Section 269UF of ITA, 1961 : Section 269Uf: Consideration For Purchase Of Immovable Property By Central Government

Explanation using Example

Imagine Mr. Sharma agrees to sell his house to Mr. Gupta for an apparent consideration of ₹50 lakhs. Before the transaction is completed, the Income Tax Department, suspecting that the transaction is undervalued to evade taxes, issues an order under section 269UD to purchase the property for the same amount (₹50 lakhs) from Mr. Sharma, as per Section 269UF(1) of the Income-tax Act, 1961. This means the government will pay Mr. Sharma the ₹50 lakhs, which is the apparent consideration for the house.

However, before the property officially becomes government property, a storm damages the house. Due to this damage, which is beyond normal wear and tear, the value of the house decreases. The appropriate authority within the Income Tax Department assesses the damage and decides that the fair value of the property is now only ₹47 lakhs. As per Section 269UF(2), the government then reduces the consideration and pays Mr. Sharma only ₹47 lakhs instead of the original ₹50 lakhs.