SHRI KUMAR DATA,ALWAR vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, ALWAR

In this appeal, the assessee is aggrieved for addition of Rs.34,271/- U/s 56(2)(vii)(b)(ii) of the Act. It was argued by the ld AR

2 ITA 238/JP/2019_ Ajay Kr. Data Vs DCIT that in the present case, agricultural land purchased by the assessee is not a capital asset as defined in section 2(14) of the Act. As per this section, capital asset does not include agricultural land in India except that agricultural land which falls within a particular distance from the local limits of the municipality. As per sub-clause (b)(III) of clause (iii) to section 2(14), agricultural land situated within 8 kms of the local limits of municipality and having a population of more than 10 lacs are considered as capital asset. In the present case, the land purchased by the assessee in village Bhandoli is situated more than 32 kms of the municipal limit of Alwar and has a population of 1357. Therefore, the land purchased by the assessee is not a capital asset and thus, not an immovable property as envisaged u/s 56(2)(vii)(b) of the Act. Hence, the difference between actual consideration and the value adopted for stamp duty purposes cannot be brought to tax in the hands of the purchaser under this section. It was further contended that the difference in actual consideration paid and DLC value was less than Rs. 50,000/- therefore, provisions of Section 56(2)(vii)(b)(ii) will not be applicable.

On the other hand, the ld DR relied on the orders of the authorities below.

As per section 56(2)(vii)(b)(ii), where an individual receives any immovable property for a consideration which is less than the stamp duty value of the property by an amount exceeding Rs.50,000/-, the stamp duty value of such property as exceeds such consideration is assessable as income from other sources. Thus, where the difference between actual consideration and the stamp duty value is less than Rs.50,000/-, the difference cannot be assessed under this section. In the present case, the difference between actual consideration and the stamp duty value is only Rs.34,271/- and therefore, this difference cannot be assessed u/s 56(2)(vii)(b)(ii).

In view of the above legal position, we do not find any merit in upholding the addition of Rs. 34,271/- made U/s 56(2)(vii)(b)(ii) of the Act. Hence, we direct the A.O. to the delete the same.