Section 56(2)(vii)(b) – Agricultural land falls within the definition of immovable property and covered within the scope of section 56(2)(vii)(b) irrespective of whether the same falls within the definition of capital asset u/s. 2(14) of the Act or otherwise.

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31.  [2019] 101 taxmann.com 391 (Jaipur-Trib.) ITO vs.
Trilok Chand Sain ITA No.:
499/Jp./2018 A.Y.:
2014-15 Dated: 7^th January, 2019

Section 56(2)(vii)(b) – Agricultural land
falls within the definition of immovable property and covered within the scope
of section 56(2)(vii)(b) irrespective of whether the same falls within the
definition of capital asset u/s. 2(14) of the Act or otherwise.

FACTS

The assessee, an individual, purchased three
plots of land and claimed that the said plots of land did not fall within the
definition of capital asset as per section 2(14) of the Income-tax Act, 1961
(“the Act”). The Assessing Officer (AO) invoked provisions of section
56(2)(vii)(b) of the Act and made addition of Rs. 1,51,06,224 being the difference
between the sale consideration as per the sale deed and the value determined by
the stamp valuation authority.

Aggrieved, the assessee preferred an appeal
to the CIT(A). The CIT(A) held that land in question being agricultural land is
not a capital asset and the said transaction of purchase of land did not
attract the provisions of section 56(2)(vii)(b) of the Act. He further held
that the assessee was in the business of sale/purchase of property and the land
so purchased was his stock-in-trade and since the stock-in-trade is also
excluded from the definition of capital asset, provisions of section
56(2)(vii)(b) of the Act were not applicable. He deleted the addition of Rs.
1,51,06,224 made to the total income of the assessee.

Aggrieved, the Revenue preferred an appeal
to the Tribunal.

HELD

Section 56(2)(vii)(b) refers to any
immovable property and the same is not limited to any particular nature of
immovable property. The Tribunal also held that the section refers to
`immovable property’ which by its grammatical meaning would mean all and any
property which is immovable in nature i.e. attached to or forming part of earth
surface. The issue as to whether such agricultural land falls in the definition
of capital asset u/s. 2(14) or whether such agricultural land is part of
stock-in-trade could not be read into the definition of any immovable property
used in the context of section 56(2)(vii)(b) of the Act and is therefore not
relevant.

The appeal filed by the Revenue was
dismissed by the Tribunal.