SUJATA PRAKASH JAWALE,MUMBAI vs. ITO WARD 42(3)(4), MUMBAI

Per Smt. Beena Pillai, JM: The present appeal arises out of the order dated 12/09/2025 passed by the Ld. Commissioner of Income Tax (Appeals)/Addl./JCIT(A)-3, Chennai [hereinafter “the Ld.CIT(A)] for A.Y. 2014-15 on the following grounds of appeal:- “1. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the reopening made u/s 147 of the Act as the same is bad in law and liable to be quashed. 2. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs.44,75,913/- u/s 56(2)(vii)(b) of the Act. 3. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs.44,75,913/- u/s 56(2)(vii)(b) of the Act without appreciating the fact the property in question is agriculture land and that said provision is not applicable on purchase of Agricultural Land, hence the addition is liable to be deleted.

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Assessee filed its return of income on 08/09/2014 declaring total income of Rs. 3,74,630/-. The return was selected for scrutiny and notice u/s 143(2) and 142(1) of the Act was issued seeking various submissions based on the questionnaire. In response to the statutory notice, authorized representative of the assessee appeared from time to time and submitted various details as called for. The Ld.AO observed that assessee is an employee of MCGM and has 3
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shown income from salary and income from other sources. It was noted that, during the year, the assessee purchased immovable property. Vide submission dated 14/06/2016, assessee furnished the purchase agreement dated 19/06/2013. The Ld.AO noted that, assessee along with four co-purchasers purchased 14,700 sq. meter land at Mouza Bhanwaj, Tal.- Khalapur, Dist. Raigad, bearing Serial
No. 13/7B and CTS Number 5330 (hereinafter referred to as “said property”) for a consideration of Rs.60,00,000/-. Subsequently, the agreement was registered on 26/06/2013. The assessee alongwith other co-purchasers paid stamp duty based on the value determined by the stamp duty authorities which was determine at Rs.5,64,00,000/-.
2.1. The Ld.AO accordingly, issued show-cause notice calling upon assessee to submit its response as to why the provisions of Section 56(2)(vii)(b)(ii) should not be applied to the facts of the case.
Assessee vide its submissions dated 26/09/2016 submitted that the original agreement of purchase was entered into by assessee along with four other parties vide agreement dated 30/06/2010, acquired the said property for a consideration of Rs. 60,00,000/-. It was submitted that, provisions of Section 56(2)(vii)(b) was introduced by Finance Act, 2013, w.e.f. 01/04/2014. It was thus submitted that, these provisions were not applicable to the present transactions. The assessee also submitted that, the said land being in the green zone, wherein no construction or commercial work is allowable. It was also submitted that, the land was having status of 32G which means no sale-deed can be executed without the 4
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permissions of Tehsildar/Collector. Assessee, thus submitted that, stamp duty value as on 2010 has to be considered as against value as on the date of registration.
2.2. The assessee also submitted the property card details before the authorities below which were not considered. The assessee submitted that, the said land is outside the municipal limits as per the certificate issued by the Tehsildar. He further submitted that, he is only 1/5th shareholder and had contributed Rs.11,83,674/- towards the total purchase consideration and Rs.18,36,900/- towards expenses incurred for the purchase of the said property.
The Ld.AO, however, considered the difference in the stamp duty value and the actual consideration and added the difference as income in the hands of assessee amounting to Rs.5,04,00,000/-.
Aggrieved by the order of Ld.AO assessee preferred appeal before Ld.CIT(A).
3. The Ld.CIT(A) after considering various submissions of assessee observed and held as under:-
7.4. The submissions of the appellant are considered. The fact of the case is that, the appellant has purchased 14700 sq m, land at Mouza Bhanwaj,
Tal.-Khalapur, Dist.Raigadh (herein after “the said Property”) in Survey
No.13/7B and CTS No.5330 for an agreement value (Consideration) of Rs.60,00,000 alongwith five other parties. The share of the appellant is 20.41%. The stamp duty value of the said property is Rs.5,64,00,000. The appellant has paid a sum of Rs.18,36,900 towards her share including
Stamp duty. The purchase agreement for this property is dated 19-06-
2013 and the appellant has submitted original agreement relating to this purchase dated 30-06-2010 before the assessing officer. In this regard, the assessing officer has held that, Section 56(2)(vii)(b)(ii) is applicable in this case, and considered the stamp duty value of 2010 amounting to Rs.2,79,30,000 for computing the addition U/s.56(2)(vii)(b)(ii) and accordingly made addition of a sum of Rs.44,75,913 (being 20.41 % of difference in considered paid & stamp duty value as on the date of that 5
