GURUKUL HOMES PRIVATE LIMITED,KOLKATA vs. ITO, WARD 2(1),, KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH, KOLKATA BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER I.T.A. No.2594/KOL/2025 (Assessment Year:2018-19) Gurukul Homes Private Limited, ITO, 61A, Park Street Ambassador Vs. Ward – 2(1), Apartment, Flat No.22, Kolkata – Kolkata 700016, West Bengal [PAN:AACCG6896M] (Appellant) .. (Respondent) Appellant by : Shri Siddharth Parekh, AR Respondent by: Shri Praveen Das Chowdhury, Sr. DR Date of Hearing 22.06.2026 Date of Pronouncement 10.07.2026

O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER:

This appeal preferred by the assessee is against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (hereinafter referred to as the “ld. CIT(A)”], dated22.03.2025 for the Assessment Year (AY) 2018-19.

ITA No.2594/Kol/2025/AY 2018-19 Gurukul Homes Pvt. Ltd. vs. ITO and undergoing medical treatment, and had to remain out of town for a considerable time. The assessee has also filed the evidences for proving the content of the affidavit. Therefore, we find reasons as bonafide. Accordingly, the delay in filing the appeal is condoned and the appeal is admitted for adjudication.

ITA No.2594/Kol/2025/AY 2018-19 Gurukul Homes Pvt. Ltd. vs. ITO 6. We have heard rival submissions and perused the materials available on record. The undisputed facts are that the assessee purchased the said land in the normal course of business and showed the same in the profit and loss account, details thereof available in the purchase account and correspondingly shown in the inventories (land) in Schedule 15. The assessee also submitted details of said purchases in Schedule 22 under the head purchases. Thus, it is undisputed that land was undisputedly stock-in-trade in the business of assessee. In our opinion, the provisions of section 56(2)(x) of the Act are not applicable to stock-in-trade as it is transactions of purchase in the ordinary course of business. The case of the assessee is squarely covered by the decision of Co-ordinate Bench of Mumbai in case of Ketan Himatlal Mehta vs. DCIT, in ITA No.2499/Mum/2024, dated 16.12.2025, wherein it has held as under:

“8. We have considered the rival submissions and have perused the material on record. 9. During the course of hearing the Learned Authorized Representative for the Assessee had, inter-alia, raised the contention that the Assessee is also engaged in a real estate development and the land in question was acquired and held as stock-in-trade. Reliance was placed on (a) Satendra Kaushik v. ITO 106 taxmann.com 244 (Jaipur), (b) Mubarak Gafur Korabu v. ITO (117 taxmann.com 828) (Pune) and (c) CBDT Circular No. 1/2011 to contend that the anti-avoidance provisions contained in Section 56(2)(x) of the Act not applicable to the present case. Thus, it was submitted that the addition of INR.18,48,70,810/- made under Section 56(2)(x) of the Act was legally and factually untenable. Reliance was also placed upon the decision of Co- ordinate Bench of the Tribunal in the case of Commercial Development Corporation Vs. NFAC/ITO Ward 24(1)(1) [ITA No.3755/Mum/2024, dated 28/10/2024, Assessment Year 2018-2019] 10. We have perused the decisions cited on behalf of the Assessee. We note that the Mumbai Bench of the Tribunal had, in the case of Commercial Development Corporation Vs. NFAC/ITO Ward 24(1)(1), [ITA No. 3755/Mum/2024, dated 28/10/2024, Assessment Year 2018-2019], held that provisions of Section 56(2)(x) of the Act cannot be invoked in the case of

