MAHESH KATRAGADDA,HYDERABAD vs. DCIT., CENTRAL CIRCLE-1(2), HYDERABAD

Facts

The assessee purchased agricultural land, declaring a consideration lower than the stamp duty value. The Pr. CIT invoked Section 263, directing the AO to reframe the assessment. The AO made an addition under Section 56(2)(x) for the difference between the purchase consideration and stamp duty value.

Held

The Tribunal held that Section 56(2)(x) applies to 'any immovable property' and is wider than the definition of 'capital asset'. The exclusion of rural agricultural land from 'capital asset' under Section 2(14) is not relevant for Section 56(2)(x). The contention regarding the tolerance limit was also rejected.

Key Issues

Whether Section 56(2)(x) is applicable to agricultural land not considered a capital asset and whether the difference between purchase consideration and stamp duty value falls within the tolerance limit.