Section 269UP — Chapter Not to Apply After a Certain Date

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

Section 269UP — Chapter not to apply where transfer of immovable property effected after a certain date

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 sunset clause: the Chapter does not apply to, or in relation to, the transfer of any immovable property effected on or after 1 July 2002.

Litigation profile: The terminus of the Chapter; no merits litigation — it fixes the date from which the whole scheme ceased to operate.

A. COMMENTARY

The sunset

Section 269UP is the terminus of Chapter XX-C. It provides, in terms, that the provisions of the Chapter shall not apply to, or in relation to, the transfer of any immovable property effected on or after 1 July 2002. From that date the pre-emptive-purchase machinery ceased to operate prospectively; no Form 37-I is required, no no-objection certificate is issued, and no purchase order can be made in respect of a post-30-June-2002 transfer.

Why the scheme was wound up

The pre-emptive-purchase regime had become administratively unwieldy and was widely seen as an obstacle to genuine property transactions, while the revenue protection it offered was increasingly delivered through other tools. The legislative response was to discontinue the Chapter prospectively rather than repeal it outright — the older transactions already caught by it continued to be governed by it, while new transactions were freed.

The successor regime

The anti-undervaluation objective of Chapter XX-C survives, in a different and less drastic form, in the deeming provisions that now do the work: section 50C (stamp-duty value as full value of consideration for the seller of land/building), section 43CA (the same for stock-in-trade) and section 56(2)(x) (taxing the under-paying buyer on the shortfall). These provisions substitute a tax adjustment for the blunt instrument of State purchase. The C.B. Gautam observations on the genuine factors that may explain a gap between market value and stated price remain instructive for these successor provisions.

Candour

Section 269UP has no case law of its own; it is the dating provision that renders the whole Chapter historic. It is set out here to complete the Chapter and to mark precisely the window within which the pre-emption jurisprudence operated.

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 where transfer of immovable property effected after certain date.

269UP. The provisions of this Chapter shall not apply to, or in relation to, the transfer of any immovable property effected on or after the 1st day of July, 2002.

C. AUTHORITIES

Section 269UP is the sunset/dating provision; the decision below is the governing authority for the era it closes, and the successor regime (sections 50C / 43CA / 56(2)(x)) now carries the anti-undervaluation objective.

The governing decision for the closed era

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.)

Anti-undervaluation principle carried into the successor provisions

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.