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Issues: Whether the transfer of immovable property by a grandfather to his grandson for lesser consideration, with a recital that the reduced consideration was on account of natural love and affection, was excluded from Chapter XX-A of the Income-tax Act, 1961, and whether the reference to the Valuation Officer and consequential notices could be sustained.
Analysis: Section 269Q of Chapter XX-A exempted transfers of immovable property made to a relative on account of natural love and affection for consideration less than fair market value, provided the instrument contained the requisite recital. A grandson falls within the expression "relative" as a lineal descendant under section 2(41) of the Income-tax Act, 1961. The transfer deeds themselves recorded the reduced consideration and the reason for it. In these circumstances, the question was not one for the Valuation Officer to decide, and the objection that the writ petitions were premature was only technical. The Department had not pleaded that the transfers were not made out of natural love and affection for the grandson.
Conclusion: The transfer was covered by section 269Q and Chapter XX-A did not apply; the reference to the Valuation Officer and the consequential notices could not be sustained and were quashed.
Final Conclusion: The writ petitions succeeded on merits, and the impugned reference and notices were set aside.
Ratio Decidendi: Where the transfer deed itself shows a transfer to a relative for lesser consideration on account of natural love and affection, and the statutory recital requirement is satisfied, Chapter XX-A exclusion applies and coercive acquisition proceedings cannot be initiated on that basis.
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