Section 269UO — Chapter Not to Apply to Certain Transfers

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

Section 269UO — Chapter not to apply to certain transfers

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: Excludes specified transfers from the Chapter — broadly, transfers below the prescribed value, transfers to relatives for genuine non-tax-avoidance reasons and other notified/specified categories — so that the pre-emption machinery does not apply to them.

Litigation profile: Exemption/exclusion provision; no significant independent merits litigation.

A. COMMENTARY

Carving out genuine transfers

Section 269UO keeps the Chapter within its purpose by excluding categories of transfer that do not carry the mischief of undervaluation-driven tax evasion. The exclusions are designed so that low-value transactions and genuine, bona fide dealings (for example, certain transfers among relatives or for reasons unconnected with tax avoidance) are not caught by the heavy machinery of pre-emption, which was meant for high-value urban property suspected of price suppression.

Proportionality of the scheme

The exclusion provision is part of what made the Chapter defensible: a blanket pre-emption power over every transfer would have been disproportionate. By confining the scheme (through the value thresholds in section 269UC and the exclusions in section 269UO) to the cases where the risk of black-money laundering through property was real, the legislature kept the restriction reasonable — the proportionality logic the Supreme Court relied on in upholding the Chapter.

Candour

Section 269UO is an exclusionary provision and has produced no separate reported merits decision; it is read as part of the calibrated design endorsed in C.B. Gautam.

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.

Chapter not to apply to certain transfers.

269UO. The provisions of this Chapter shall not apply to or in relation to any immovable property where the agreement for transfer of such property is made by a person to his relative on account of natural love and affection, if a recital to that effect is made in the agreement for transfer.

C. AUTHORITIES

Candour rule: section 269UO is an exclusion provision with no direct authority; the decision below frames the calibrated design it serves.

Calibrated, proportionate scope of the 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.)