ITA No.2594/Kol/2025/AY 2018-19 Gurukul Homes Pvt. Ltd. vs. ITO transactions of purchase of stock-in-trade. The relevant extract of decision of Tribunal reads as under: 3. Briefly stated, facts of the case are that the assessee, a partnership firm, was engaged in the business of real estate development. For the year under consideration, the assessee filed return of income on 25.06.2018 declaring total income at Rs.8,18,890/-. The return of income filed by the assessee was selected for limited scrutiny for verification of the fact that purchase value of the property recorded in the sale consideration was less than the value as per the stamp duty value authorities. The statutory notices under the Act were issued and complied by the assessee. In the course of the assessment proceedings, it was noticed that assessee firm had purchased land along with tenants and dwelling house standing thereon vide two agreements each dated 15.03.1978 for a total consideration of Rs.4,25,000/- for building and Rs.3,25,000/- for land respectively. The large portion of the land is still occupied by unauthorized hutments which are declared as Slum by the appropriate authority. The agreement was executed and possession of the property was taken by the assessee in the year 1977-78. The purchase consideration was also discharged by the banking channels but the conveyance of property was however registered in the year under consideration. As the conveyance of the property was not passed on after transaction of purchase, the assessee took the matter to Hon'ble High Court of Bombay, wherein the Hon'ble High Court directed the seller for grant of conveyance in favour of the assessee. On further appeal, the Hon'ble Supreme Court also allowed the issue in favour of the assessee. Consequently, in the year under consideration, the assessee registered the conveyance of the property, wherein the stamp duty value of the property is assessed at Rs.80,34,09,000/-. Accordingly, in the course of the assessment proceedings, the Assessing Officer asked as why the sale consideration of the property should not be taken at the value which is recorded by the stamp duty value authorities. The Assessing Officer rejected the submission of the assessee and held the sale consideration at Rs.80,34,09,000/- and computed the addition in terms of section 56(2)(x) of the Act. 4. On further appeal, the assessee submitted that property in dispute was stock-in-trade and therefore, the provisions of section 56(2)(x) of the Act were not applicable in the case of the assessee. The assessee also contested that provisions of section 56(2)(x) of the Act have been inserted by way of Finance Act, 2009 w.e.f. 01.10.2009 and whereas property in dispute were entered in the books of accounts of the assessee as stock-in-trade in the assessment year corresponding to

ITA No.2594/Kol/2025/AY 2018-19 Gurukul Homes Pvt. Ltd. vs. ITO the previous year 1977-1978 and therefore said provisions cannot be invoked in the year under consideration. The assessee also submitted that invoking proviso to section 56(2)(x) of the Act, if at all any addition has to be made, then the value of the property as per stamp duty value as on date of the agreement in the year 1997-1998 should be considered. The Assessing Officer referred the matter of valuation to the DVO and the report of the DVO was received during the appellate proceedings and therefore, the Ld. CIT(A) applied the rate estimated by the DVO at Rs.16,29,263/- as against the agreement value of Rs.7,50,000/-shown by the assessee. The Ld. CIT(A) accordingly sustained addition of Rs.8,79,263/- as against the addition Rs.80,34,09,000/- made by the Assessing Officer. 6. Aggrieved, both the assessee and the Revenue are in appeal before the Tribunal by way of raising grounds as reproduced above. 7. Before us, the Ld. counsel for the assessee has filed a Paper Book containing pages 1 to 298. 8. We have heard rival submission of the parties and perused the relevant material on record including Paper Book pages 1 to 298 filed by the assessee. We find that the Ld. CIT(A) has considered the property as stock-in-trade which has not been disputed by the Revenue. The relevant finding of the Ld. CIT(A) is reproduced as under: “12.1.4 DECISION have carefully examined the rival contentions. It is pertinent to note that the Appellant is engaged in the business of real estate development The Appellants submission that the captioned property as purchased in 1978 has been treated as stock in trade and accepted as such in assessment proceedings in those years is evident from the perusal of assessment orders and its financial statements. The Appellant still shows the said land as its stock in trade in its financials of AY 2018-19 and stamp duty paid during the year added to the said plot treated as stock in trade/ work in progress. The Assessing Officer has not disputed the said treatment or rejected the books of accounts or given any deduction of stamp duty paid while making addition under section 56(2) (x) of the Act. The A O has not brought on record any material which may point out/conclude that the captioned property is a different property.” 8.1 Further, on the applicability of section 56(2)(x) of the Act on the stock-in-trade, the Ld. CIT(A) rejected the contention of the assessee. The finding of the Ld. CIT(A) is reproduced as under:

