Sections 269UD and 269UE of Income Tax Act 1961: Central Government Purchase and Vesting of Immovable Property

Sections 269UD and 269UE formed part of Chapter XX-C of the Income Tax Act, 1961. The Chapter created a statutory mechanism under which the appropriate authority could, in specified property-transfer cases, order purchase of immovable property by the Central Government and provide for the consequent vesting and possession of that property.

Important present-law position: Chapter XX-C is of historical relevance for transfers covered by the earlier regime. Section 269UP provides that the provisions of Chapter XX-C do not apply to, or in relation to, a transfer of immovable property effected on or after 1 July 2002. Accordingly, Sections 269UD and 269UE should not be read as imposing a current compulsory-purchase procedure on property transfers effected on or after that date.

At a glance

Section 269UD: dealt with an order by the appropriate authority for purchase of specified immovable property by the Central Government.
Section 269UE: dealt with vesting of property or specified rights in the Central Government after an order under Section 269UD.
Section 269UC: supplied the statement relating to the proposed transfer on which the Section 269UD process depended.
Section 269UP: ended the application of Chapter XX-C to transfers effected on or after 1 July 2002.

Section 269UD - Order for Purchase by Central Government

Section 269UD empowered the appropriate authority, after receipt of the statement under Section 269UC(3), to make an order for purchase by the Central Government of the immovable property at an amount equal to the apparent consideration, subject to the statutory safeguards, conditions and limitation periods contained in the section.

Meaning and main requirements of Section 269UD

Purchase order: Section 269UD(1) authorised the appropriate authority to order purchase of the relevant immovable property by the Central Government at the amount of apparent consideration.
Time limit: the section prescribed a limitation period for making the purchase order. For statements received on or after 1 June 1993, the relevant proviso substituted three months for the earlier two-month period, subject to the further statutory rules concerning defective statements, jurisdiction and court stays.
Opportunity of hearing: Section 269UD(1A) required a reasonable opportunity of being heard to the transferor, the person in occupation where appropriate, the transferee and other known interested persons before a purchase order was made.
Reasons: Section 269UD(1B) required every purchase order to specify the grounds on which it was made.
Service of order: Section 269UD(2) required a copy of the order to be served on the transferor, relevant occupier, transferee and other known interested persons.

What is apparent consideration?

The expression apparent consideration was defined for Chapter XX-C in Section 269UA. Broadly, its computation depended on the nature of the proposed transfer and the consideration specified or ascertainable under the agreement for transfer. The concept was central to the statutory purchase mechanism because Section 269UD linked the Government purchase amount to the apparent consideration.

Hearing and reasons before compulsory purchase

The statutory scheme expressly required procedural safeguards before an order under Section 269UD(1). The affected parties had to receive a reasonable opportunity of being heard, and the resulting order had to state its grounds. These requirements formed part of the decision-making process for acquisition under the former Chapter XX-C regime.

Section 269UE - Vesting of Property in Central Government

Section 269UE dealt with the legal consequences after an order under Section 269UD(1). Where the provision applied to immovable property of the nature described in Section 269UA(d)(i), the property vested in the Central Government on the date of the purchase order in terms of the agreement for transfer, subject to the provisions dealing with specified encumbrances and leasehold interests.

Main effects of Section 269UE

Vesting: Section 269UE(1) provided for vesting in the Central Government upon the Section 269UD purchase order.
Encumbrance or lease intended to defeat Chapter XX-C: after giving the required opportunity of hearing, the appropriate authority could declare such an encumbrance or leasehold interest void where the statutory conditions were satisfied.
Delivery of possession: Section 269UE(2) generally required the transferor or other person in possession to surrender or deliver possession within fifteen days after service of the purchase order, subject to the statutory protection for qualifying bona fide encumbrance holders or lessees.
Taking possession: Section 269UE(3) authorised taking possession where a person refused or failed to comply with the surrender requirement.
Police assistance: Section 269UE(4) permitted the appropriate authority to requisition the services of a police officer for taking possession.
Existing liabilities: Section 269UE(5) clarified that the provision did not discharge the transferor or another person, other than the Central Government, from liability relating to encumbrances.
Specified property rights: Sections 269UE(6) and (7) dealt with vesting of rights of the nature referred to in Section 269UA(d)(ii) and the consequential application of the possession provisions.

Relationship Between Sections 269UC, 269UD and 269UE

The former Chapter XX-C mechanism operated as a connected statutory sequence. Section 269UC dealt with the agreement and statement concerning the proposed transfer. Section 269UD then governed the appropriate authority's power to order purchase by the Central Government, including hearing and reasons. If such an order was made, Section 269UE governed vesting and possession. Other provisions of Chapter XX-C addressed consideration, payment, re-vesting, powers of the authority, registration and related matters.

Section 269UP and the 1 July 2002 Cutoff

Section 269UP, inserted by the Finance Act, 2002 with effect from 1 July 2002, states that Chapter XX-C does not apply to, or in relation to, the transfer of any immovable property effected on or after that date. Therefore, Sections 269UD and 269UE remain relevant principally for understanding the historical Chapter XX-C regime and matters arising from transactions to which that regime applied.

Legal Context Before the Bharatiya Sakshya Adhiniyam 2023

This article is framed in the legal context preceding implementation of the Bharatiya Sakshya Adhiniyam, 2023. Sections 269UD and 269UE themselves are provisions of income-tax law concerning the former Chapter XX-C property-purchase mechanism; they are not provisions of the law of evidence. Where evidentiary questions arose in proceedings governed by the earlier evidence-law regime, the Indian Evidence Act, 1872 was the general evidence statute, subject to the nature of the proceeding and other applicable law.

Official References

Income Tax Department - Government of India Income Tax Department - Section 269UE Finance Act 2002 - insertion of Section 269UP

This page explains the statutory provisions for general legal information. For a historical transaction or pending dispute, the version of the Act applicable to the relevant date, amendments, notifications and judicial decisions should be examined.