Section 269A — Definitions

CHAPTER XX-A — ACQUISITION OF IMMOVABLE PROPERTIES IN CERTAIN CASES OF TRANSFER TO COUNTERACT EVASION OF TAX

Section 269A — Definitions

Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise

Status: Historic / spent. Chapter XX-A was inserted by the Taxation Laws (Amendment) Act, 1972, with effect from 15 November 1972, and does not apply to transfers of immovable property made after 30 September 1986 (section 269RR). It stands superseded by Chapter XX-C (pre-emptive purchase) and, for current transactions, by section 50C / section 56(2)(x).

Finance Act, 2026: No amendment. The Finance Act, 2026 does not touch any provision of Chapter XX-A.

Mechanism: Defines the vocabulary of the whole Chapter — 'apparent consideration', 'competent authority', 'court', 'fair market value', 'immovable property', 'instrument of transfer', 'person interested' and 'transfer'.

Litigation profile: Litigated through its key definitions — 'apparent consideration' (deferred-consideration discounting at 8%), 'fair market value' and 'transfer' (sale, exchange, lease ≥ 12 years, and part-performance under section 53A of the Transfer of Property Act).

A. COMMENTARY

Scheme of the definition section

Section 269A is the dictionary of Chapter XX-A. Three definitions do the heavy lifting in litigation. 'Apparent consideration' fixes the figure stated in (or gathered from) the instrument of transfer, and where any part of the price is deferred, requires that deferred part to be brought to its discounted present value at eight per cent per annum — so that an inflated face value cannot be used to defeat acquisition, nor a back-loaded price used to disguise undervaluation. 'Fair market value' is the price the property would ordinarily fetch on sale in the open market on the date of transfer. The gap between the two is the trigger for the whole Chapter.

'Transfer' — a wide net

'Transfer' is defined expansively to catch sale, exchange and lease for a term of not less than twelve years, and — crucially — the allowing of possession to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882. The lease Explanation deems a lease extendible to an aggregate of twelve years or more to be a long lease. This width was meant to stop avoidance by long leases and possession-without-conveyance devices.

Strict construction

Because the Chapter is expropriatory, the courts read its definitions strictly and in favour of the citizen: see Vimlaben Bhagwandas Patel (penal/expropriatory character) and the burden-of-proof discipline of K.P. Varghese. A gap between fair market value and apparent consideration is the occasion for enquiry, not proof of an untrue statement.

Why this still matters

Though spent for transfers after 30 September 1986, the section 269A concepts of 'apparent consideration' and discounted deferred consideration were carried forward verbatim into section 269UA of Chapter XX-C, on which the live case-law (e.g. Shrichand Raheja) was decided; the definitions therefore retain interpretive value.

B. STATUTORY TEXT (verbatim)

Reproduced verbatim from the Income-tax Act, 1961, as amended up to the Finance Act, 2025 (the Finance Act, 2026 makes no change). Page-header/footer artefacts of the source PDF have been removed; wording, clause-lettering and punctuation are unaltered.

Definitions.

269A. In this Chapter, unless the context otherwise requires,—

(a) "apparent consideration",—

(1) in relation to any immovable property transferred, being immo- vable property of the nature referred to in sub-clause (i) of clause (e), means,—

(i) if the transfer is by way of sale, the consideration for such transfer as specified in the instrument of transfer ;

(ii) if the transfer is by way of exchange,—

(A) in a case where the consideration for the transfer consists of a thing or things only, the price that such thing or things would ordinarily fetch on sale in the open market on the date of execution of the instrument of transfer ;

(B) in a case where the consideration for the transfer consists of a thing or things and a sum of money, the aggregate of the price that such thing or things would ordinarily fetch on sale in the open market on the date of execution of the instrument of transfer and such sum ;

(iii) if the transfer is by way of lease,—

(A) in a case where the consideration for the transfer consists of premium only, the amount of premium as specified in the instrument of transfer ;

