Section 269J of the Income-tax Act, 1961: Compensation for Acquisition of Immovable Property
Section 269J prescribed how compensation was calculated when the Central Government acquired immovable property under Chapter XX-A of the Income-tax Act, 1961, a historical mechanism designed to counter tax evasion through undervalued property transfers. It addressed the basic compensation amount, damage to property, improvements, court references and specified penalty consequences.
Meaning and scope of Section 269J
Chapter XX-A dealt with acquisition of certain transferred immovable properties where the statutory conditions relating to tax evasion were met. Section 269A defined terms such as apparent consideration (the consideration determined under the statutory rules for the type of transfer), competent authority (the designated tax authority), and court (the court or designated judicial officer under the Chapter). Section 269C specified when acquisition proceedings could be initiated; Section 269I governed vesting of property in the Central Government.
Section 269J(1): How compensation was calculated
The basic rule provided for compensation equal to the apparent consideration for the transfer plus 15% of that amount.
For example, if the apparent consideration was Rs. 10,00,000, the basic statutory compensation would be Rs. 11,50,000, before any applicable adjustment. This is an illustration of the historical formula, not a current acquisition valuation rule.
Where some contractual consideration fell due after acquisition, the proviso separately identified the 15% addition, sums already payable by the acquisition date, and sums becoming payable afterward. Section 269K addressed the tender, timing or deposit of compensation.
Section 269J(2): Damage and improvements
Reduction for damage
Under clause (a), damage occurring after transfer to the transferee but before vesting in the Central Government, other than normal wear and tear, could reduce compensation by the agreed or court-determined restoration cost.
Increase for improvements
Under clause (b), qualifying improvements made after transfer but before publication of the preliminary notice under Section 269D(1) could increase compensation by the agreed or court-determined expenditure. In both cases the provision allowed 15 days after vesting for agreement on the adjustment.
Section 269J(3): Court reference and limitation
A reference concerning damage or improvements was to be made within 30 days after vesting, subject to a further period allowed by the court on a timely application showing sufficient cause. The reference had to identify the basic compensation and the proposed reduction or increase.
Section 269J(4): Deemed penalty and related protection
The historical provision treated the difference between compensation under Section 269J(1) and a specified hypothetical amount under the Land Acquisition Act, 1894 as a penalty deemed realised from the transferee. It also contained narrowly framed restrictions on additional penalties under the then-applicable Section 271(1)(c)(iii) and Section 18(1)(c)(iii) of the Wealth-tax Act, 1957 for the specified excess consideration. These references must be interpreted in their historical statutory setting; the Land Acquisition Act, 1894 has since been replaced for contemporary acquisitions by the 2013 land acquisition legislation.
Section 269J: Original statutory text
The following text is retained from the original webpage for reference to the historical law, including its proviso, subsections and legislative note.
(1) Where any immovable property is acquired under this Chapter, the Central Government shall pay for such acquisition compensation which shall be a sum equal to the aggregate of the amount of the apparent consideration for its transfer and fifteen per cent of the said amount :
1 Provided that in a case where, under the agreement between the parties concerned, the whole or any part of the consideration for the transfer of such immovable property is payable on any date or dates falling after the date on which such property is acquired, the compensation payable by the Central Government shall be the aggregate of the following amounts, namely:-
(i) an amount equal to fifteen per cent of the apparent consideration ;
(ii) the amount, if any, that has become payable in accordance with such agreement on or before the date on which such property is acquired under this Chapter ; and
(iii) the amount payable after the date on which such property is acquired under this Chapter.
(2) Notwithstanding anything contained in sub-section (1),-
(a) where, after the transfer to the transferee of the property referred to in that sub-section but before the vesting of the property in the Central Government, the property has been damaged (otherwise than as a result of normal wear and tear), the compensation payable under that sub-section shall be reduced by such amount as the competent authority and the persons entitled to the compensation may agree within fifteen days of the vesting of the property in the Central Government or in default of such agreement as the court may, on a reference made to it in this behalf by the competent authority or by any person duly authorised for the purpose by the competent authority, determine to be the amount that may have to be expended for restoring the property to the condition in which it was at the time of such transfer ;
(b) where, after the transfer of such property to the transferee
but before the date of publication in the Official Gazette of the notice in
respect of such property under sub-section (1) of section 269D, any improvements
have been made to the property, whether by way of addition or alteration or in
any other manner, the compensation payable in respect of such property under
sub-section (1) shall be increased by such amount as the competent authority and
the persons entitled to the compensation may agree within fifteen days of the
vesting of the property in the Central Government or in default of such
agreement as the court may, on a reference made to it in this behalf by the
competent authority or by any person duly authorised for the purpose by the
competent authority, determine to be the amount spent for making such
improvements.
(3) Every reference under clause (a) or clause (b) of sub-section (2) shall be
made within thirty days of the date on which the immovable property to which it
relates becomes vested in the Central Government or within such further period
as the court may, on an application made in this behalf before the expiry of the
said period and on being satisfied that there is sufficient cause for doing so,
allow and such reference shall state clearly the compensation payable under
sub-section (1) in respect of the immovable property and the amount by which,
according to the estimate of the competent authority, such compensation shall be
reduced under clause (a) or, as the case may be, increased under clause (b), of
subsection (2).
(4) The amount by which the compensation payable under sub-section (1) in respect of any immovable property acquired under this Chapter falls short of the amount which would have been payable as compensation if that property had been acquired under the Land Acquisition Act, 1894 (1 of 1894), after the issue of a preliminary notice under section 4 of that Act on the date of publication in the Official Gazette of the notice in respect of the property under sub-section (1) of section 269D, shall be deemed to have been realised by the Central Government as a penalty from the transferee for being a party to a transfer with such object as is referred to in clause (a) or clause (b) of sub-section (1) of section 269C, and no penalty shall be levied for any assessment year on the transferee-
(a) under clause (iii) of sub-section (1) of section 271, for concealing the particulars or furnishing inaccurate particulars of so much of his income as is utilised by him for paying to the transferor, by way of consideration for the property, any amount in excess of the apparent consideration for the property, notwithstanding that such amount is included in the income of the transferee;
(b) under clause (iii) of sub-section (1) of section 18 of the Wealth-tax Act, 1957 (27 of 1957), for concealing the particulars or furnishing inaccurate particulars of so much of his assets as are utilised by him for paying to the transferor, by way of consideration for the property, any amount in excess of the apparent consideration for the property, notwithstanding that such assets are included in the net wealth of the transferee.
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1. Ins. by s. 8 ibid. (w.e.f. 1-7-1982).
Official legal sources and related provisions
Consult the Income Tax Department's Section 269J text, Section 269A definitions and legislative note, and the official consolidated Income-tax Act, 1961 (as amended by Finance Act, 2025). Historical statutory wording and current legal applicability should be considered separately.
Editorial update: 28 October 2026. This article is general legal information and not case-specific legal advice.