Government's right to pre-emptive purchase of Immovable property.

1. The Finance Act, 1986 has inserted Chapter XXC in the Income Tax Act with a view to check undisclosed consideration involved in the transfer of immovable properties. The provisions in this chapter grant the Government the pre-emptive right to purchase the immovable property for the amount shown in the agreement of transfer entered into between the transferor and transferee. The order of such purchase by the Central Government is made by the Appropriate Authority, having jurisdiction over the area where the property is situated. Before making the order of purchase by the Central Government, the Appropriate Authority gives the Transferor(s) and the Transferee(s) an opportunity of being heard. Other persons having interest in the property like tenants are also given an opportunity of being heard. The order of such purchase by the Central Government, made by the Appropriate Authority specifies the grounds on which the order is made,

Requirements of no objection before registration of the documentsof transfer.

2. The provisions in Chapter XXC require that the  Registering Officer appointed under the Registration Act, 1908 shall not register any document which purports to transfer immovable property exceeding the prescribed value unless a certificate is obtained from the Appropriate Authority that it has no objection to the transfer of the property for the consideration stated in the agreement.

3. The requirement of no objection for registration of the transfer documents is applicable to cases where the consideration for the transfer of the property specified in the agreement of transfer exceeds the prescribed limit. Four different limits (Rs. 75 lakhs, Rs. 50 lakhs, Rs. 25 lakhs & Rs. 20 lakhs) are prescribed with effect from 1st August 1995 for the areas to which this provision is applicable. Areawise prescribed limit is given in the Annexure. The immovable property for this purpose includes :

Transfers covered under these provisions.

4. The right to pre-emptive purchase by the Central Government arises when there is proposed transfer of the immovable property between the transferor and the transferee. For this purpose transfer includes :

1. Sale
2. Exchange
3. Long term lease - i.e. lease for a term not less than 12 years.
4. Giving the possession in part performance of the contract.
5. Transfer of share in co-operative society or a company when it has effect of transferring the enjoyment of the property.

Areas to which this provision applies

5. This provision came into existance from 1st October, 1986 in the first instance in respect of properties situated in four metropolitan cities. Gradually properties situated in other areas are also covered under this provision. The areas and the date from which the provision applies to them are as under:

Jurisdiction of Appropriate Authorities.

6. There are seven Appropriate Authorities located at Delhi, Mumbai, Calcutta, Chennai, Bangalore, Ahmedabad and Lucknow. The areas falling in their jurisdiction are given at page

7. Before the transferor or transferee approach for no objection certificate, following pre-requisites should be completed by them :—

1. The person intending to transfer the immovable property (transferor) must enter into an agreement for transfer with the person to whom the said  property is proposed  to be transferred (transferee).
2. Such agreement should be entered into at least four months before the intended date of transfer.
3. The agreement must be reduced to writing in the form of a statement by or on behalf of each person, who is a party to the transfer.
4. The statement must be in the prescribed form (Form No.  37-1) and must set forth the prescribed particulars. The specimen of the form is reproduced at page 45 of this booklet.
5. The statement must be signed and verified in the prescribed manner by or on behalf of each of the transferor and the transferee.
6. The statement in Form No. 37-1 together with its Annexure and a copy of the agreement for sale of the property must be furnished in duplicate to the Appropriate Authority having jurisdiction within 15 days from the date of the agreement.

8. As mentioned in para 2 above, the Registering Officer appointed under the Registration Act shall not register any document which purports to transfer immovable property exceeding the prescribed limits unless a certificate is obtained from the Appropriate Authority that it has no objection to the transfer of the property for the consideration stated in the agreement. After the statement in Form No. 37-1 is furnished to the Appropriate Authority, the agreement for its transfer cannot be reversed or altered. Any transfer of the immovable property in violation of these provisions is void.

What is the position if statement submitted is found to be defective.

9. Where the statement submitted is found to be defective, the appropriate authority may intimate the defect to the assessees concerned and give them an opportunity to rectify the defect within 15 days (or extended period) from the date of intimation. If the defect is not rectified within the period allowed, the statement would be deemed never to have been furnished.

Time limit for issue of no objection by Appropriate Authority.

10. If the Appropriate Authority does not decide within 3 months (from the end of the month in which the statement is furnished to it) to purchase the immovable property in respect of which statement in Form No. 37-1 has been filed, the Appropriate Authority has to issue a certificate of No Objection to the transferor and the transferee.

If the Appropriate Authority decides to purchase the property, the Central Government will make the payment of the consideration for the property mentioned in the agreement within a month from the end of the month in which the order of purchase is made. If the Government is unable to pay the consideration for the property to the person entitled to it within one month from the end of the month in which the order is passed by the Appropriate Authority, the order of purchase stands abrogated and the Appropriate Authority has to issue a No Objection in respect of the agreement. In case of refusal to receive payment of consideration or dispute as to the title the Central Government shall deposit the amount of consideration with appropriate authority.

Cases where no objection certificate from Appropriate Authority is not required.

