Section 269UA — Definitions

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

Section 269UA — Definitions

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: The dictionary of Chapter XX-C: defines 'agreement for transfer', 'apparent consideration' (with the deferred-consideration discounting rule), 'appropriate authority', 'immovable property' (including rights through co-operative-society/company membership), 'person interested' and 'transfer' (sale, exchange, lease of not less than twelve years, and part-performance under section 53A of the Transfer of Property Act).

Litigation profile: Litigated through its key definitions — chiefly 'apparent consideration' and the discounting of deferred consideration, and the wide reach of 'immovable property' and 'transfer'.

A. COMMENTARY

Scheme of the definition section

Section 269UA carries the operative vocabulary of the whole Chapter. The single most important definition is 'apparent consideration': the price specified in (or gathered from) the agreement for transfer, with a critical rider — where the whole or part of the consideration is payable on a date or dates after the agreement, the deferred portion is deemed to be its discounted present value as on the date of the agreement, computed at the prescribed rate of interest. This prevents an inflated face value, achieved by back-loading the price, from being used to defeat the value comparison that triggers pre-emptive purchase.

'Immovable property' — a wide net

'Immovable property' is defined to include not only land and buildings (with attached machinery, plant, furniture and fittings, and rights therein) but also rights in or with respect to land or buildings arising from membership of, or shares in, a co-operative society, company or other association of persons, or from any agreement or arrangement. This was aimed squarely at the flat-by-share device, by which apartments were transferred through transfer of society shares without a conveyance of land. 'Transfer', correspondingly, reaches sale, exchange, lease for a term of not less than twelve years (with an Explanation deeming an extendible lease to be a long lease where the aggregate term can reach twelve years), and the allowing of possession in part performance of a section 53A contract.

'Apparent consideration' and discounting

The discounting rule is where the section bites in practice. In Shrichand Raheja the Bombay High Court applied the section 269UA(b) requirement to bring deferred consideration to present value at the prescribed rate, and considered the consequences for the parties when a purchase order is abrogated. The concept is the same one the Supreme Court explained in C.B. Gautam when describing how genuine commercial factors can explain a gap between fair market value and stated price.

Strict, citizen-favouring construction

Because the Chapter is expropriatory, its definitions are read strictly and the burden lies on the revenue: K.P. Varghese requires proof of real understatement, not a mere arithmetical gap, and C.B. Gautam confirms that significant undervaluation raises only a rebuttable presumption of evasion. The defined terms are the gateway to that enquiry, not a substitute for it.

Why it still matters

Although spent for post-30-June-2002 transfers, the section 269UA concepts of 'apparent consideration' and discounted deferred consideration illuminate the cognate ideas of 'full value of consideration' under section 48 and the anti-undervaluation provisions in sections 50C and 56(2)(x), with which the current practitioner is concerned.

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.

Definitions.

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

(a) "agreement for transfer" means an agreement, whether registered under the Registration Act, 1908 (16 of 1908) or not, for the transfer of any immovable property ;

(b) "apparent consideration",—

(1) in relation to any immovable property in respect of which an agreement for transfer is made, being immovable property of the nature referred to in sub-clause (i) of clause (d), means,—

(i) if the immovable property is to be transferred by way of sale, the consideration for such transfer as specified in the agreement for transfer ;

(ii) if the immovable property is to be transferred 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 on which the agreement for transfer is made ;

(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 on which the agreement for transfer is made, and such sum ;

(iii) if the immovable property is to be transferred 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 agreement for 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 agreement for 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 agreement for 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 agreement for 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 agreement for transfer, determined by adopting such rate of interest as may be prescribed in this behalf ;

(2) in relation to any immovable property in respect of which an agreement for transfer is made, being immovable property of the nature referred to in sub-clause (ii) of clause (d), 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 on which the agreement for transfer is made ;

(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 on which the agreement for transfer is made, 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 agreement for 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 agreement for transfer, determined by adopting such rate of interest as may be prescribed in this behalf ;

(c) "appropriate authority" means an authority constituted under section 269UB to perform the functions of an appropriate authority under this Chapter ;

(d) "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 to be 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 in or with respect to any land or any building or a part of a building (whether or not including any machinery, plant, furniture, fittings or other things therein) which has been constructed or which is to be constructed, accruing or arising from any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement of whatever nature), not being a transaction by way of sale, exchange or lease of such land, building or part of a building ;

(e) "person interested", in relation to any immovable property, includes all persons claiming, or entitled to claim, an interest in the consideration payable on account of the vesting of that property in the Central Government under this Chapter ;

(f) "transfer",—

(i) in relation to any immovable property referred to in sub-clause (i) of clause (d), 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 is to be 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

(d), means the doing of anything (whether by way of admitting as a member of or by way of transfer of shares in a co-operative society or company or other association of persons 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

The authorities below address the discounting of deferred consideration and the construction of 'apparent consideration', read with the burden-of-proof and capital-gains principles that govern the comparison the Chapter requires.

'Apparent consideration' and discounting of deferred consideration

Shrichand Raheja v. S.C. Prasad (Bombay High Court, decided 29 September 1994)

Court Bombay High Court.

Held Applied the section 269UA(b) rule that, where part of the consideration is payable after the date of the agreement, the deferred part must be brought to its discounted present value at the prescribed rate; addressed the consequences of abrogation of the purchase order for the parties.

Relevance High Court illustration of the 'apparent consideration' and discounting mechanism in the definition section 269UA, on which the value comparison under sections 269UC/269UD turns.

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.)

Burden of proof and the meaning of 'full value of consideration'

K.P. Varghese v. ITO (1981) 131 ITR 597 / (1981) 4 SCC 173 (SC)

Court Supreme Court of India.

Held For the (then) capital-gains understatement provision, the revenue must prove that the assessee actually received more than the declared consideration; a mere difference between fair market value and the stated price does not establish understatement. 'Full value of the consideration' means the consideration actually agreed, not market value.

Relevance Supplies the burden-of-proof discipline read into Chapter XX-C: the value gap is the occasion for enquiry, not proof of an untrue statement; the citizen must always be allowed to rebut.

CIT v. George Henderson & Co. Ltd. (1967) 66 ITR 622 (SC)

Court Supreme Court of India.

Held 'Full value of the consideration' in the capital-gains charge means the consideration bargained for by the parties, not the fair market value of the asset transferred.

Relevance With Gillanders Arbuthnot and K.P. Varghese, this is the principle the Tribunals apply when, in a transferor's assessment, the apparent/agreed consideration (the very figure on which a Chapter XX-C order or no-objection certificate turns) is sought to be displaced by market value.

CIT v. Gillanders Arbuthnot & Co. (1973) 87 ITR 407 (SC)

Court Supreme Court of India.

Held Reaffirmed George Henderson: capital gains are computed on the consideration actually received or accruing, not on a notional market value.