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Facts
The assessee's appeal for assessment year 2016-17 arose from an order involving proceedings under section 143(3) of the Income-tax Act, 1961. The lower authorities made an addition of Rs.26.45 lakhs alleging a difference between the actual purchase price and the stamp value of the land.
Held
The Tribunal noted that the addition under section 56(2)(vii) of the Act comes into play only when the assessee receives an immovable property in the nature of a capital asset. As there was no indication that the assessee purchased a capital asset at a price less than its stamp value, the addition was not sustainable.
Key Issues
Whether the addition made under section 56(2)(vii) of the Income-tax Act on account of the difference between the purchase price and stamp duty value of land is sustainable when no capital asset was involved.
Sections Cited
143(3), 56(2)(vii), 2(14)
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Income Tax Appellate Tribunal, AGRA BENCH, “SMC” AGRA
Before: SHRI SATBEER SINGH GODARA & SHRI M. BALAGANESH
This assessee’s appeal for assessment year 2016-17, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/APL/S/250/2024-25/1067528976(1), dated 12.08.2024 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).
Heard both the parties at length. Case file perused.
It emerges during the course of hearing that both the learned lower authorities have made the addition of Rs.26.45 lakhs under section 56(2)(vii) of the Act alleging difference between actual purchase price and stamp value of the land(s) in question. We invited the Revenue’s attention to section 56(2)(vii) Explanation wherein the legislature has defined “property” as the “following capital asset of the assessee”. Meaning thereby that the impugned addition comes into play only when the assessee concerned receives any immovable property in the nature of a capital asset under section 2(14) of the Act.
It is in this factual backdrop that we note that there is no indication in both the learned lower authorities respective orders that the assessee had purchased any capital asset at a price less than the stamp value thereof so as to be exigible to section 56(2)(vii) addition. We thus conclude that given the fact that there is no capital asset involved in the assessee’s land purchased, the impugned addition is not sustainable in law and on facts. The same is directed to be deleted in very terms.
This assessee’s appeal is allowed. Order pronounced in the open court on 7th February, 2025