Section 269UG — Payment or Deposit of Consideration

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

Section 269UG — Payment or deposit of consideration

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: Requires the consideration to be tendered to the persons entitled within the prescribed period; provides for deposit with the appropriate authority where there is a dispute as to apportionment or title, or where the person entitled does not consent to receive it or cannot be found.

Litigation profile: Litigated on strict compliance — the manner, payee and timing of tender, and the consequences of defective tender (which feed section 269UH).

A. COMMENTARY

The State's payment obligation

Section 269UG is the counterpart of vesting: having taken the property under section 269UE, the Central Government must, within the prescribed period (one month from the end of the month in which the purchase order is made), tender the consideration to the person or persons entitled to it. Where there is a dispute about apportionment or title, or the person entitled does not consent to receive the amount or cannot be found, the amount is to be deposited with the appropriate authority. Tender or deposit within time is the condition on which the State's title is allowed to stand.

Strict compliance — Prima Realty

The compliance required is exacting. In Prima Realty v. Union of India the cheque tendered named the wrong payee ('Prime Reality Ltd.' instead of the firm 'Prima Realty'); the Supreme Court held this to be tender to a different legal entity and therefore no valid tender under section 269UG(1) at all. The defect could not be cured after the statutory period, and the consequence followed automatically under section 269UH — abrogation of the purchase and re-vesting in the transferor.

Deposit as the safety valve

The deposit mechanism in section 269UG exists precisely so that disputes about who is entitled, or a recalcitrant or untraceable payee, cannot be used by the State as an excuse for non-payment, nor be allowed to defeat the transferor's right to be paid. The proper course, where tender is problematic, is deposit with the authority within time; a failure to do either is fatal.

Interest dimension

Where the consideration is paid late, questions of interest/compensation to the transferor arise. The discipline of timely tender or deposit is what the section is designed to enforce; the courts have treated non-compliance not as a curable irregularity but as triggering the re-vesting consequence.

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.

Payment or deposit of consideration.

269UG. (1) The amount of consideration payable in accordance with the provisions of section 269UF shall be tendered to the person or persons entitled thereto, within a period of one month from the end of the month in which the immovable property concerned becomes vested in the Central Government under sub-section (1), or, as the case may be, sub-section (6), of section 269UE :

Provided that if any liability for any tax or any other sum remaining payable under this Act, the Wealth-tax Act, 1957 (27 of 1957), the Gift-tax Act, 1958 (18 of 1958), the Estate Duty Act, 1953 (34 of 1953), or the Companies (Profits) Surtax Act, 1964 (7 of 1964), by any person entitled to the consideration payable under section 269UF, the appropriate authority may, in lieu of the payment of the amount of consideration, set off the amount of consideration or any part thereof against such liability or sum, after giving an intimation in this behalf to the person entitled to the consideration.

(2) Notwithstanding anything contained in sub-section (1), if any dispute arises as to the apportionment of the amount of consideration amongst persons claiming to be entitled thereto, the Central Government shall deposit with the appropriate authority the amount of consideration required to be tendered under sub-section

(1) within the period specified therein.

(3) Notwithstanding anything contained in sub-section (1), if the person entitled to the amount of consideration does not consent to receive it, or if there is any dispute as to the title to receive the amount of consideration, the Central Government shall deposit with the appropriate authority the amount of consideration required to be tendered under sub-section (1) within the period specified therein :

Provided that nothing herein contained shall affect the liability of any person who may receive the whole or any part of the amount of consideration for any immovable property vested in the Central Government under this Chapter to pay the same to the person lawfully entitled thereto.

(4) Where any amount of consideration has been deposited with the appropriate authority under this section, the appropriate authority may, either of its own motion or on an application made by or on behalf of any person interested or claiming to be interested in such amount, order the same to be invested in such Government or other securities as it may think proper, and may direct the interest or other proceeds of any such investment to be accumulated and paid in such manner as will, in its opinion, give the parties interested therein the same benefits therefrom as they might have had from the immovable property in respect whereof such amount has been deposited or as near thereto as may be.

C. AUTHORITIES

The leading authority below establishes the strictness of section 269UG and its linkage to re-vesting under section 269UH. The Tribunal dimension. No appeal lies to the Income-tax Appellate Tribunal against an order under this Chapter: by section 269UN such an order is final and conclusive, the remedy being a writ to the High Court. The merits jurisprudence is therefore of the High Courts and the Supreme Court; the Tribunal's role is collateral, in the transferor's own assessment.

Strict compliance — manner, payee and timing of tender

Prima Realty v. Union of India (1997) 223 ITR 655 / (1996) 11 SCC 65 / AIR 1997 SC ... (SC)

Court / Bench Supreme Court of India (J.S. Verma and B.N. Kirpal JJ.); decided 18 November 1996.

Issue Whether tender of the consideration by a cheque drawn in favour of a wrongly named payee ('Prime Reality Ltd.' instead of the firm 'Prima Realty') was a valid tender under section 269UG(1).

Held Misdescription of the payee amounted to tender to a different legal entity; there was no valid tender within the prescribed period under section 269UG(1). Consequently the purchase order stood abrogated under section 269UH(1) and the property re-vested in the transferor, with consequential reliefs.

Relevance The leading decision on sections 269UG (manner and timing of tender/deposit) and 269UH (automatic re-vesting on failure to tender or deposit within time). Compliance with section 269UG is strict.