Case Law Details
Vinay Indersing Dhupia Vs ITO (ITAT Surat)
The Surat ITAT held that section 56(2)(x) applies to “any immovable property”, and therefore even agricultural land falls within its ambit. The assessee had argued that the land purchased was agricultural land and not a “capital asset”, and hence outside the scope of section 56(2)(x). Rejecting the contention, the Tribunal clarified that the concept of “capital asset” is relevant in the seller’s hands for capital gains taxation, but not in the buyer’s hands for section 56(2)(x).
The assessee had purchased agricultural land along with co-owners at a value substantially lower than the stamp duty valuation. Though the AO initially proposed addition based on stamp duty value, he accepted the assessee’s alternate plea to adopt the lower valuation determined by the DVO in a co-owner’s case. The addition was accordingly restricted to the difference between the DVO value and the actual purchase consideration.
The Tribunal further observed that once the assessee himself relied on the DVO’s report for relief from the higher stamp duty valuation, he could not later challenge the same DVO report as incorrect. Finding no infirmity in the DVO-based computation, the ITAT upheld the addition under section 56(2)(x) and dismissed the appeal.
AUTHOR’S VIEW
It is respectfully submitted that the reasoning given by the Tribunal, in humble opinion of the author, appears to be incorrect.
Sec 56(2)(x) was introduced vide Finance Act 2017 & was applicable for AY 2018-19 onwards while the erstwhile provisions was Sec 56(2)(vii). Definition of property was initially introduced in Sec 56(2)(vii) by Finance Act, 2009 w.e.f 01.10.2009 which defined as under:
(d) property means
(i) immovable property being land or building or both;
—–
—–
(ix) bullion
It is noteworthy that vide Finance Act, 2010 the above definition of ‘property’ was amended and for the words ‘property means’ the words ‘property means the following capital asset of the assessee, namely:-’ were replaced with retrospective effect from 01.10.2009.
Thus, after amendment vide Finance Act, 2010, the definition of property u/s. 56(2)(vii) of the Act reads as under:
“(d) “property” means the following capital asset of the assessee, namely:—
(i) immovable property being land or building or both
—-
(ix) bullion”
Thus, in view of the above amendment in the definition of ‘property’, wherein the word ‘capital asset’ has been specifically introduced in order to keep any asset which is not a capital asset out of the ambit of Section 56(2).
FULL TEXT OF THE ORDER OF ITAT SURAT
This appeal is filed by the assessee against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 25.07.2025 for the Assessment Year (A.Y.) 2020-21 in the proceeding u/s 143(3) r.w.s. 144B of the Income Tax Act.
2. The brief facts of the case are that the assessee had filed his return of income for A.Y. 2020-21 on 13.01.2021 declaring total income of Rs.18,49,380/-. The case was selected for limited scrutiny under CASS to verify the purchase value of the property under the provision of section 56(2)(x) of the Act. In the course of assessment, the AO noticed that the assessee had purchased an agricultural land located at Block No. 329, at Village Vejalpore, Navsari along with three other persons and the purchase consideration contributed by the assessee @ 25% was Rs.4,65,252/-. However, the stamp duty value of the land was Rs.1,60,80,000/-. Accordingly, the AO had proposed to treat the proportionate stamp duty value as the purchase consideration and show caused the assessee as to why addition u/s. 56(2)(x) of the Act shouldn’t be made. The assessee had contended before the AO that the land purchased was an agricultural land and not covered under the definition of capital asset. As an alternate submission, the assessee had submitted that the matter was referred to the DVO in the case of another co-owner Shri Mahavir Prasad S Jain and the DVO had determined the value of the property at Rs.75,25,400/- as against jantri value of Rs.1,60,80,000/-determined by stamp duty valuation authority. The assessee had, therefore, requested to adopt the value determined by the DVO. The AO had accepted the alternate plea of the assessee and considered the value determined by the DVO at Rs. 75,45,400/- and proportionate purchase consideration in the hands of the assessee was worked out at Rs.18,81,350/-. As the assessee had disclosed purchase consideration of Rs.4,65,252/- only, the difference of Rs.14,16,098/- was considered as income of the assessee under the provision of section 56(2)(x) of the Act. The assessment was completed u/s 143(3) r.w.s. 144B of the Act on 6/09/2022 at total income of Rs.32,65,478/-.
3. Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed. Th
4. Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:
1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A has erred in confirming the action of Assessing Officer in making addition of Rs. 14,16,098/- u/s. 56(2)(x) of the I.T. Act 1961.
2. It is therefore prayed that the above addition made by the assessing officer and confirmed by the learned CIT(A) may please be deleted.
3. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.
