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Citation Codes
Equivalent Citations
citation codes
Case Number
Judges
  • Das Gupta, J.
Acts
  • Indian Income-tax Act, 1922 (XI of 1922), the Excess Profits Tax Act, 1940 (XV of 1940), or the Business Profits Tax Act, 1947 (XXI of 1947), or(b)
  • Income-tax Act, 1922 (XI of 1922), the Excess Profits Tax Act, 1940 (XV of 1940), or the Business Profits Tax Act, 1947 (XXI of 1947),
  • Payment of Taxes (Transfer of Property) Ordinance, 1948 (XXI of 1948), sec. 6 of the General Clauses Act, 1897 (X of 1897),
  • provisions of clause (a), (b), (c) or (e) of sub-section (1) of section 17 of the Indian Registration Act, 1908 (XVI of 1908),
  • provisions of cl. (a), cl. (b), cl. (c) of cl. (e) of sub-sec. (1) of sec. 17 of the Indian Registration Act, 1908 (XVI of 1908),
  • Indian Income-tax Act. the Excess Profits Tax Act or the Business Profits Tax Act, 1947,
  • PAYMENT OF TAXES TRANSFER OF PROPERTY ACT
  • provisions of clauses (a), (b) (c) and (e) of sec. 17 of the Registration Act.
  • sec. 4 (1) of the Payment of Taxes (Transfer of Property) Act, 1949.2.
  • (a), (b). (c) and (e) of sub-sec. (1) of sec. 17 of the Registration Act.
  • sec. 4 (1) of the Payment of Taxes (Transfer of Property) Act.
  • (1) of sec. 5 of the Indian Income-tax Act, 1922 (XI of 1922),
  • sec. 17, cls. (b), (c) and (e) of the Registration Act,
  • provisions of sec. 17 of the Registration Act
  • section 4 of the Transfer of Property (India)
  • sec. 6 of the General Clauses Act.
  • Indian Companies Act, 1913.
  • sub-section.8. Sec. 4
  • GENERAL CLAUSES ACT
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Judges
  • Das Gupta, J.
Acts
  • Indian Income-tax Act, 1922 (XI of 1922), the Excess Profits Tax Act, 1940 (XV of 1940), or the Business Profits Tax Act, 1947 (XXI of 1947), or(b)
  • Income-tax Act, 1922 (XI of 1922), the Excess Profits Tax Act, 1940 (XV of 1940), or the Business Profits Tax Act, 1947 (XXI of 1947),
  • Payment of Taxes (Transfer of Property) Ordinance, 1948 (XXI of 1948), sec. 6 of the General Clauses Act, 1897 (X of 1897),
  • provisions of clause (a), (b), (c) or (e) of sub-section (1) of section 17 of the Indian Registration Act, 1908 (XVI of 1908),
  • provisions of cl. (a), cl. (b), cl. (c) of cl. (e) of sub-sec. (1) of sec. 17 of the Indian Registration Act, 1908 (XVI of 1908),
  • Indian Income-tax Act. the Excess Profits Tax Act or the Business Profits Tax Act, 1947,
  • PAYMENT OF TAXES TRANSFER OF PROPERTY ACT
  • provisions of clauses (a), (b) (c) and (e) of sec. 17 of the Registration Act.
  • sec. 4 (1) of the Payment of Taxes (Transfer of Property) Act, 1949.2.
  • (a), (b). (c) and (e) of sub-sec. (1) of sec. 17 of the Registration Act.
  • sec. 4 (1) of the Payment of Taxes (Transfer of Property) Act.
  • (1) of sec. 5 of the Indian Income-tax Act, 1922 (XI of 1922),
  • sec. 17, cls. (b), (c) and (e) of the Registration Act,
  • provisions of sec. 17 of the Registration Act
  • section 4 of the Transfer of Property (India)
  • sec. 6 of the General Clauses Act.
  • Indian Companies Act, 1913.
  • sub-section.8. Sec. 4
  • GENERAL CLAUSES ACT
See more information ...
Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

Hind Estates, Ltd. (the Petitioner), an Indian private limited company, obtained several 99-year leases commencing 1 January 1949 from various lessors (Respondents Nos. 4, 5 and 6) over properties in Calcutta, Cawnpore and Delhi. At the time the leases were granted, Ordinance XXI of 1948 (a successor to earlier Ordinances) was in force and, subsequently, the Payment of Taxes (Transfer of Property) Act, 1949 (Act XXII of 1949) came into force.

