Section 269U — Commencement of Chapter

CHAPTER XX-C — PURCHASE BY CENTRAL GOVERNMENT OF IMMOVABLE PROPERTIES IN CERTAIN CASES OF TRANSFER

Section 269U — Commencement of Chapter

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

Status: Historic / spent. Chapter XX-C was inserted by the Finance Act, 1986 and brought into force area-wise under section 269U; by section 269UP it does not apply to any transfer of immovable property effected on or after 1 July 2002. The pre-emptive-purchase machinery is therefore dormant. The section is reproduced and annotated in full for completeness of the Treatise.

Finance Act, 2026: No amendment. The Finance Act, 2026 does not touch any provision of Chapter XX-C (sections 269U to 269UP).

Mechanism: Enabling/commencement provision: the Chapter comes into force on such date as the Central Government may appoint by notification, and different dates may be appointed for different areas.

Litigation profile: No merits litigation; an enabling notification provision.

A. COMMENTARY

Function of the section

Section 269U is the switch that turned the Chapter on. Unlike most provisions, which operated from a fixed statutory date, Chapter XX-C was brought into force area-by-area through notifications under section 269U. This phased, area-wise commencement was deliberate: the pre-emptive-purchase scheme was first extended to the metropolitan markets where undervaluation of urban property was most acute, and then to other areas. A transaction therefore fell within the Chapter only if the immovable property was situate in an area, and the transfer was made on a date, to which the Chapter had been extended by notification.

Why the date matters

Because liability under the Chapter is tied to notified area and date, the commencement question is jurisdictional: an order of pre-emptive purchase in respect of property outside a notified area, or before the notified date, is without authority of law. The provision must now be read together with the sunset in section 269UP — the Chapter does not apply at all to transfers effected on or after 1 July 2002 — so its operative window was the period between the area-wise notification and 30 June 2002.

Candour

Section 269U has generated no reported merits decision of its own; it is the formal commencement hinge of an otherwise heavily litigated Chapter.

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 to Chapter XX-C). Page-header/footer artefacts of the source PDF have been removed; wording, clause-lettering and punctuation are unaltered.

Commencement of Chapter.

269U. The provisions of this Chapter shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different areas.

C. AUTHORITIES

Section 269U is a commencement provision; there is no direct authority on it. The cluster below states the foundational decision that governs the Chapter as a whole.

The foundational decision governing the whole Chapter

C.B. Gautam v. Union of India (1993) 199 ITR 530 / 110 CTR 179 / 65 Taxman 440 / (1993) 1 SCC 78 (SC)

Court / Bench Supreme Court of India; decided 17 November 1992 (test case transferred from the Delhi High Court).

Issue Constitutional validity of Chapter XX-C, and whether a pre-emptive purchase order under section 269UD can be made without affording the parties a hearing and without recording reasons.

Held The Chapter was upheld in substance, but the Court read into it the principles of natural justice: a reasonable opportunity to show cause must be given to the intending purchaser and seller before an order under section 269UD is made, and the order must record reasons. Pre-emptive purchase can be resorted to only where there is significant undervaluation of about 15 per cent or more, raising a rebuttable presumption of an attempt to evade tax. The words 'free from all encumbrances' in section 269UE(1) were read down so as not to defeat bona fide tenants and encumbrancers in possession.

Relevance The foundational decision for the entire Chapter. It governs sections 269UA, 269UC, 269UD, 269UE and 269UF and is the source of the hearing-and-reasons discipline applied throughout. (Followed Kraipak v. UOI AIR 1970 SC 150 and Olga Tellis v. Bombay Municipal Corpn. (1985) Suppl. 2 SCR 51.)