Section 269RR — Chapter Not to Apply Where Transfer of Immovable Property Made After a Certain Date

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

Section 269RR — Chapter not to apply where transfer of immovable property made after a certain date

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

Status: Sunset provision. Inserted by the Finance Act, 1986, with effect from 1 October 1986. It is the clause that makes the whole Chapter historic: Chapter XX-A does not apply to transfers made after 30 September 1986. No amendment. The Finance Act, 2026 does not touch any provision of Chapter XX-A.

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

Mechanism: Switches off Chapter XX-A for any transfer of immovable property made after 30 September 1986, marking the transition to the pre-emptive-purchase regime of Chapter XX-C.

Litigation profile: The decisive transitional provision; defines the temporal boundary of the entire Chapter.

A. COMMENTARY

The sunset

Section 269RR is the most consequential provision in the Chapter for the modern reader: it provides in terms that the Chapter shall not apply to transfers made after 30 September 1986. Everything in sections 269A–269S therefore operates only on transfers up to that date. Acquisition by undervaluation gave way, from 1 October 1986, to the pre-emptive-purchase scheme of Chapter XX-C (sections 269U–269UP).

Why the change

The acquisition model of Chapter XX-A was litigation-heavy and slow (reason to believe, twin conditions, objections, appeals, vesting). Chapter XX-C replaced it with a swifter pre-emptive purchase by the Central Government at the apparent consideration — itself later read down for natural justice in C.B. Gautam. Both have since been overtaken, for ordinary undervaluation, by the deeming machinery of section 50C and section 56(2)(x).

Practical effect

For any current transaction, Chapter XX-A is dead letter; it survives only for the dwindling tail of pre-1-October-1986 transfers and for its interpretive value (its 'apparent consideration' concept lives on in section 269UA).

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 where transfer of immovable property made after a certain date.

269RR. The provisions of this Chapter shall not apply to or in relation to the transfer of any immovable property made after the 30th day of September, 1986.

C. AUTHORITIES

The temporal cut-off and the transition to Chapter XX-C are the substance; the cognate authority marks the successor regime.

Transition to the successor pre-emptive-purchase regime

C.B. Gautam v. Union of India — [1993] 199 ITR 530 (SC)

Cognate Decided on Chapter XX-C (section 269UD pre-emptive purchase), the successor scheme. The Supreme Court held that pre-emptive purchase / acquisition for undervaluation can be resorted to only where there is 'significant undervaluation' (of the order of 15%), which raises a rebuttable presumption of an attempt to evade tax, and that the principles of natural justice — a reasonable opportunity of hearing — must be read into the provision before an order divesting a citizen of property is made, even where the statute is silent.

Relevance The Court expressly traced the lineage of the pre-emptive-purchase scheme to Chapter XX-A; its reasoning on undervaluation-as-rebuttable-presumption and on natural justice is directly transposable to sections 269C and 269F.

Validity of the regime being phased out

Mahavir Metal Works (P.) Ltd. v. Union of India — [1974] 95 ITR 197 (Delhi)

Held Constitutional validity of Chapter XX-A upheld. Compulsory acquisition of undervalued property, on payment of compensation equal to the apparent consideration plus the statutory solatium, is a reasonable restriction in the interest of countering tax evasion and does not offend Articles 14, 19(1)(f) or 31 of the Constitution.

Why The in-built safeguards — recorded reason to believe, Gazette notice, individual notice, objections, hearing and appeals — rescue the scheme from arbitrariness.