ITA No.2594/Kol/2025/AY 2018-19 Gurukul Homes Pvt. Ltd. vs. ITO “12.2.1 DECISION I have carefully examined submission of the Appellant as to applicability of provisions of section 56/2)(x) to the immovable property acquired as stock in trade. The CBDT Circular as relied upon by the Appellant is relating to the provision of section 56(2)(v) of the Act and as such not helpful in the present case. Further, there is no clear cut and definite finding either by the Assessing Officer or as per any clear cut proof/organic evidence of the property being stock in trade in view of the above whether the property is stock in trade or not, it is not entitled to any relief on the ground and contention that it is out of the ambit of Section 56 (2)(x) of the Act and therefore the Appellant is not eligible for any relief on this ground alone. The contention of the appellant that the captioned property is in the nature of stock-in-trade in view of the amendment by the Finance Act, 2010 wherein the expression property has been defined in clause (d) of the Explanation below section 56(2)(vii) clarifying that with effect from 01.04.2009, the property would only include capital assets is misplaced as the amendment solely dealt with the issues related section 56(2)(vi) and its meaning was not supposed to be imported to the fabric of the provisions 56(2)(x) of the Act. The contention of the appellant on this ground is therefore rejected as dismissed and not admissible." 8.2 Before us, the Ld. counsel for the assessee has referred to the decision of the Co-ordinate Bench of the Jaipur in the case of Satendra Kaushik v. ITO [2019] 106 taxmann.com 244 (Jaipur) (Trib.), wherein it is held that provisions of section 56(2)(x) of the Act have application to the property which is in the nature of the capital asset of the recipient. In said case, the assessee purchased a piece of land as its stock-in-trade, therefore, addition made by the Assessing Officer invoking provisions of section 56(2)(x) of the Act was set aside. The relevant finding of the Co-ordinate Bench of the Tribunal is reproduced as under: “10. I have considered the rival contentions and carefully gone through the orders of the authorities below. The provisions of section 56(2)(vii) were introduced as a counter evasion mechanism to prevent laundering of unaccounted income. The provisions were intended to extent the tax net to such transactions in kind. The intent is not to tax the transactions entered into in the normal course of business or trade, the profits of which are taxable under specific head of income. Therefore, the definition of property has been amended to provide that section 56(2)(vii) will have application to the „property‟ which is in the suture of a capital asset of the recipient and therefore would not apply to stock in trade, raw material and consumable stores of

ITA No.2594/Kol/2025/AY 2018-19 Gurukul Homes Pvt. Ltd. vs. ITO any business of such recipient. However, a property is defined in a very specific my which includes agricultural and non-agricultural land or both It appears that the lower authorities have not properly appreciated the relevant provisions of the Act with regard to the land purchased by the which is part of stock in trade. In the substantial interest of justice, we restore the matter back to the file of the AO for deciding the mate afresh after sung due opportunity of hearing to the assessee." 8..3 Similarly, the Co-ordinate Bench of the Tribunal in the case of Mubarak Gafur Korabu v. ITO [2020] 117 taxmann.com 828 (Pune- Trib.) has adjudicated he issue as under: "10. In the totality of above definitions, we hold that agricultural land purchased by assessée is not governed by the provisions of section of the Act being not capital asset and also because of the fact that the assessee was holding it as stock in trade. Hence, it is outside the purview of said section and no addition has to be made in the hands of assessee.” 8.4 Respectfully, following above decisions of Tribunal, we hold that section 56(2)(x) of the Act cannot be invoked in the case of the transactions of the assessee, which are undisputed for purchase of stock in trade. Further, the provisions of section 56(2)(x) of the Act have been introduced by Finance Act, 2009 w.e.f. 01.10.2009, whereas transaction of the purchase of the land in question has been recorded by in its books of accounts as stock-in-trade in the assessment year corresponding to the previous year 1977-78 and therefore, now the provision of section 56(2)(x) of the Act cannot be applied over the case, merely for the reason that said property has been registered now. Since, we have held that section 56(2)(x) of the Act is not applicable over the transaction in dispute in this case, the addition cannot be made in the case of the assessee and therefore, the grounds raised by the Revenue in its appeal are dismissed. The grounds raised by the assessee in its appeal are also rendered merely academic, which we are not required to adjudicate, when we have already held the application of section 56(2)(x) of the Act as unsustainable in law in the case of the assessee. The grounds of appeal of the assessee are also dismissed as infructuous. 9. In the result, the appeal of the Revenue is dismissed, whereas appeal of the assessee stand allowed.” (Emphasis Supplied)