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agreement). In respect of the appellants submission that, the said land is an agricultural land and hence, the same does not come under the definition of “property” as per Section 56(2) clause (vii) the assessing officer has observed that, the assessment of the said property is done as “immovable property” and not as a “capital asset” and hence, the claim that Section 56(2)(vii) is not applicable for agricultural land is not accepted.
Further, the assessing officer has observed that as per 7/12 extract of the property the land is a “Padh” land, which means no agricultural activity is carried out and the appellant has also not disclosed any income from Agriculture in the AY 2015-16 and AY 2016-17. Further, the appellant also relied on the assessment orders in the cases of Co-owners of the property, wherein no addition is made U/s.56(2)(vii).
7.5. Now, the issue in this case is whether Section 56(2)(vii) specifically excludes Agricultural land and whether the land purchased by the appellant is covered U/s.2(14). Regarding, the first issue, the provisions of Section 56(2)(vii) does not defines the term “immovable property”. Further,
Section 56(2)(vii) mentions about “immovable Property” and “Other than Immovable property”. Hence, Section 56(2)(vii) does not refer to “Capital asset” as defined in Section 2(14), but has consciously used the term
“immovable property”. Section 56 is taxed under the head “Income from other sources”. Hence, the difference in the stamp duty value and the purchase consideration in the hands of the purchaser is taxed under the head “Income from other sources”. On the other hand in the case of the seller the difference in the consideration as per the stamp duty value and the sale consideration is taxed U/s.50C which is under the head “Capital gain”, wherein the section 50C clearly speaks about the “transfer of a “capital asset”.
7.6. Section 56 is a deeming provision to bring to tax, the transaction through less consideration reported as “income from other sources”. In the case of the seller of agricultural land, it is the farmer who sells the land and, hence, the same is exempted. However, in the case of the purchaser, it is not the case. Hence, the same corollary as that of Section 50C would not apply to Section 56(2)(vii). In this regard, reliance is placed on the decision of Hon’ble Ahmedabad Tribunal in the case of Clayking Minerals
LLP vs. Income-tax Officer [2025] reported in 174 taxmann.com 1111, wherein the tribunal while deciding on Section 56(2)(x) which has replaced
Section 56(2)(vii)(b) since October 2017, has observed that:-
“On a plain reading, it is seen that section 56(2)(x) mentions the term
“any immovable property”. Now the issue for consideration is whether “Agricultural land” (on the assumption for argument’s sake that the land in question qualifies as an “agricultural land”) falls within the ambit of an “immovable property” as stated in section 6
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56(2)(x). The term “immovable property” has not been defined in section 56(2)(x) or in any other section in the Income Tax Act. This renders the word to be interpreted in general parlance. In general understanding of the term, the word “Immovable Property” means an asset which cannot be moved without destroying or altering it.
Therefore, going by the general definition, “immovable property”
would include any rural agricultural land, in absence of any specific exclusion in section 56(2)(x). Notably, section 56(2)(x) does not use the word “capital asset”. The sale of rural agricultural land is exempt in the hands of the seller since the word “capital asset” has been specifically defined to exclude agricultural land in rural areas under section 2 clause 14. Thus, sale of rural agricultural land shall not give rise to any capital gains in the hands of the seller as it is not considered as a capital asset itself. However, from the point of view of the “purchaser” of immovable property, as stated above, section 56(2)(x) mentions “any immovable property” which going by the plain words of the Statute, does not specifically exclude
“agricultural land”.
Therefore, going by the plain words of the section 56(2)(x), which uses the term “immovable property”, agricultural land cannot be taken out of the purview of section 56(2)(x).”
7.7. Hence, it is held that, the claim that Agricultural land is excluded from Section 56(2)(vii) is not acceptable. Next issue is whether the appellant has purchased an agriculture land. In this regard, the assessing officer has observed that, the appellant has not carried out any agriculture activity and has not disclosed any agriculture income in subsequent years. In this regard reference is made to the decision of Hon’ble Supreme court in the case of Smt. Sarifabibi Mohmed Ibrahim v. CIT [1993] 70 Taxman 30/204
ITR 631 wherein the Hon’ble court has held that, agricultural status depends on actual use and intention, and not merely on classification in revenue records. However, in the present case, Since, it has been held in the previous paras, that the agriculture land has not been excluded in Section 56(2)(vii)(b), question of whether the land purchased by the appellant is agriculture or not is irrelevant and becomes infructuous.
7.8. In view of the above, the order of assessing officer bringing to tax a sum of Rs.44,75,913 as income U/s.56(2)(vii)(b) is upheld. Accordingly, the appeal on this issue is dismissed.”
Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before this Tribunal.