On 16 May 1950 the Income-tax Officer (Respondent No. 1) issued notices under section 4(1) of the Payment of Taxes (Transfer of Property) Act, 1949 to the lessors (Respondents Nos. 4 and 5), stating that no certificate in terms of section 3 of the Act would have been issued had the Act been in force on the dates of the transfers, and requiring the addressees to show cause. No notice was given to the Petitioner (the lessee).

The Petitioner filed the present application seeking, inter alia, a writ of mandamus or a writ of like nature to restrain Respondents Nos. 1 and 2 from giving effect to the notices and from taking further steps or proceedings under section 4(1) of the Payment of Taxes (Transfer of Property) Act, 1949. S.R. Das Gupta, J. delivered judgment on the application.

Legal Issues Presented

  1. Whether section 4(1) of the Payment of Taxes (Transfer of Property) Act, 1949 authorises the Income-tax Officer to issue notices and take recovery proceedings in respect of leases (i.e., whether leases fall within the scope of the "transfers" to which section 4(1) applies).
  2. Whether, as contended by the Petitioner, the transfers referred to in section 4 are only those transfers of the kind described in section 3 (and thus section 4 should be read as limited to that class).
  3. Whether the Payment of Taxes (Transfer of Property) Act, 1949 is ultra vires the Constitution of India (a constitutional challenge raised but not decided because it was unnecessary to the outcome of this application).
  4. Whether section 9 of the Act, by applying section 6 of the General Clauses Act, has the effect of keeping the prior Ordinance in force so that the authorities' actions under the Ordinance (rather than under the Act) could be sustained (i.e., the legal effect of section 9 in relation to the Ordinances and the General Clauses Act).

Arguments of the Parties

Petitioner's Arguments (Mr. Chaudhuri)

  • The Act does not apply to leases; section 4(1) should not be interpreted to authorise the Income-tax Officer to act in respect of leases.
  • The "transfers" referred to in section 4 are of the kind mentioned in section 3 (those requiring a certificate before registration) and therefore section 4 is confined to that class; because leases are excluded from the registration requirement in section 3, the notices are beyond the Act's scope.
  • The Payment of Taxes (Transfer of Property) Act, 1949 is ultra vires the Constitution of India because it violates fundamental rights (this constitutional challenge was raised but not decided in the present application).
  • Section 9 of the Act makes section 6 of the General Clauses Act applicable so that the earlier Ordinance continues to operate; on that basis the authority's action cannot be sustained (argument based on the legal effect of section 9).

Respondents' Arguments (Advocate-General)

  • Section 4 is independent of section 3; section 3 deals with prospective registration of specified transactions, while section 4 deals with recovery in respect of transfers already made after 7 February 1948.
  • The Ordinances, and the text of the Act, support a broader construction: the Act is essentially a descendant of the Ordinances, and differences in wording do not change the independent operation of section 4.
  • Conceded procedural point: if the action of the Income-tax Officer does not fall within the Act, suitable directions should be issued by the Court.
  • With respect to section 9, its purpose is to keep alive proceedings commenced under the prior Ordinances; the Advocate-General pointed out that the General Clauses Act does not apply to temporary Acts and that section 9 merely gives the effect of section 6 of the General Clauses Act so as to preserve earlier proceedings.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Court undertook a textual and contextual interpretation of section 4(1) of the Payment of Taxes (Transfer of Property) Act, 1949, considering also the Act's heading, preamble, and the corresponding provisions of the earlier Ordinances (Ordinance III of 1948 and Ordinance XXI of 1948) and amendments to those Ordinances.

