Vikas Agarwal Vs ITO (ITAT Delhi)
The Delhi Bench ‘A’ of the ITAT allowed the assessee’s appeal for AY 2014-15 and deleted the addition of ₹59,32,667 made under section 56(2)(vii)(b) on account of alleged undervaluation of immovable property.
The assessee had jointly purchased agricultural land for ₹11 lakh, whereas the stamp duty value was ₹1.88 crore. The Assessing Officer invoked section 56(2)(vii)(b) and taxed the differential value. The CIT(A) upheld the addition, holding that section 56(2)(vii)(b) applies to “any immovable property,” including agricultural land.
The Tribunal disagreed. It held that Explanation (d) to section 56(2)(vii)(b) restricts “property” to a capital asset. Since rural agricultural land is expressly excluded from the definition of “capital asset” under section 2(14)(iii), it falls outside the ambit of section 56(2)(vii)(b).
On facts, the assessee produced credible evidence—Tehsildar’s certificate and Census data—showing that the land was located beyond 6 km from municipal limits and the town population was below 10 lakh, squarely qualifying it as rural agricultural land. The Tribunal followed coordinate bench decisions holding that deeming provisions under section 56 cannot be applied to assets excluded from section 2(14).
Accordingly, the ITAT deleted the entire addition and allowed the appeal.
FULL TEXT OF THE ORDER OF ITAT DELHI
