreement to sell the same to the petitioner. On July 22, 1983, respondent No. 3 executed a sale deed in her favour in terms of that agreement to sell and presented the same on that day before the Sub-Registrar, Tumkur (hereinafter referred to as the “Sub-Registrar”), for registration. The petitioner claims that she has paid the balance of sale price to respondent No. 3 and the registration charges before the Sub-Registrar who has made those endorsements in the original document and notwithstanding all this, the Sub-Registrar had refused registration of the said sale deed on the ground that the vendor-respondent No. 3 had not produced before him a certificate under s. 230A of the I.T Act, 1961 (hereinafter referred to as “the Act”) which has been challenged by her in an appeal before the District Registrar of the District and the same is still pending before him.

3. While prosecuting her appeal before the District Registrar, the petitioner made an application on December 30, 1983, before the ITO, Tumkur Circle, Tumkur (hereinafter referred to as the “ITO”), for issue of a certificate under s. 230A in favour of respondent No. 3, who on February 18, 1984 (annexure A), rejected the same. In this petition under article 226 of the Constitution, the petitioner has challenged the order dated February 18, 1984 (annexure A) of the ITO and has sought for a mandamus to him to issue that certificate. Sri V.H Upadhyaya, learned counsel for the petitioner, strenuously contends that the ITO had illegally and unreasonably refused to issue the certificate sought by the petitioner in the name of respondent No. 3. In support of his contention Sri Upadhyaya strongly relies on a ruling rendered by Varadarajan J. (as he then was) in Mrs. Helen Jayaraj v. Sub-Registrar of Mylapore, [1983] 139 ITR 942 (Mad.).

4. Sri K. Srinivasan, learned senior standing counsel appearing for respondents Nos. 1 and 2, contends that an application for a certificate under s. 230A can be made by the owner and vendor of the property and that the application by the petitioner who was only a vendee was not maintainable and the order made by the ITO on that ground without specifically stating that as the reason was legal and valid.

5. Unfortunately, the ITO in his cryptic order had not given any reason for rejecting the application made by the petitioner much less the reason on which it is sought to be supported. But reading the order of the ITO in the context, it is clear that he has rejected the same taking the view that it was not maintainable under s. 230A of the Act, I, therefore, proceed to examine the question on that basis.

6. Admittedly, the property stood in the name of respondent No. 3, who has transferred the same to the petitioner. In her application before the ITO the petitioner sought for issue of a certificate under s. 230A of the Act in the name of respondent No. 3, Both these facts are not in dispute.

7. Section 230A of the Act, the true scope of which calls for examination, reads thus:

“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 (XVI 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 fifty thousand rupees, no registering officer appointed under that Act shall register any such document, unless the Income-tax 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 (XV of 1940), the Business Profits Tax Act, 1947 (XXI of 1947), the Indian Income-tax Act, 1922 (XI of 1922), the Wealth-tax Act, 1957 (XXVII of 1957), the Expenditure-tax Act, 1957 (XXIX of 1957), the Gift-tax Act, 1958 (XVIII of 1958), the Super Profits Tax Act, 1963 (XIV of 1963) and the Companies (Profits) Surtax Act, 1964 (VII of 1964), or

(b) the registration of the document will not prejudicially affect the recovery of any existing liability under any of the aforesaid Act.

(2) The application for the certificate required under sub-section (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 sub-section (1) shall not apply in a case where the person referred to in that sub-section 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 Gazettte”.

8. Whenever a person proposes to transfer, assign, limit or extinguish his right, title or interest in any property the value of which exceeds Rs. 50,000 which is compulsorily registrable under the Indian Registration Act of 1908, the registering authority is prohibited from registering such documents unless that person produces before him a certificate issued by the concerned ITO certifying that taxes due by him under that Act and other Acts referred to in that section, if any, have been paid or satisfactory arrangements for their payment have been made. The words “such person” occurring in the section refers to the transferor or the person creating interest in favour of another. In the context, the words “such person” cannot be read as any and every person comprehending both the “transferor” and the “transferee”. For reasons that are not far to seek, this section requires the ITO to issue a certificate only to the person that proposes to transfer or create an interest in favour of another and to no other person. If the legislature in its wisdom creates a right on the “transferor” only, the court cannot create that right in favour of the “transferee” also. Any such attempt will really amount to legislation in the guise of interpretation, which is impermissible. In my view, this construction of s. 230A also flows from the classic statement of Rowlatt J. in Cape Brandy Syndicate v. IRC, [1921] 2 KB 403 (CA) 414, approved in a number of cases by our Supreme Court, in which the learned judge observed that “in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. Nothing is to be read in and nothing is to be implied. One can only look fairly at the language.”