Key steps in the Court's analysis:

  1. The Judge examined the language of section 4, focusing on the use of the definite article in “the transfer” and the phrase “no certificate in the terms mentioned in sec. 3 would have been issued if the Act had been in force on the date the transfer was made.” The Court read these words as indicating that section 4 contemplates the same class of transfers described in section 3 (i.e., the kinds of transfers for which a certificate under section 3 would be necessary before registration).
  2. The Judge compared the Act with the earlier Ordinances. The Ordinances had used broader language (“any transfer”) and included movables; the Act used “the transfer” and omitted movables from section 4. The Court regarded these textual differences (including the insertion in the Act of the conditional phrase “if the Act had been in force”) as signaling a legislative intent to confine section 4 to the same class of transfers as section 3.
  3. The Court gave weight to the Act’s heading and preamble, which state the object as provision for the payment of taxes before transfers of property are registered. The Judge read sections 3 (prospective registration) and 4 (recovery in respect of transfers already made) as addressing the same class of transfers; this reading preserved consistency between the heading, preamble and the operative provisions.
  4. The Court rejected the Advocate-General’s argument that section 4 was independent and should be read to apply to a broader range of transfers (including leases). The Judge noted potential absurd results of the Advocate-General’s construction — for example, it would permit the Income-tax Officer to issue notices in respect of short-term leases or monthly tenancies that do not require registration — which would be inconsistent with the Act’s theme of withholding registration until tax liabilities are addressed.
  5. The Court concluded that, on a proper textual and contextual reading, leases do not fall within the purview of section 4(1). Accordingly, the Income-tax Officer’s exercise of power under section 4(1) in respect of leases was beyond the statutory power conferred by the Act.
  6. On the point concerning section 9 and the General Clauses Act, the Court accepted the Advocate-General’s explanation: section 9 preserves proceedings that started under the previous Ordinances. The Court observed that the General Clauses Act does not apply to temporary Acts, and section 9 simply invoked section 6 of the General Clauses Act to keep those prior proceedings alive; the Court found no force in the Petitioner’s contention that section 9 had the opposite effect.
  7. The Court explicitly declined to decide the constitutional challenge to the Act (the ultra vires argument). The Judge explained that because the other grounds advanced by the Petitioner sufficed to dispose of the application, and the constitutional question was not necessary to the decision, it was not adjudicated; the Judge further observed that, if required, referral to a Special Bench would have been appropriate.

Holding and Implications

Holding:

The Court concluded that section 4(1) of the Payment of Taxes (Transfer of Property) Act, 1949 does not authorise the Income-tax Officer to take action in respect of leases, and therefore the notices issued under section 4(1) in respect of the Petitioner’s leases were beyond the powers conferred by the Act.

Consequent order:

DISPOSITION: The rule was made absolute. Respondents Nos. 1, 2 and 3 are prohibited and restrained from taking any steps in furtherance of the notices mentioned in the petition, from giving effect to those notices, or from proceeding thereunder. The Petitioner was awarded costs of the application (as of a motion; each day's hearing allowed separately as of a motion).

Implications:

  • The direct effect is to enjoin the named respondents from enforcing the particular notices issued under section 4(1) in respect of the leases granted to the Petitioner.
  • The Court did not decide the constitutional challenge; therefore, no determination was made on the broader constitutional validity of the Act in this opinion.
  • The opinion does not articulate broader precedential consequences beyond the decision in this case; it confines itself to the statutory interpretation and the specific relief granted to the Petitioner.
Show full summary ...

    Hind Estates Ltd. v. C.S Peters And Ors

    The Judgment of the Court was delivered by

    S.R Das Gupta, J.:— This is an application on behalf of Hind Estates, Ltd., inter alia for a writ of Mandamus or writ of like nature directing the Respondents Nos. 1 and 2 and each of them to forbear from giving effect to the notices issued by them to Respondents Nos. 4 and 5 on diverse dates including 16th May, 1950, or from taking any further steps in pursuance of the said notices or taking or continuing any proceedings under sec. 4 (1) of the Payment of Taxes (Transfer of Property) Act, 1949.

