Section 269Q: Chapter Not to Apply to Transfers to Relatives

Text of Section 269Q - Chapter not to apply to transfers to relatives

The provisions of this Chapter shall not apply to or in relation to any transfer of immovable property made by a person to his relative on account of natural love and affection for a consideration which is less than its fair market value if a recital to that effect is made in the instrument of transfer.

The provision creates an exception to the operation of Section 269C and related Chapter XX-A acquisition machinery when its specified conditions are satisfied.

Conditions for the Section 269Q exclusion

1. Transfer to a relative: The transferor must transfer immovable property to a person qualifying as the transferor's relative under the applicable statutory meaning.
2. Natural love and affection: The transfer must be made on account of natural love and affection, rather than merely being described as a commercial bargain.
3. Consideration below fair market value: The consideration must be less than the property's fair market value.
4. Express recital in the instrument: The instrument of transfer must contain a recital recording the relevant fact of the transfer on account of natural love and affection for below-market consideration.

These are cumulative statutory conditions. Merely transferring property to a family member, without satisfying the remaining requirements, does not by itself establish the exclusion.

Meaning of important expressions

Relative

The expression must be interpreted according to the definition applicable to Chapter XX-A and the transaction concerned. Section 2(41) of the Income-tax Act defines relative, in relation to an individual, as the husband, wife, brother or sister or any lineal ascendant or descendant of that individual. Other tax provisions can use different definitions; the definition applicable to the particular provision must be checked.

Fair market value

Fair market value is a valuation concept relevant to the acquisition provisions of Chapter XX-A. Section 269A contains definitions for that Chapter. It is not necessarily identical to stamp-duty value or the amount stated in the deed.

Instrument of transfer and recital

The instrument of transfer is the legal document evidencing the property transfer. A recital is a statement within that document recording the background or purpose of the transaction. Section 269Q specifically required a recital reflecting the below-market transfer on account of natural love and affection.

How Section 269Q operated

Chapter XX-A contained provisions for acquisition by the Central Government of certain immovable properties transferred for apparent consideration below fair market value in circumstances addressed by Section 269C. Section 269Q carved out qualifying family transfers from the Chapter's application.

Illustration: A parent transferred immovable property to a child for less than fair market value because of natural love and affection, and the deed expressly recorded those circumstances. If the statutory definition and all other requirements were met, Section 269Q could exclude that historical transfer from Chapter XX-A. The facts, applicable law and transaction date remain decisive.

For the historical restriction on the Chapter's operation, see Section 269RR.

Does Section 269Q apply to property transfers today?

Not as an operative Chapter XX-A acquisition exemption for new transfers. Under Section 269RR, that Chapter ceased to apply to transfers made after 30 September 1986. Modern transfers between relatives must instead be evaluated under the law applicable to the transaction, which may include the Registration Act, 1908, applicable state stamp legislation and relevant provisions of income-tax law.

For example, tax treatment of property received for inadequate consideration may require consideration of Section 56(2)(x) of the Income-tax Act, 1961 and its own defined exceptions, depending on the relevant tax year and the governing legislation. The meaning of relative for that provision is not automatically the same as for every other provision. No general present-day exemption from tax or registration can be inferred solely from Section 269Q.

Official legal resources

Consult the authoritative statutory text and subsequent amendments through the Income Tax Department's Acts collection and India Code. For related historical provisions, read Section 269P, Section 269R and Section 269RR.