9. The form prescribed for making an application for issue of a certificate under s. 230A is consistent with the section. In any event, the form of application prescribed by Rules can neither extend nor abridge the scope and ambit of s. 230A of the Act.

10. On the above discussion, it follows that the application made by the petitioner under s. 230A of the Act before the ITO was not maintainable.

11. But, in Helen Jayaraj's case, [1983] 139 ITR 942 (Mad), Varadarajan, J. (as he then was), dealing with a case that is almost similar to the present case, has expressed that the petitioner can maintain her application under s. 230A of the Act in these words (947):

“……. Merely because a reference has been made in sub-s. (2) of s. 230A of the Act to the person referred to in sub-s. (1), namely, the person who purports to transfer, assign, etc., his interest in properties valued at more than fifty thousand rupees, the I.T Department cannot, in my opinion, decline to issue a certificate in favour of the petitioner on the ground that the third respondent had objected to the same with the object of defeating the rights claimed by the petitioner under the document and also because the seventh respondent appears to have objected to the issuance of the certificate in favour of the petitioner. When the I.T Department finds that the third respondent was not even an income-tax assessee and no arrears of any of the taxes mentioned in cl. (a) of s. 230A(1) of the Act was due from the third respondent, the I.T Department should have issued a certificate to the petitioner after taking an overall picture of the matter and not be guided only by the words of sub-s. (1) of s. 230A. There is no positive law in the Act for the issuance of a certificate to a third party. Therefore, I am of the opinion that the I.T Department has wrongly declined to issue a certificate under s. 230A of the Act in respect of the third respondent in favour of the petitioner.”

12. With respect to his Lordship, this conclusion runs counter to the plain language of the section, which I have earlier analysed. With respect, the second reason given by his Lordship that in the absence of a positive prohibition in the Act, a third party can seek for a certificate in the name of another person is not also sound. I, therefore, find it difficult to subscribe to the views expressed by Varadarajan J. in Helen Jayaraj's case, [1983] 139 ITR 942 (Mad) to the contrary.

13. On the above discussion, I hold that the ITO was justified in refusing the application made by the petitioner, though he had not set out all these reasons in support of his finding.

14. Sri Upadhyaya seeks for a direction to the ITO to at least issue a certified copy of the certificate, if any, issued to respondent No. 3.

15. Sri Srinivasan, in my opinion, rightly submits that if the petitioner makes an application for a certified copy of the certificate, if any, issued to respondent No. 3, the ITO will examine and issue the same. Whether the ITO has issued a certificate to respondent No. 3 is itself in doubt. So far, the petitioner has not made any application for a certified copy of the certificate, if any, issued to respondent No. 3. In this view, this court cannot, issue a writ or direction sought by the petitioner. As and when the petitioner makes an application for a certified copy of the certificate, if any, issued to respondent No. 3, I have no doubt that the ITO will issue such a copy after collecting the necessary charges without unnecessarily driving the petitioner to another writ petition.

16. In the light of my above discussion, I hold that this writ petition is liable to be dismissed. I, therefore, dismiss this writ petition and discharge the rule issued in the case. But, in the circumstances of the case, I direct the parties to bear their own costs.

Srimathi Indira v. Income-Tax Officer, Tumkur Circle, And Others.

Structured Summary of the Opinion (Puttaswamy, J.)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant / Petitioner's Arguments (Sri V. H. Upadhyaya)

Respondents' Arguments (Sri K. Srinivasan)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Outcome

Srimathi Indira v. Income-Tax Officer, Tumkur Circle, And Others.

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