    2. The case of the Petitioner before me is as follows: The Petitioner Hind Estates, Ltd., is a private limited company incorporated in India under the Indian Companies Act, 1913. The registered office of the company is situate at No. 220/1, Lower Circular Road, Calcutta. The Respondents Nos. 4 and 5 by a registered lease dated the 13th December, 1948, granted in favour of the Petitioner a lease for 99 years commencing from 1st January, 1949, of a number of properties situate is Calcutta at a rent of Rs. 2,400 per month. By another indenture of lease, dated 4th January, 1949, the Petitioner also obtained a lease from the Respondents Nos. 4 and 6 for a period of 99 years commencing from 1st January, 1949, at a rent of Rs. 1,000 per month of certain properties situate at Cawnpore. By a third indenture of lease, dated the 20th December, 1948, the Petitioner obtained a lease of certain properties in Delhi from the Respondent No. 4, Mohamad Amin for a period of 99 years commencing from 1st January, 1949, at a rent of Rs. 100 per month. After partition of India and on 7th February. 1948, an Ordinance being Ordinance No. III of 1948, was passed by the Government of India. Under the said Ordinance no Registering Officer should register any document which is required to be registered under cls. (a), (b). (c) and (e) of sub-sec. (1) of sec. 17 of the Registration Act. unless a certificate had been obtained from the Assistant Commissioner of Income-tax, to the effect that the person making such transfer is not liable to taxation under the Indian Income-tax Act. the Excess Profits Tax Act or the Business Profits Tax Act, 1947, or that he has either paid or made satisfactory provisions for the payment of all existing and anticipated liabilities under any of the said acts or that he has otherwise satisfied that the registration should be allowed. Sec. 4 of the said Ordinance provides that if any right, title and interest in any property whether movable or immovable, other than agricultural land has been transferred, assigned, limited or extinguished after 14th August, 1947, the Income-tax Officer of the area where the property is situate may issue a notice to all or any of the parties to the transactions requiring them to produce a certificate prescribed by sec. 3 of the said Ordinance and if no such certificate is produced, he may forward a statement to the Collector show-ing the existing and anticipated liabilities of each or any of the said parties and Col lector should then proceed to recover the total amount shown in the statement as if it were an arrear of land revenue and for that purpose may treat the said property as if it belonged to all or any of the per sons named in the statement. Thereafter on the 6th August, 1948, another Ordinance was passed, being Ordinance No; XXI of 1948. The said Ordinance is practically in the same terms as the Ordinance No. III of 1948 with this variation, namely, that under sec. 3 of Ordinance XXI of 1948 which is otherwise same as sec. 4 of the Ordinance III of 1948, stocks, shares and securities are excluded from the operation thereof and in place of the words “the certificate prescribed by sec. 3” used in sec. 4 of the Ordinance III of 1948, the expression “a certificate by the Inspecting Assist ant Commissioner o Income-tax of the said area in the terms mentioned in sec. 2 of the said Ordinance” is used. The Ordinance XXI of 1948 expired on the 7th February, 1949, and on the 22nd April, 1949, an Act being Payment of Taxes (Transfer of Property) Act (Act XXII of 1949) came into force.

    3. The heading of the said Act is as follows:— “An Act to make provision for the payment of taxes before transfers of property are registered in certain cases”,

    4. The preamble of the said Act runs as follows:— “Whereas it is expedient to make provision for the payment of taxes before transfers of property are registered in certain cases”.

    5. The said Act, under sec. 2 thereof, was made applicable to “any person who, on account of the setting up of the Dominions of India and Pakistan, or on account of civil disturbances or the fear of such disturbances, leaves or has, since the 14th day of August, 1947, left any place in the Provinces of India for any place outside India, or who, since the said date, has been residing in any place outside India; or (ii) who, in the opinion of any of the income-tax authorities specified in sub-sect (1) of sec. 5 of the Indian Income-tax Act, 1922 (XI of 1922), Or a Custodian of Evacuee Property or a Collector, is likely to leave the provinces of India with the intention of settling in any place outside the provinces of India, and in respect of whom a declaration that he is a person to whom this Act-applies has been received from any such income-tax authority, Custodian of Evacuee Property or Collector by the registering officer of the area in which any property belonging to such person is situate”.

