Applicability Of Section 56(2)(X) To Receipt Of Rural Agricultural Land

ISSUE FOR CONSIDERATION

Section 56(2)(x) provides for the taxability of certain receipts, which inter alia include the receipt of any immovable property as well as receipt of any other property, either without consideration or for a consideration which is less than its stamp duty value. Earlier, a similar provision was contained in section 56(2)(vii). For this purpose, the term ‘property’ is defined in clause (d) of the Explanation to section 56(2)(vii) as the capital asset of the assessee as specified therein, which, inter alia, includes immovable property, being land or building or both.

The issue has arisen as to whether the receipt of agricultural land, which does not fall within the definition of the term ‘capital asset’ under section 2(14), is covered within the ambit of section 56(2)(x) or not. The Jaipur bench of the tribunal has held that in order to apply the provisions of section 56(2)(x) to agricultural land, it must fall within the definition of “capital asset”. As against this, the Ahmedabad bench of the tribunal has held that all types of immovable property would get covered within the ambit of section 56(2)(x), irrespective of whether it falls within the definition of capital asset or not.

PREM CHAND JAIN’S CASE

The issue had earlier co