Section 269UF — Consideration for Purchase

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

Section 269UF — Consideration for purchase of immovable property by Central Government

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: Fixes the consideration payable by the Central Government on a pre-emptive purchase as an amount equal to the apparent consideration (with provision, in certain cases involving subsequent improvements or specified circumstances, for the consideration to be determined accordingly).

Litigation profile: Closely tied to section 269UA ('apparent consideration') and to valuation under section 269UD; litigated as part of the valuation controversy.

A. COMMENTARY

The price the State pays

Section 269UF answers the question 'at what price?'. The consideration payable by the Central Government on a pre-emptive purchase is an amount equal to the apparent consideration as defined in section 269UA. This is the linchpin of the scheme's fairness rationale: the State pays exactly the price the parties themselves declared, so a truthful declarant is made whole and only an under-declarant suffers — he forfeits the difference between the price he secretly bargained for and the lower price he chose to state.

Interaction with discounting and improvements

Because 'apparent consideration' already incorporates the section 269UA discounting of deferred payments, the section 269UF figure is the discounted present value where the price was back-loaded. The section also accommodates defined situations (such as specified subsequent circumstances) in which the consideration is to be determined accordingly, but the governing idea remains the apparent consideration, not a fresh market valuation by the State.

Valuation disputes belong to section 269UD review

Disputes about quantum are in substance disputes about the apparent consideration and the undervaluation finding under section 269UD; they are governed by Sudha Patil (no re-valuation by the writ court) and Krishna Kumar Rawat (valuation methodology and moulding of monetary relief). Section 269UF itself is mechanical once the apparent consideration is fixed.

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.

Consideration for purchase of immovable property by Central Government.

269UF. (1) Where an order for the purchase of any immovable property by the Central Government is made under sub-section (1) of section 269UD, the Central Government shall pay, by way of consideration for such purchase, an amount equal to the amount of the apparent consideration.

(2) Notwithstanding anything contained in sub-section (1), where, after the agreement for the transfer of the immovable property referred to in that sub-section has been made but before the property vests in the Central Government under section 269UE, the property has been damaged (otherwise than as a result of normal wear and tear), the amount of the consideration payable under that sub-section shall be reduced by such sum as the appropriate authority, for reasons to be recorded in writing, may by order determine.

C. AUTHORITIES

Section 269UF is mechanical once 'apparent consideration' is fixed; the authorities below govern that figure and the limits of review of valuation.

'Apparent consideration' as the measure of the price

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.)

Valuation and the limits of review

Appropriate Authority v. Smt. Sudha Patil (1999) 235 ITR 118 (SC)

Court Supreme Court of India.

Held Merely because no statutory appeal is provided against a pre-emptive purchase order, the supervisory writ jurisdiction of the High Court is not enlarged into an appellate power. The High Court cannot substitute its own valuation for that of the appropriate authority; it may interfere only on established grounds of judicial review (jurisdictional error, breach of natural justice, perversity).

Relevance The leading decision on the scope of judicial review of section 269UD orders; read with section 269UN (finality). Limits the citizen's writ remedy to legality, not merits, of valuation.

Krishna Kumar Rawat v. Union of India (Supreme Court, decided 29 July 2019; affirming Rajasthan High Court, 31 May 2007)

Court Supreme Court of India (on appeal from the Rajasthan High Court, Jaipur Bench).

Held Where the appropriate authority, after a show-cause notice under section 269UD(1A), found the fair market value materially higher than the apparent consideration, the pre-emptive purchase order was sustainable; on the facts, relief was moulded by directing refund of amounts to the affected purchasers with interest.

Relevance A modern Supreme Court reaffirmation of the valuation methodology and the show-cause discipline under section 269UD(1)/(1A), and of the courts' power to mould consequential monetary relief.