(B) in a case where the consideration for the transfer consists of rent only, the aggregate of the moneys (if any) payable by way of rent and the amounts for the service or things forming part of or constituting the rent, as specified in the instrument of transfer ;

(C) in a case where the consideration for the transfer consists of premium and rent, the aggregate of the amount of the premium, the moneys (if any) payable by way of rent and the amounts for the service or things forming part of or constituting the rent, as specified in the instrument of transfer, and where the whole or any part of the consideration for such transfer is payable on any date or dates falling after the date of such transfer, the value of the consideration payable after such date shall be deemed to be the discounted value of such consi-deration, as on the date of such transfer, determined by adopting the rate of interest at eight per cent per annum ;

(2) in relation to any immovable property transferred, being immovable property of the nature referred to in sub-clause (ii) of clause (e), means,—

(i) in a case where the consideration for the transfer consists of a sum of money only, such sum ;

(ii) in a case where the consideration for the transfer consists of a thing or things only, the price that such thing or things would ordinarily fetch on sale in the open market on the date of the transfer ;

(iii) in a case where the consideration for the transfer consists of a thing or things and a sum of money, the aggregate of the price that such thing or things would ordinarily fetch on sale in the open market on the date of the transfer and such sum, and where the whole or any part of the consideration for such transfer is payable on any date or dates falling after the date of such transfer, the value of the consideration payable after such date shall be deemed to be the discounted value of such consideration, as on the date of such transfer, determined by adopting the rate of interest at eight per cent per annum ;

(b) "competent authority" means a Joint Commissioner authorised by the Central Government under section 269B to perform the functions of a competent authority under this Chapter ;

(c) "court" means a principal civil court of original jurisdiction unless the Central Government has appointed (as it is hereby authorised to do) any special judicial officer within any specified local limits to perform the functions of the court under this Chapter ;

(d) "fair market value",—

(i) in relation to any immovable property transferred by way of sale or exchange, being immovable property of the nature referred to in sub-clause (i) of clause (e), means the price that the immovable property would ordinarily fetch on sale in the open market on the date of execution of the instrument of transfer of such property ;

(ii) in relation to any immovable property transferred by way of lease, being immovable property of the nature referred to in sub-clause (i) of clause (e), means the premium that such transfer would ordinarily fetch in the open market on the date of execution of the instrument of transfer of such property, if the consideration for such transfer had been by way of premium only ;

(iii) in relation to any immovable property transferred, being immovable property of the nature referred to in sub-clause (ii) of clause (e), means the consideration in the form of money that such transfer would ordinarily fetch in the open market on the date of the transfer, if such transfer had been made only for consideration in money ;

(e) "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 transferred together with any machinery, plant, furniture, fittings or other things, such machinery, plant, furniture, fittings or other things also.

Explanation.—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 of the nature referred to in clause (b) of sub-section (1) of section 269AB ;

(f) "instrument of transfer" means the instrument of transfer registered under the Registration Act, 1908 (16 of 1908), or, as the case may be, the statement registered under section 269AB with the competent authority ;

(g) "person interested", in relation to any immovable property, includes all persons claiming, or entitled to claim, an interest in the compensation payable on account of the acquisition of that property under this Chapter ;

(h) "transfer",—

(i) in relation to any immovable property referred to in sub-clause (i) of clause (e), means transfer of such property by way of sale or exchange or lease for a term of not less than twelve years, and includes allowing the possession of such property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882).

Explanation.—For the purposes of this sub-clause, a lease which provides for the extension of the term thereof by a further term or terms shall be deemed to be a lease for a term of not less than twelve years if the aggregate of the term for which such lease has been granted and the further term or terms for which it can be so extended is not less than twelve years ;

(ii) in relation to any immovable property of the nature referred to in sub-clause (ii) of clause

(e), means the doing of anything (whether by way of transfer of shares in a co-operative society or company or by way of any agreement or arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, such property.