    6. Secs. 3, 4 and 9 of the said Act are material.

    7. Sec. 3 runs as follows:— “Payment of taxes before registration of documents: (1) Where any document required to be registered under the provisions of cl. (a), cl. (b), cl. (c) of cl. (e) of sub-sec. (1) of sec. 17 of the Indian Registration Act, 1908 (XVI of 1908), purports to transfer, assign, limit or extinguish any right, title or interest in any property, other than agricultural land, belonging to any person to whom this Act applies, no Registering Officer appointed under the said Act shall register any such document, unless it is certified by the Income-tax Officer of the area in which the property is situate in respect of the person whose right, title or interest in the property is to be so transferred, assigned, limited or extinguished under the terms of the document that—

    (a) such person is not liable to assessment or taxation under the Indian Income-tax Act, 1922 (XI of 1922), the Excess Profits Tax Act, 1940 (XV of 1940), or the Business Profits Tax Act, 1947 (XXI of 1947), or

    (b) such person has either paid or made satisfactory provision for the payment of all existing or anticipated liabilities under any of the Acts specified in cl. (a) of this sub-section; or (c) the Income-tax Officer is otherwise satisfied that the registration of the document will not prejudicially affect the recovery of all existing or anticipated liabilities referred to in cl. (b) of this sub-section”.

    8. Sec. 4 runs as follows:— “Recovery of taxes where property has been transferred without a certificate.

    (1) Where, in respect of the transfer made on or after the seventh day of February, 1948, in the Provinces of Bombay, West Bengal, East Punjab, Bihar, Delhi and Ajmer-Merwara, and in any other province on or after the date on which the Transfer of Property (India) Ordinance, 1948 (III of 1948), was made applicable to that Province, of any right, title or interest in any immovable property other than agricultural land, belonging to any person to whom this Act applies, the Income-tax Officer of the area where the property is situate is satisfied, after giving such person notice in this behalf for a period of not less than one month, that no certificate in the terms mentioned in sec. 3 would have been issued to him if this Act had been in force on the date the transfer was made, he may forward a statement to the Collector showing the existing and anticipated liabilities by way of taxes in respect of all or any of the parties to the transfer….”

    Sec. 9 runs as follows:— “Effect of expiry of Ordinance XXI of 1948— On the expiry of the Payment of Taxes (Transfer of Property) Ordinance, 1948 (XXI of 1948), sec. 6 of the General Clauses Act, 1897 (X of 1897), shall apply as if the Ordinance had been repealed by a Central Act”.

    At the time of the granting of the leases in favour of the Petitioner by the Respondents Nos. 4 and 5 hereinbefore mentioned, the Ordinance XXI of 1948 was already in force.

    On May 16, 1948, the Respondent No. 1, C.S Peters, who was then the Income-tax Officer, acting on behalf of the Indian Union, issued diverse notices to the lessors, in relation to the properties leased out to the Petitioner, under sec. 4 (1) of the Payment of Taxes (Transfer of Property) Act. The material portions of the said notices are as follows:—

    “Whereas you are a person to whom the Payment of Taxes (Transfer of Property) Act, 1949 (Act XXII of 1949), applies within the meaning of sec. 2 of the said Act, and

    (2) Whereas your right, title and interest in the movable properties mentioned below has been transferred by way of lease to Messrs. Hind Estates, Ltd., of 220/1, Lower Circular Road, Calcutta, and

    (3) Whereas it appears that no certificate in the terms mentioned in sec. 3 of this Act would have been issued to you if the said Act had been in force on the date the transfers were made,

    You are hereby required under sec. 4 (1) of the said Act to show cause on or before July 3, 1950, why I should not hold that no certificate in the terms mentioned in sec. 3 of the said Act would have been issued to you if the Act had been in force on the dates the transfers were made”.

