Section 269UC — Restrictions on Transfer of Immovable Property

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

Section 269UC — Restrictions on transfer of immovable property

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: Bars any transfer of immovable property above the prescribed value in a notified area except after a written agreement for transfer in Form 37-I is entered into and filed with the appropriate authority at least the prescribed period before the intended transfer; sub-section (4) lets the authority point out rectifiable defects in the statement.

Litigation profile: Heavily litigated — the meaning of 'agreement for transfer', Form 37-I, Rule 48-L timing, and the limited reach of the section 269UC(4) 'rectification of defects' power.

A. COMMENTARY

The gateway provision

Section 269UC is the procedural gateway to the whole scheme. Notwithstanding the Transfer of Property Act or any other law, no transfer of immovable property of the prescribed value in a notified area may be effected except after the parties enter into a written agreement for transfer, reduced to the form of a statement (Form 37-I, under Rule 48-L), and filed with the appropriate authority a prescribed period before the intended date of transfer. The filing starts the clock within which the authority must decide whether to pre-empt the purchase or step aside.

'Agreement for transfer' versus Form 37-I

The leading decision is DLF Universal Ltd. v. Appropriate Authority. The Supreme Court distinguished the parties' private agreement to transfer from the statutory statement in Form 37-I, holding that, for Rule 48-L, the 'agreement for transfer' is the statement in Form 37-I; the filing period prescribed by the Rule is directory, not mandatory, and runs from the date the agreement is reduced to writing in Form 37-I. The Court directed issuance of no-objection certificates where Form 37-I had been duly filed.

The narrow section 269UC(4) power

Sub-section (4) allows the appropriate authority only to intimate rectifiable defects in the statement. It is not a licence to adjudicate the legality of the underlying agreement. Jagdish A. Sadarangani settles that only defects capable of rectification within the prescribed period fall within sub-section (4); the legality or validity of the agreement is outside it. Tanvi Trading and Murlidhar Ratanlal Exports hold to the same effect — the authority's choices are binary: purchase, or grant a no-objection certificate.

Practical effect

For the practitioner of the era, section 269UC meant that high-value urban transactions could not be completed without first running the Form 37-I gauntlet. The provision's reach over society-share and possession-based transfers (through the wide definitions in section 269UA) was what gave the Chapter its bite against the flat-by-share and possession-without-conveyance devices.

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.

Restrictions on transfer of immovable property.

269UC. (1) Notwithstanding anything contained in the Transfer of Property Act, 1882 (4 of 1882), or in any other law for the time being in force, no transfer of any immovable property in such area and of such value exceeding five lakh rupees, as may be prescribed, shall be effected except after an agreement for transfer is entered into between the person who intends transferring the immovable property (hereinafter referred to as the transferor) and the person to whom it is proposed to be transferred (hereinafter referred to as the transferee) in accordance with the provisions of sub-section (2) at least four months before the intended date of transfer.

(2) The agreement referred to in sub-section (1) shall be reduced to writing in the form of a statement by each of the parties to such transfer or by any of the parties to such transfer acting on behalf of himself and on behalf of the other parties.

(3) Every statement referred to in sub-section (2) shall,—

(i) be in the prescribed form ;

(ii) set forth such particulars as may be prescribed ; and

(iii) be verified in the prescribed manner, and shall be furnished to the appropriate authority in such manner and within such time as may be prescribed, by each of the parties to such transaction or by any of the parties to such transaction acting on behalf of himself and on behalf of the other parties.

(4) Where it is found that the statement referred to in sub-section (2) is defective, the appropriate authority may intimate the defect to the parties concerned and give them an opportunity to rectify the defect within a period of fifteen days from the date of such intimation or within such further period which, on an application made in this behalf, the appropriate authority may, in its discretion, allow and if the defect is not rectified within the said period of fifteen days, or as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Chapter, the statement shall be deemed never to have been furnished.

C. AUTHORITIES

The authorities below settle the meaning of 'agreement for transfer'/Form 37-I, the directory nature of the filing timeline, and the confinement of the section 269UC(4) power to rectifiable defects.

'Agreement for transfer', Form 37-I and the filing timeline

DLF Universal Ltd. v. Appropriate Authority (2000) 243 ITR 730 (SC)

Court / Bench Supreme Court of India (D.P. Wadhwa and Ruma Pal JJ.); decided 4 May 2000 (batch of appeals).

Held Within Rule 48-L the 'agreement for transfer' is the statement in Form 37-I; the 15-day filing period in Rule 48-L is directory, not mandatory, and runs from the date the agreement is reduced to writing in Form 37-I. Sub-section (4) of section 269UC permits the authority to point out only rectifiable defects in Form 37-I; it does not empower the authority to sit in judgment on the legality of the underlying agreement. Where Form 37-I is duly filed, the authority must either purchase or issue a no-objection certificate.

Relevance The leading Supreme Court exposition of section 269UC, the agreement requirement and Form 37-I; settles the directory nature of the filing timeline and the limited reach of section 269UC(4).

Jagdish A. Sadarangani v. Govt. of India (1998) 8 SCC 409 (SC)

Court Supreme Court of India.

Held Sub-section (4) of section 269UC is confined to rectifiable defects in the statement (Form 37-I); it does not allow the appropriate authority to examine or pronounce on the legality of the agreement for transfer.

Relevance Cornerstone, applied in DLF Universal, on the limited 'rectification of defects' power within section 269UC.

Limited scope of the authority — purchase or no-objection only

Tanvi Trading & Credits (P) Ltd. v. Appropriate Authority (1991) 188 ITR 623 (Delhi)

Court Delhi High Court; decided 28 November 1990.

Held Section 269UD confers only a pre-emptive right to purchase at the apparent consideration (or to issue a no-objection certificate). The appropriate authority has no jurisdiction to adjudicate upon the legality or validity of the proposed transaction or the transferor's title; such matters are relevant only to the discretion whether to exercise the right of purchase.

Relevance Defines the narrow scope of the appropriate authority's function under sections 269UC, 269UD and 269UL; repeatedly followed, including in DLF Universal.

Murlidhar Ratanlal Exports Ltd. v. Appropriate Authority (2000) 243 ITR 752 (Calcutta)(DB)

Court Calcutta High Court, Division Bench.

Held The appropriate authority may only order purchase by the Central Government or grant a no-objection certificate; it has no additional discretionary or adjudicatory power over the transaction.

Relevance High Court authority reinforcing the binary 'purchase or NOC' scheme of sections 269UD and 269UL.