JUDGMENT

KANIA, C.J.I. - The petitioner herein filed Civil Writ Petition No. 2821 of 1986 in the Delhi High Court challenging the validity of the provisions of Chapter XX-C inserted in the Income Tax Act, 1961 (referred to herein as the Income Tax Act) by the Finance Act of 1986. That writ petition has been transferred to this Court as a test case. The order transferring the said writ petition was made on September 20, 1989.

2. The relevant facts lie within a narrow compass. The petitioner is the intending purchaser of a plot of land bearing No. B-7/108 A, situated at Safdarjung Enclave, New Delhi, admeasuring 253 sq. mtrs. The owner of the property is one Jai Lal s/o Ghazi Ram. The said owner held the said plot under a lease executed by the Delhi Development Authority on February 25, 1981. On February 4, 1985 the owner entered into an agreement to transfer the leasehold rights in the said property to the petitioner and a sum of Rs. 4.5 lakhs was paid as the advance price. On the same day an agreement for the construction of a structure on the plot was entered between the said parties. On July 9, 1986 a fresh agreement to sell the residential house put up on the aforesaid plot of l