Section 269Q — Chapter Not to Apply to Transfers to Relatives

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

Section 269Q — Chapter not to apply to transfers to relatives

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 It stands superseded by Chapter XX-C and, for current transactions, by section 50C / section 56(2)(x).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: Excludes from the Chapter transfers of immovable property made by a person to his relative, for inadequate consideration, on account of natural love and affection (and certain other excepted transfers).

Litigation profile: Exclusion provision; construed to keep bona fide family transfers outside the acquisition net.

A. COMMENTARY

Rationale of the exclusion

Section 269Q recognises that not every below-value transfer is a tax-evasion device. A genuine gift-like transfer to a relative out of natural love and affection lacks the proscribed object of section 269C(1)(a)/(b); the Chapter therefore does not apply. The exclusion reinforces that the Chapter targets evasion, not generosity.

Construction

Read with the twin-conditions doctrine of Vimlaben, section 269Q confirms that the presence of the ulterior tax-evasion/concealment object is indispensable: where the transfer is explicable by family affection rather than evasion, the foundation of section 269C falls away.

Candour

There is no significant body of reported merits law construing section 269Q in isolation; the cognate authority below supplies the interpretive frame.

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.

Chapter not to apply to transfers to relatives.

269Q. The provisions of this Chapter shall not apply to or in relation to any transfer of immovable property made by a person to his relative on account of natural love and affection for a consideration which is less than its fair market value if a recital to that effect is made in the instrument of transfer.

C. AUTHORITIES

Candour rule: an exclusion for bona fide family transfers; the cognate authority frames its construction.

Cognate — the proscribed object as the touchstone

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.