Law:

Section:

Section 269UC, read with section 269UA, of the Income-tax Act, 1961 - Purchase of immovable property by Central Government - Restrictions on transfer of property - Whether where lease was for a period of nine years which was extendable for a further period of nine years if lessee complied with certain terms and conditions, Explanation to section 269UA(f)(i) was clearly attracted requiring compliance of provisions of section 269UC - Held, yes FACTS The appellant was the owner of certain property which was let out at certain monthly rental with effect from 1-6-1991 for a period of nine years extendable for a further period of nine years. The appropriate authority issued a show-cause notice to the appellant alleging that it was a lease for a period of more than 12 years and, hence, the provisions of Chapter XXC would be attracted and the lessor and the lessee were obliged to submit Form 37-1 within 15 days of the draft agreement. The appellant contended that the lessee had an option to renew the lease by giving three months' notice prior to the expiry of the lease and further a fresh lease deed was required to be executed and registered and, hence, the provisions of Chapter XXC would not be attracted. The appropriate authority rejected the appellant's contention and held it guilty of not complying with the provisions of section 269UC. Accordingly, a complaint was laid under section 276AB, read with section 278B, before the Additional Chief Metropolitan Magistrate alleging contravention of section 269UC. The Magistrate took cognizance of the offence and issued process against the appellant. On writ, the High Court dismissed the same observing that on a conjoint reading of paras 1 and 12 of the lease deed, it appeared that the lessor intended the lease to last for 18 years and further the lessor could not have refused to renew/extend the lease after first term if the lessee complied with the conditions and, therefore, provisions of Chapter XXC were applicable. On appeal to the Supreme Court : HELD On a plain reading of the Explanation to section 269UA(f), it is evident that a lease, which provides for the extension of the term thereof by a further term, shall be…

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