    9. No notice was given to the Petitioners, who are the lessees from the Respondents Nos. 4 and 5. In the circumstances the Petitioner has presented this application before this Court for the reliefs I have already mentioned.

    10. Mr. Chaudhuri appearing on behalf of the Petitioner urged before me that the action of the Income-tax Officer in issuing the said notices does not come within the four corners of the Act because the Act does not apply to leases. Mr. Chaudhuri, further contended before me that the transfers referred to in sec. 4 of the said Act are the kinds of transfers which are mentioned in sec. 3 of the Act and for which a certificate under the said section would be necessary before they can be registered. If that is so, then Mr. Chaudhuri's contention is that the action on the part of the Income-tax Officer in taking steps under sec. 4 of the said Act is not warranted by the provisions of the said Act and does not come within the four corners thereof, and, therefore, a direction should be issued by this Court as asked for.

    11. I should mention that the Advocate-General appearing on behalf of the Respondents did not dispute the proposition, namely, that if the action of the authorities concerned does not come within the four corners of the Act, then suitable directions should be issued by this Court. But his contention is that the action does come within the provisions of sec. 4 of the said Act.

    12. The second contention of Mr. Chaudhuri is that the Payment of Taxes (Transfer of Property) Act, 1949, is ultra vires the Constitution of India inasmuch as it violates the fundamental rights secured for the citizens of India under the articles of the said Constitution.

    13. This is an important point of constitutional law, but, having regard to the view which I have taken of the other points urged by Mr. Chaudhuri, it would not be necessary for me to decide this question on this application. If it were necessary, and if I had come to the conclusion that the other contentions raised on behalf of the Petitioner cannot be sustained and he can succeed only if he can establish before me that the Act itself is ultra vires the Constitution of India, then I would have referred the matter to the Hon'ble Chief Justice for constituting a Special Bench to decide this “question, as, in my opinion, it would be much more satisfactory to have it decided by a Bench of three Judges. But, as I have already said, it would not be necessary for me for the purpose of deciding this application to go into that question.

    14. The third contention of Mr. Chaudhuri is that under sec. 9 of the said Act the provisions of sec. 6 of the General Clauses Act have been made operative as if the Ordinance had then been repealed by a Central Act. Mr. Chaudhuri's contention is that because of that reason the Ordinance still applies and if that is so, then the action of the authorities concerned cannot be sustained.

    15. With regard to the first contention of Mr. Chaudhuri, Mr. Advocate-General's contentions before me in short are as follows:— Section 4 is an independent section, independent of sec. 3 of the Act. Under sec. 3 the Registering Officer shall not register certain classes of transactions, lease being admittedly excluded. All that it meant was that in future the Registering Officer shall not register those transactions. But sec. 4 on the other hand applied to transfers which have already taken place after February 7, 1948, of any right, title and interest in any immovable property. The provisions of the previous Ordinances also show that the subsequent sections are independent of the previous ones. That this was the intention of the legislature is evident from the fact that the provisions of Ordinance III of 1948 had to be amended by changing the words, namely, “certificates as prescribed by the Act” to “certificates in terms of the Act”. The only difference between the Ordinances and the Act is that movables have been excluded; otherwise, the Act is merely a descendant of the Ordinances.

