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TMI BlogIncome-tax (Amendment) Act, 1981--Explanatory notes on the provisions ofX X X X Extracts X X X X X X X X Extracts X X X X ..... r 1st July, 1982, will be governed by the provisions of the Amending Act. 1.2 It may be mentioned that the Taxation Laws (Amendment) Act, 1972, had inserted a new Chapter XXA in the Income-tax Act for acquisition of immovable properties in certain cases of transfer to counteract evasion of tax. The provisions of this Chapter empowered the Central Government to acquire any immovable property having a fair market value exceeding Rs.25,000 in cases where the consideration declared in the instrument of transfer was less than the fair market value of the property on the date of execution of the instrument of transfer. This power is available only in cases where there is reason to believe that the consideration agreed to between the parties has not been truly stated with a view to facilitating tax evasion by the transferor or the transferee. It is not permissible to initiate proceedings for acquisition of any property unless its fair market value exceeds the declared consideration by more than 15% of such consideration. For this purpose, the power to initiate proceedings for acquisition of immovable properties has been vested in the Assistant Commissioners of Income-tax who are designa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he instrument of transfer; (b) where the consideration for the transfer consists only of rent, the aggregate of the moneys payable by way of rent as also the amounts for the service or things which form part of or constitute the rent as specified in the instrument of transfer; (c) where the consideration for the transfer consists of premium and rent, the aggregate of the amount of the premium, the moneys payable by way of rent as also the amounts for the service or things which form part of or constitute the rent, as specified in the instrument of transfer. 3.3 It has also been provided that where the whole or any part of the consideration for the transfer by way of lease is payable on any date or dates falling after the date of such transfer, the value of the consideration payable after the date of the transfer shall be taken at the discounted value of such consideration by adopting the rate of interest at 8% per annum. In other words, the present value of the apparent consideration on the date of transfer by way of lease will be taken as the amount or the aggregate of the amounts payable after the date of such transfer by taking the discounted value of such amounts at 8% pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has retained this definition in sub-clause (i) of section 269A in relation to the transfer of immovable properties by way of sale or exchange. The Amending Act has inserted a new sub-clause (ii) of clause (d) which defines the expression "fair market value", in relation to any immovable property transferred by way of lease, to mean the premium that such transfer would ordinarily fetch in the open market on the date of execution of the instrument of transfer of such property if the consideration for such transfer had been payable by way of premium only. In other words, the fair market value of the immovable property transferred by way of lease means the premium which such transfer would ordinarily fetch in the open market on the date of the execution of the agreement of the long-term lease, that is to say, lease for a period of 12 years or more. 4.2 Further, the Amending Act has inserted a new sub-clause (iii) in clause (d) to define the expression "fair market value", in relation to any immovable property of the nature referred to in clause (e)(ii), that is to say, any rights of the nature referred to in section 269AB(1)(b) to mean the consideration in the form of money that on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ression "transfer". 7.1 Clause (e) of section 2 of the Amending Act has amended clause (h) of section 269A of the Income-tax Act containing the definition of the term "transfer". Prior to the amendment made by the Amending Act, the expression "transfer" in relation to any immovable property meant transfer of such property by way of sale or exchange. The Amending Act has extended the definition of the expression "transfer" to mean in relation to any immovable property being any land or building referred to in clause (e)(i), a lease for a term of not less than 12 years and also includes allowing the possession of such property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act. 7.2 The Explanation to sub-clause (i) of section (h) of section 269A provides that a lease which provides for extension of the term thereof by a further term or terms will be deemed to be a lease for a term of not less than 12 years, if the aggregate of the term for which such lease has been granted and further term or terms for which it can be so extended is not less than 12 years. In other words, where the lease has been ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act. Section 269AB provides that the transactions specified in clause (a) and clause (b) of sub-section (1), shall be reduced to writing in the form of a statement by each of the parties to the transaction or by any of the party to such transaction who acts on behalf of himself and on behalf of the other parties. The transactions specified in clause (a) and clause (b) of sub-section (1) are the following, namely:- (i) every transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882; (ii) every transaction (whether by way of becoming a member of or acquiring shares in a co-operative society, company or other association of persons or by way of any agreement or arrangement of whatever nature), by which a person acquires any rights in or with respect to any building or part of a building which has been constructed or which is to be constructed. For this purpose, any transaction by way of sale, exchange or lease of such building or part of the building which is required to be registered under the Registration Act is not inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a period of 9 months from the end of the month in which the instrument of transfer in respect of such property is registered under the Registration Act, 1908. 10.2 Clause (a) of sub-section (5) of the Amending Act has amended the provisions of section 269D to provide that no proceedings shall be initiated in respect of any immovable property after a period of 9 months from the end of the month in which the instrument of transfer in respect of such property has been registered under the Registration Act, 1908, or, as the case may be, under section 269AB of the Income-tax Act. 10.3 Clause (b) of section 5 has inserted a new Explanation in sub-section (2) of section 269D to provide that the Explanation to section 269B(2) which has been inserted by section 4 of the Amending Act and which has been explained in paragraph 9.2 above will apply for the purposes of sub-section (2) of section 269D as it applies for the purpose of sub-section (2) of section 269B. [Section 5 of the Amending Act] Amendment to the provisions of section 269F relating to hearing of objection. 11.1 Sub-section (9) of section 269F provides that in any proceedings under Chapter XXA in respect of any immo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights of the nature referred to in section 269AB(1)(b), any order of acquisition of the property is passed by the competent authority, the Central Government steps into the shoes of the transferee and shall have all the rights which would have been enjoyed by the transferee. However, the competent authority may issue such directions to any persons concerned for taking the necessary steps for ensuring compliance with the provisions relating to vesting of such rights in the Central Government and for placing the Central Government in the same position in relation to rights in the case of the transferee. 12.2 New sub-section (6) provides that in relation to the rights of the nature referred to in section 269AB(1)(b) in or with respect to any building or part of a building, the provisions of sub-section (1), sub-section (2) and sub-section (3) of section 269-I shall have effect as if the reference to immovable property therein were a reference to such building or part of a building. [Section 7 of the Amending Act] Amendment of section 269J relating to compensations. 13.1 Sub-section (1) of section 269J provides that where any immovable property is acquired under Chapter XX ..... X X X X Extracts X X X X X X X X Extracts X X X X
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