C. AUTHORITIES

Chapter XX-A generated little merits law of its own on the bare definitions; the authorities below are the directly relevant High Court and Supreme Court decisions on 'apparent consideration', 'fair market value' and the strict construction of the Chapter, supplemented by the cognate Chapter XX-C decision on the identical 'apparent consideration' concept.

'Apparent consideration' and discounting of deferred consideration

Shrichand Raheja v. S.C. Prasad, Appropriate Authority — Bombay High Court

Cognate Decided on the definition of 'apparent consideration' in section 269UA (Chapter XX-C). Where consideration is deferred, the apparent consideration must be discounted to present value, and the discounting runs from the date fixed for tender/payment. A direct analogue of the 8 per cent discounting rule embedded in the definition of 'apparent consideration' in section 269A.

'Fair market value' — meaning and method of valuation

CIT, West Bengal-II v. Madho Properties Ltd. — Calcutta High Court, per Dipak Kumar Sen & C.K. Banerji JJ (decided 12 September 1980)

Held The 'belting method' of valuing urban land (the front belt valued highest and successive rear belts at a discount by distance from the road) is a scientific and acceptable mode of arriving at fair market value when supported by data; it was approved following Mathura Prosad Rajgharia v. State of West Bengal (SC) and Smt. Tribeni Devi v. Collector, Ranchi (SC).

Also Reaffirmed that the section 269C(2) presumptions cannot be invoked at the initiation stage; the Tribunal's adoption of the belting method was upheld and the Revenue's appeal dismissed.

Mathura Prosad Rajgharia v. State of West Bengal — Supreme Court

Cognate (valuation) Approved the belting method for valuing urban land acquired compulsorily; the method is scientific where the diminution of value with distance from the road is borne out by data. Applied in Madho Properties to fair market value under Chapter XX-A.

Smt. Tribeni Devi v. Collector, Ranchi — Supreme Court

Cognate (valuation) Fair market value must be assessed on an objective standard, taking account of the property's present condition and its reasonable potential; guidance relied upon for the 'fair market value' enquiry under sections 269A/269C/269J.

Foundational construction of the defined terms

The character of the Chapter governs how its definitions are read.

CIT v. Smt. Vimlaben Bhagwandas Patel and Smt. Kamlaben Kanjibhai Patel — [1979] 118 ITR 134 (Gujarat) (decided 25 January 1979)

Facts Notice under section 269D(1) initiating acquisition of two industrial sheds transferred below the competent authority's estimate of fair market value; the transferee challenged initiation.

Held The leading judgment on Chapter XX-A. The acquisition machinery is expropriatory and penal in character and must be construed strictly. Initiation under section 269C(1) requires the competent authority to entertain reason to believe BOTH limbs of the 'twin conditions' — (i) that the fair market value exceeds the apparent consideration (understatement), and (ii) that the consideration was not truly stated with the ulterior object in clause (a) or (b) (reduction/evasion of the transferor's tax or concealment by the transferee). The statutory presumptions in section 269C(2) belong to the post-initiation adjudicatory stage (section 269F) and cannot supply the reason to believe at the threshold.

Also Where the authority records more than one ground, the initiation is not vitiated merely because one ground is later found defective, so long as a valid ground survives. Reasons must have a rational nexus with the material.

K.P. Varghese v. ITO, Ernakulam — [1981] 131 ITR 597 (SC)

Cognate Decided on section 52(2), but its burden-of-proof rule is the doctrinal backbone of Chapter XX-A litigation. The revenue cannot proceed on understatement merely by showing that the fair market value exceeds the declared consideration by the statutory margin; the burden lies on the revenue to prove that the assessee actually received more than what was disclosed.

Application Carried into section 269C: a mere arithmetical gap between fair market value and apparent consideration is not, by itself, proof that the consideration was 'not truly stated'; understatement (extra consideration passing) must be established.