    16. I have carefully considered the contentions of the Advocate-General, but I am unable to accept the same. In my opinion the use of the words ‘the transfer’ in sec. 4 indicates the class of transfers mentioned in sec. 3 of the Act and for which a certificate would be necessary before the same can be registered, in my opinion the words ‘the transfer’ used in sec. 4 of the said Act is equivalent to and means such transfer. That this is the interpretation of sec. 4 is evident from the use of the words no certificate in the terms mentioned in sec. 3 would have been issued if the Act had been in force on the date the transfer was made. It means that if the Act had been in force on the date of the transfer in question (therefore a certificate in terms of sec. 3 would be necessary before any transfer as mentioned in sec. 3 could be registered), and if the Income-tax Officer is satisfied that no such certificate would have been issued to him in terms of sec. 3, then he can act under sec. 4. But the question whether or not a certificate would be issued in terms of sec. 3 would only arise incases of transfers as mentioned in sec. 3 of the said Act. That indicates to my mind that ‘the transfers’ referred to in sec 4 are the kinds of transfers to which the Act would have applied if it had been in force and in respect of which certificates were necessary in terms of sec. 3.

    17. In this connection it would he helpful to refer to the material provisions of the previous Ordinances, being Ordinance III of 1948 and Ordinance XXI of 1948. Sec. 3 of the Ordinance III runs as follows:—

    “Sec. 3. Registration of documents: No Register-Officer, Revenue Officer, Custodian or other officer appointed to deal with property shall register any document, relating to property other than agricultural land, which is required to be registered under the provisions of clause (a), (b), (c) or (e) of sub-section (1) of section 17 of the Indian Registration Act, 1908 (XVI of 1908), unless it is certified by the Inspecting Assistant Commissioner of Income-tax of the area in which the property is situate in respect of every person whose right, title or interest in the property is or will be transferred, assigned, limited or extinguished under the terms of the document, either that such person is not liable to taxation under the Income-tax Act, 1922 (XI of 1922), the Excess Profits Tax Act, 1940 (XV of 1940), or the Business Profits Tax Act, 1947 (XXI of 1947), or that he has either paid or made satisfactory provision for the payment of all existing or anticipated liabilities under any of the said Acts, or that he is otherwise satisfied that the registration should be allowed.”

    Sec. 4. Recovery proceedings: If any right, title or interest in any property whether movable or immovable, other than agricultural land, is or has been transferred, assigned, limited or extinguished after the 14th day of August, 1947, the Income-tax Officer of the area in which the property is situate may at any time issue a notice to all or any of the parties to the transaction requiring them to produce within one month the Certificate prescribed by sec. 3; and if such certificate is not produced he may forward a statement to the Collector showing the existing and anticipated tax liabilities of each or any of the said parties. The Collector shall then proceed to recover the total amount shown in the statement as if it were an arrear of land revenue, and for the purpose of the recovery proceedings he may treat the said property, as if it belonged to all or any of the persons named in the statement.”

    18. An Amendment was effected to the provisions of Ordinance III of 1948 by Ordinance XI of 1948, the material portions of which run as follows:—

    “In section 4 of the Transfer of Property” (India) Ordinance, 1948, as for the words ‘in any immovable property other than agricultural land’ the words ‘in any immovable property other than agricultural land or in any movable property other than stocks, shares and securities’ shall be substituted and shall be always deemed to have been substituted; for the words the certificate prescribed by the words ‘a certificate by the Inspecting Assistant Commissioner of Income-tax of the said area in the terms mentioned in’ shall be substituted and shall be deemed always to have been substituted.”

    19. The provisions of Ordinance XXI of 1948 is the same as the provisions of Ordinance III as it stood after the amendment mentioned above.

    20. It appears on a comparison of the provisions of the said previous Ordinances and the provisions of the present Act that while in the Ordinances the words used were “any transfer”, the words used in the present section are “the transfer”, and “movables” which were included in the relevant sections of the Ordinances have been omitted from sec. 4 of the Act in question. The operation of sec. 4 of the present Act has also been restricted to certain areas of the Indian Dominion and to certain classes. Again, the words “if the Act had been in force on the date the transfer was made” are not to be found in the said Ordinances; and if the construction, which the learned Advocate-General wants me to put on sec, 4 of the present Act, is to be accepted, then I see no reason why these words are introduced in the said section of the present Act.