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 Mubarak Gafur Korabu v. Income Tax Officer reported in [2020] 117 taxmann.com 828 (Pune-Trib.)
 Vikas
6268/Del/2025
[12/01/2026]
 Shri Yogesh Maheshwari vs. DCIT; reported in 2021 (1)
TMI 832
4.3. On the contrary, the Ld. DR strongly relied on the orders passed by the authorities below.
I have perused the submissions advanced by both the sides in light of the records placed before this Tribunal.
5. It is an admitted fact that the said land is beyond 8 kms from the municipal limits of the Khopoli Nagar Parishad having a population of 2,882 persons. These factual status, supported by the certificate issued by the Khopoli Nagar Parishad has not been controverted by the authorities below. There is nothing on record placed by the Revenue to refute the certificates issued by the local authorities of Khopoli Nagar Parishad, Taluka Raigad District.
5.1. On perusal of the assessment order, it is noted that the Revenue itself admits to the fact that the land purchased by the assessee is an agricultural land. On a careful perusal of the provisions of section 2(14) of the Act, it is noted that agricultural land stands excluded from the definition of “capital asset” and, therefore, falls outside the scope of section 56(2)(vii)(b)(ii) of the Act.
Further, the certificates issued by the Khopoli Nagar Parishad proves that the said agricultural land is situated in the green zone

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governed by Section 32G of Maharashtra Tenancy and Agricultural
Lands Act, 1948, which cannot be commercially exploited.
5.3. Based on the above, I, therefore, hold that the said land, being an agricultural land, has to be excluded from the definition of capital asset under section 2(14) of the Act and consequently the provisions of section 56(2)(vii)(b) of the Act will not be applicable.
5.4. It is further noted from the records placed before this Tribunal that the co-owners were also subjected to scrutiny assessment wherein the Ld. AO has accepted the position as submitted by the assessee before this Tribunal on identical facts and evidences. The assessment order in respect of the other co-owners has been placed on record in support of the submission.
Thus, taking into consideration the totality of the facts of the case, this Tribunal does not find any basis to uphold the addition made by the Ld. AO. Accordingly, the Ld. AO is directed to delete the addition and allow the claim of the assessee.
Accordingly, the ground raised by the assessee stands allowed.
In the result, the appeal filed by the assessee stands allowed.
Order pronounced in the open court on 13/03/2026 (BEENA PILLAI)
Judicial Member
Mumbai
Dated: 13/03/2026

SC Sr. P.S.

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Copy of the order forwarded to:
(1)The Appellant
(2) The Respondent
(3) The CIT
(4) The CIT (Appeals)
(5) The DR, I.T.A.T.By order

(Asstt.