K. S. BAKTHAVATSALAM J.

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 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. Subhalakshmi 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.

The petitioners in W. P. No. 1389 of 1990 purchased a property measuring an extent of five grounds 1180 sq. ft. in T. S. No. 47, Block No. 37 of Kottur Village, and 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 agreements in respect of undivided share of the property (365/13180).

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 11 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 propertyThe 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.

The same complaint is being made by the vendee/purchasers, the petitioners in W. P. Nos. 408, 409 and 1466 to 1470 of 1990.

The complaint of the petitioner in W. P. No. 408 of 1990 is that 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 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 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 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 1991 (71) CC 723, 1991 (189) ITR 192, 1990 AIR(Mad) 251, 1990 AIR(Madras) 251 ; [1989] WLR (Suppl.) 1. Learned counsel referring to sections 269UA 269UC, and 269UL of the Income-tax Act, 1961 1989 AIR(SC) 2227, 1989 (3) CompLJ 227 [LQ/SC/1989/462] , 1989 (44) ELT 613 [LQ/SC/1989/462] , 1989 (3) JT 720, 1991 (81) STC 113, 1989 (2) Scale 617 [LQ/SC/1989/462] , 1989 (4) SCC 378 [LQ/SC/1989/462] , 1989 (S1) SCR 129, 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 purchases 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 doubt 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 functions under the Registration Act and apply the provisions of the Indian Stamp Act on the facts of each caseMrs. Nalini Chidambaram, learned counsel, appearing for the Incometax 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 shares 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 petitions are valid in law.

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 was some inconvenient circumstance to the petitioners herein and that there is no tax involvement in these casesReplying 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 aggrieved inasmuch as the sellers are expected to do the same under the. 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 transferee to transferor which is not warranted under the Income-tax Act and as such, the power of the quasi-judicial authority's function is fettered by these circulars (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 circulars 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.

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.

I have considered the arguments of Mr. K. C. Rajappa, learned counsel appearing for the petitioners 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 compassIt is necessary to refer to certain statutory provisions of the Incometax Act, 1961, to understand the cases on hand.

Section 230A of the Income-tax Act, 1961, provides for certain restrictions on registration of transfers of immovable property in certain cases 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 Act shall register any such document unless ..." *

Chapter XX-C consisting of sections 269UA to 269UO of the Incometax 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;..."

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 alsoExplanation.-For the purposes of this sub-clause, 'land, building, part of a building, machinery, plant, furniture, fittings and other things' include any rights therein

(ii) any rights in or with respect to any land or any building or part of a building (whether or not including any machinery, plant, furniture, fittings or other things therein), which has been constructed or which is to be constructed, accruing or arising from any transaction (whether 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 :" *

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 effected except after an agreement for transfer is entered into between the person who intends transferring the immovable property (hereinafter referred to as the transferor) and the person to whom it is proposed to be transferred (hereinafter referred to as the transferee) in accordance with the provisions of sub section (2) at least three months before the intended date of transfer

(2) The agreement referred to in sub-section (1) shall be reduced to writing in the form of a statement by each of the parties to such transfer or by any of the parties to such transfer acting on behalf of himself and on behalf of the other parties(3) Every statement referred to in sub-section (2) shall

(i) be in the prescribed form ;

(ii) set forth such particulars as may be prescribed ; and

(iii) be verified in the prescribed manner

and shall be furnished to the appropriate authority in such manner and within such time as may be prescribed, by each of the parties to such transaction or by any of the parties to such transaction acting on behalf of himself and on behalf of the other parties." *

Section 269UL places certain restrictions on registration, etc., of documents in respect of transfer of immovable property and section 269UL(1) of thereads 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 property in respect of which it has received a statement under subsection (3) of section 269UC, is furnished, along with such document." *

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 ......" *

Section 2(10) of the Indian Stamp Act, 1899, defines 'conveyance' as follows.

"Conveyance :-'Conveyance' includes a conveyance on sale and every instrument by which property, whether movable or immovable, is transferred inter vivos and which is not otherwise specifically provided for by Schedule I." *

Item No. 23 of the Schedule I of the Indian Stamp Act, 1899, defines "conveyance" as follows

Description of instrument Proper stamp duty

--------------------------------------------------------------------------------------------------------------------------------------------- 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 or situated within the Cities of Madras part thereof of the market value of and Madurai and Municipal Towns the property which is the of Coimbatore, Salem and Tiruchirappalli. subject-matter of conveyance (b) of any other property. Seven rupees for every Rs. 100 or part thereof of the market value of the property which is the subject-matter of conveyance

Section 269UA(a) also defines "agreement for transfer"which is to the 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," *

A reading of section 230A of the Income-tax Act, 1961.

"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 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 . . ." *

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, 1988 (174) ITR 304, 1988 (74) CTR 126. In that case, when the valuation of the interest of 3/40ths 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 concernedA Division Bench of this court in a decision in Park View Enterprises v. State Government of Tamil Nadu 1991 (71) CC 723, 1991 (189) ITR 192, 1990 AIR(Mad) 251, 1990 AIR(Madras) 251 ; [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 market 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 1, section 47A procedure cannot be followed. . ." *

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 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 facts 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, 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 . . ." *

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. 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 above mentioned decisions, I am of the view that the circulars which are impugned in these writ petitions cannot stand.

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 1989 AIR(SC) 2227, 1989 (3) CompLJ 227 [LQ/SC/1989/462] , 1989 (44) ELT 613 [LQ/SC/1989/462] , 1989 (3) JT 720, 1991 (81) STC 113, 1989 (2) Scale 617 [LQ/SC/1989/462] , 1989 (4) SCC 378 [LQ/SC/1989/462] , 1989 (S1) SCR 129, may be madeThough 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 transactions, i.e., selling a property dividing into many shares, it is worthwhile to consider amending the Income-tax Act as well as the Registration Act. As the provisions exist on date, the writ petitioners are bound to succeed.

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 [LQ/MadHC/1990/194] , 1992 (104) CTR 251, 1990 (51) TAXMAN 478 [LQ/MadHC/1990/194] , 1992 (104) CTR(Mad) 251 (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 than Rs. 10 lakhs and what was sold was the individual undivided share in the said property.

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.

In the result, all the writ petitions are allowed. However, there will be no order as to costs.