    21. Apart from any reference to the provisions of the previous Ordinances, on a proper consideration of the section itself and also as read with other provisions of the Act, it seems to me that sec. 4 of the Act applies to the class of transfers mentioned in sec. 3. The heading of the Act, the preamble of the Act and the heading of the section itself also support the view which I have taken in this matter. The heading and the preamble of the Act show that the object, or, as Mr. Sen puts it, the main theme of the Act is to provide for payment of taxes before transfers of property are registered in certain cases. Such a provision is made in sec. 3 of the Act so far as future transfers pre concerned, and in sec. 4 of the Act in cases of transfers which took place prior to the commencement of the Act. But both the sections, in my opinion, refer to the same class of transfers. This view makes the heading of the Act, the preamble and the heading of the section itself consistent with the provisions of the said section.

    22. Mr. Advocate-General laid considerable emphasis upon the words “any right, title and interest in any immovable property” appearing in the said section. These words no doubt create some difficulty in the matter, and they did cause some hesitation in my mind before I came to the conclusion, to which I have referred. But it appears that in sec. 3 also similar expressions are used. The expressions used in the said sections are “purports to transfer, assign, limit or extinguish any right, title and interest in any immovable property” although referring only to such documents which are required to be registered under the provisions of clauses (a), (b) (c) and (e) of sec. 17 of the Registration Act. It appears to me that similar language has been used in sec. 4 of the Act. I must confess that the sections of the Act are not happily worded It seems to me that almost the same words appearing in sec. 17, cls. (b), (c) and (e) of the Registration Act, have been used in both the sections, being secs. 3 and 4 of the Act.

    23. Besides, if the contention of the learned Advocate-General is to be accepted, then the result would be that even in cases of leases for one year, or less than a year, for example monthly tenancies, the Income-tax Officer would be entitled to act under sec 4 and issue a notice, although such leases do not come under the provisions of sec. 17 of the Registration Act and do not even require any registration at all. The main theme of the Act is to provide for payment of taxes before transfers of property are registered in certain cases unless a certificate in terms of sec. 3 is obtained. One of the terms of such certificate, as mentioned in sec. 3, is that the Income-tax Officer is satisfied that the registration of the document will not prejudicially affect recovery of existing or anticipatory liability. But if the contention of the Advocate-General is to be accepted, then even in the case of documents creating leases for one year or less than a year and which do not require any registration at all the Income-tax Officer would be able to issue a notice under sec. 4 of the Act.

    24. On a full consideration of the matter I have come to the conclusion that sec. 4 (1) does not authorise the Income-tax Officer to act in the case of leases, and this being a case of a lease he is not entitled to issue the notices which have been issued. I am fully aware of the possibility of dishonest parties avoiding the provisions of the Act by taking resort to leases instead of transfers. But I have to interpret the Act as it has been enacted, and if on such interpretation the leases do not come within the purview of sec. 4 (1) of the said Act, then the Income-tax Officer cannot take the action under the said section.

    25. With regard to the contention of Mr. Chaudhuri, which is based on sec. 9 of the present Act, I must confess that I am unable to see any force in the said contention.

    26. Sec. 9, as Mr. Advocate-General has rightly pointed out, only keeps alive the proceedings which started under the previous Ordinances, because, it is now well-established that the General Clauses Act does not apply to temporary Acts. That is why a provision had to be made in this Act providing for the application of sec. 6 of the General Clauses Act. The effect of sec. 9 is nothing more than that. That being so. I cannot accept Mr. Chaudhuri's contentions on this point.

    27. But on the view which I have taken as to the effect of sec. 4 (1) of the Act and having come to the conclusion that the Income-tax Officer has acted beyond his powers, I shall give relief to the Petitioner in this case.

    28. The result is that the rule will be made absolute and the Respondents Nos. 1, 2 and 3 are hereby prohibited and restrained from taking any steps in furtherance of the notices mentioned in the petition or from giving effect to the said notices or from proceeding thereunder. The applicant is entitled to the costs of this application. The costs will be as of a motion but each day's hearing would be allowed separately as of a motion.

    A.K.D.G

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    Hind Estates Ltd. v. C.S Peters And Ors
    (Dec 8, 1950)