ITA No.2594/Kol/2025/AY 2018-19 Gurukul Homes Pvt. Ltd. vs. ITO 11. On perusal of above, we find that the Co-ordinate Benches of the Tribunal have held that provisions contained in Section 56(2)(x) of the Act cannot be invoked in the case of purchase of stock-in-trade. On perusal of Balance Sheet of the Assessee for the relevant previous year we note that asset under consideration has been recorded under the head ‘Other Current Assets’ and not under the head ‘Capital Assets’. It is the contention of the Assessee that the Assessee has been holding the same as stock-in-trade. During the course of hearing the Learned Departmental Representative pointed out that the financial statements submitted by the Assessee were not audited and therefore, the Revenue should be granted another opportunity. Further, we note that the findings returned by the Assessing Officer and the CIT(A) are predominantly in relation to period/mode of acquisition of asset in question by the Assessee. While the Balance Sheet supports the stand taken by the Assessee, we note that there is no factual finding returned by the Assessing Officer or the CIT(A) in this regard. Taking into consideration the submissions made by both the sides, and facts & circumstances of the present case were deem it appropriate to remit this issue back to the file of the Assessing Officer with the directions to adjudicate the issue afresh after taking into consideration the above decision of the co-ordinate benches of the Tribunal. The Assessing Officer is directed to verify the relevant financial statements of the Assessee to return specific factual findings as to whether the asset in question was held by the Assessee as stock-in-trade. It is clarified that in case the Assessing Officer arrives at a conclusion that the asset is question is held as stock-in-trade, no addition under Section 56(2)(x) the Act would be made. The Assessee is directed to co-operate and place before the Assessing Officer relevant financial statements. It is clarified that in case the Assessee fails to appear before the Assessing Officer or fails to provide the financial statement requisitioned by the Assessing Officer, the Assessing Officer would be at liberty to adjudicate the issue on the basis of material on record. In terms of the aforesaid, the addition of INR.18,48,70,810/- made under Section 56(2)(x) of the Act is set aside. Before parting we would like to observe that during the course of hearing it was contended on behalf of the Assessee, on a without prejudice basis, that in any case while making the addition the cost of acquisition of asset or agreed consideration should be taken as 21 Crore [12 Crore + 9 Crore] while computing the addition under Section 56(2)(x) of the Act. Since we have restored the issue back to the file of the Assessing Officer, we have not adjudicated upon the other contentions raised by the Assessee. In case the occasion arises, the Assessee would be at liberty to raise all rights and contentions before the Assessing Officer. 12. Accordingly, in terms of paragraph 11 above, Ground No.4 raised by the Assessee is allowed for statistical purpose and Ground No. 1 to 3 raised by

ITA No.2594/Kol/2025/AY 2018-19 Gurukul Homes Pvt. Ltd. vs. ITO the Assessee are dismissed as having been rendered infructuous since we have remanded the issue back to the file of Assessing Officer. 13. In terms of above, the present appeal is partly allowed.” 7. Consequently, we respectfully following the above decision (supra), set aside the order of ld. CIT(A) and direct the AO to delete the addition made .

The order is pronounced in the open Court on 10/07/2026.

Sd/- Sd/- (George Mathan) (Rajesh Kumar) JUDICIAL MEMBER ACCOUNTANT MEMBER Kolkata, Dated: 10/07/2026 SAMANTA आदेश �ȧ ĤǓ�ͧ �ͪ �\ Ē ȯͪ��/Copy of the Order forwarded to: \ �Ȣ�ȡ�ȸ/ The Appellant 1. 2. Ĥ×��ȸ/ The Respondent 3. Ȳ�Ȳͬ��आयकर] �ǕÈ�/ Concerned CIT आयकर] �ǕÈ�(अपील) / The CIT(A) 4. 5. ��ȡ�Ȣ�ĤǓ�Ǔ�ͬ �, आयकर\ �Ȣ�ȣ�\ͬ ����,/ DR, ITAT, Kolkata 6. �ȡ�[ फाईल/ Guard file

BY ORDER, // TRUE COPY //

Asstt.Registrar, ITAT, Kolkata