11. The No Objection Certificate from the Appropriate Authority is not required by the Registering Officer in the following cases :—

For help and guidance contact PRO.

12. In case of any doubt or difficulty the Public Relation Officer in the Income Tax Department or the Office of the Appropriate Authority may be contacted.

Agreement made this .....................................day of.................................... in the year 19................................ between........................................................

hereinafter called the transferee(s) of the OTHER PART. It is hereby agreed by and between the parties as follows : —

1)   The transferor(s) and the transferee(s) agree to transfer of the immovable property located at .......................................................................... and described in the Schedule hereunder written by way of ............................................................

2)   The total apparent consideration for the transfer of the immovable property is ..................................................................................................................

3)...............................................................................................................

4) The particulars of the transferor(s), transferee(s) and other details about the transaction are furnished in the annexure to this agreement.

The Schedule above referred to :......................................................................

* As amended by IV(Twelfth Amdt.) Rules, 1994 published in Notification No.9655 (F) No. l42/52/94-(TPL) dated 29/11/94 we.f. 1.1.95.

In witness of the above agreement for sale, the parties hereto solemnly declare that what is stated above and in the annexure (including the document(s) accompanying such annexure), to the extent it relates to the respective party, is correct and complete to the best of their knowledge and belief. Each party further declares that he is competent to sign this agreement and verify its content.

1.    Particulars of the transferor(s)

1. Name(s)
2. Father's/Husband's name
3. Present address(es)
   1. Plot No.
   2. Lane/Street
   3. Locality
   4. CityAown with PIN CODE
   5. District
   6. State
   7. Telephone No.
4. Permanent address(es)
   1. Plot No.
   2. Lane/Street
   3. Locality
   4. City/town with PIN CODE
   5. District
   6. State
   7. Telephone No.
   8. Permanent Account No.
5. Ward/Circle/Special Range and place where assessed to income-tax.

2.    Particulars of the transferee(s)

1. Name(s)
2. Father's/Husband's name
3. Present address(es)
   1. Plot No.
   2. Lane/Street
   3. Locality
   4. CityAown with PIN CODE
   5. District
   6. State
   7. Telephone No.
4. Permanent address(es)
   1. Plot No.
   2. Lane/Street
   3. Locality
   4. City/town with PIN CODE
   5. District
   6. State
   7. Telephone No.
   8. Permanent Account No.
5. Ward/Circle/Special Range and place where assessed to income-tax.

3.    Particulars of the property sought to be transferred

Enclose copies of building plan, layout plan and site plan

4.    Nature of interest or right proposed to be transferred. Please indicate whether the property consists of:

1. ownership, or
2. membership of co-operative society, or association of persons, or a company (please indicate the number of shares and their value), or
3. lease, or
4. right to possession taken or retained in part performance of a conract of the nature referred to in Section 53A of the Transfer of Property Act, 1882 or any agreement or arrangement of whatever nature, or
5. any other (please specify).

5.     Particulars of consideration for transfer :—

6.     Is the property proposed to be transferred encumbered in any manner? If so, please give details, if it is by way of

1. lease
2. mortage (including equitable mortage of any form)
3. charge
4. tenancy
5. any other (please specify)

Please furnish a copy of the deed, agreement or any other document executed in respect of the encumbrance. Also furnish up-to-date encumbrance certificate issued by the competent Sub-Registrar.

7 Details of liabilities in respect of dues of the local authorities (e.g. lease rent, water charges, electricity bills, development charges, etc.)

8.

9. Whether any part or whole of the property proposed to be transferred has been reserved for any public purpose? If so, give details.

10. Whether any litigation relating to the property proposed to be transferred is pending? If so, give nature and details of such litigation.

11. If the property is not in the possession of the transferor, please give details of the person(s) in possession of the property, his / their address(es) and the nature of the possession by the occupant(s).

1. Is the transferor in possession of the title deeds of the property proposed to be transferred?
2. If the answer to (i) above is no, the name and address of the person in possession of the title deeds and the reasons thereof.

12.   Particulars about acquisition of the property proposed to be transferred :-

1. Date on which the immovable property was acquired.
2. Cost of acquisition of the property. If the property was constructed by the transferor(s), the cost of acquisition of the land and cost of construction is to be given separately.
3. Was the property or pan thereof acquired other than by way of purchase? If so, give the details of such acquisition and cost of acquisition to the previous owner. Furnish a copy of relevant document.

13.   Persons interested in the property and in the consideration specifying their shares and basis thereof :-

(i).......................................

(ii)......................................

(iii)......................................

14. Is there any other written agreement for transfer of the said property other than the one in this form? If so, enclose a copy of this agreement.

15. Address of the Registrar where the sale agreement is required to be registered.

16. Please give nature and number of documents enclosed :-

(i).......................................

(ii)......................................

(iii).....................................

________________________                                    _________________________
Signature(s) of Transferor(s)                                    Signature(s) of Transferee(s)

Notes:—