5. Shri Rasesh Shah, the Ld. AR of the assessee submitted that the status of the land as on date of transfer was agricultural land, which was not converted into non-agricultural land as on date of execution of sale deed. He explained that the assessee and the 3 other co-owners were not agriculturalists and, therefore, they could not directly purchase the said agricultural land from the seller unless permission was granted u/s. 63 of the Bombay Tenancy and Agricultural Act. As per the provision of said Act, the assessee and the co-owners were required to pay stamp duty as per the valuation of land determined by stamp duty authority as non-agricultural land and the land was required to be converted into non-agricultural land within six months from the date of execution of sale deed. The Ld. AR submitted that in view of the facts and circumstances as discussed above, the land purchased by the assessee was an agricultural land only, which was not a capital asset. Therefore, the provision of section 56(2)(x) of the Act was not applicable in the present case. In this regard, he relied upon the following decisions.
i. ITO Vs. Trilok Chand Sain [101 com391 (Jaipur – Trib.)
ii. Mubarak Gafur Korabu Vs. ITO[117 com828 (Pune-Trib.)
iii. ITO Vs. Urmila Bharatbhushan Agarwal – ITA 417/Ahd/2023 (Ahd. Trib.)
iv. Vithalbhai Kadvabhai korat Vs. ITO, Ward-3(3)(5), Surat [ITA No. 339/Srt/2018 dated 27.11.2020
v. Shri Sanjay B. Chovatia Vs. ITO, Ward-3(3)(4), Surat [ITA No. 780/Srt/2018] dated 22.03.2022
The Ld. AR further submitted that the valuation done by the DVO was not proper and one of the sale instance considered by him was that of non-agricultural land. He, therefore, requested that the matter may be set aside to consider the objection of the assessee on the Valuer’s report.
6. Per contra, Shri Ajay Uke, the Ld. SR-DR submitted that the provision of section 56(2)(x) of the Act is applicable in respect of transaction of any immovable property. Therefore, whether the land purchased by the assessee was agricultural or non-agricultural, had no bearing as the property purchased was certainly an immovable asset. The Ld. Sr. DR submitted that since the purchase made by the assessee was at a price much less than the stamp duty value of the property, the AO had rightly made the addition under the provision of section 56(2)(x) of the Act. Regarding the valuation report, the Ld. AR submitted that that the report of the DVO in the case of co-owner was relied upon by the assessee himself. Further the objection raised by the co-owner was also duly considered by the DVO in his report. He, therefore, strongly supported the order of the lower authorities on this issue.
7. We have considered the rival submissions. The precise issue before us is whether the provision of section 56(2)(x) of the Act, was rightly invoked by the AO in the present case. It will be relevant to reproduce the provision of section 56(2)(x) of the Act, which is as under:
(2) In particular, and without prejudice to the generality of the provisions of sub-section (1), the following incomes, shall be chargeable to income-tax under the head “Income from other sources”, namely :—
…………………
(x) where any person receives, in any previous year, from any person or persons on or after the 1st day of April, 2017,—
(a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;
(b) any immovable property,—
(A) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;
(B) for a consideration, the stamp duty value of such property as exceeds such consideration, if the amount of such excess is more than the higher of the following amounts, namely:—
(i) the amount of fifty thousand rupees; and
(ii) the amount equal to ten per cent of the consideration:
Provided that where the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of agreement may be taken for the purposes of this sub-clause :
Provided further that the provisions of the first proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed, on or before the date of agreement for transfer of such immovable property:
Provided also that where the stamp duty value of immovable property is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub-section (15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of this sub-clause as they apply for valuation of capital asset under those sections:
Provided also that in case of property being referred to in the second proviso to sub-section (1) of section 43CA, the provisions of sub-item (ii) of item (B) shall have effect as if for the words “ten per cent”, the words “twenty per cent” had been substituted;
8. On aplain reading, it is seen that section 56(2)(x) of the Act, mentions the term “any immovable property”. There is no dispute to the fact that the property purchased by the assessee, even if it was an agricultural land, was an immovable property. Thus, the transaction was squarely covered under the ambit of section 56(2)(x) of the Act. The contention of the assessee that the agricultural land purchased by him was not a ‘capital asset’ is not at all relevant. The section 56(2)(x) of the Act does not use the word capital asset. The examination of fact as to whether the agricultural land was capital asset or not, will be relevant in the hand of the seller, in order to determine whether the sale transaction was exigible to capital gains tax. In the hand of the buyer this issue is not at all relevant. The land acquired by the assessee, whether agricultural or non-agricultural, was certainly an immovable asset. Thus, the provision of section 56(2)(x) of the Act is found to be squarely applicable in the present case.
9. The case laws relied upon by the assessee are found to be in connection with old provisions and pertain to section 56(2)(vii)(b) of the Act. Rather in the case of Trmlok Chand Samn (supra) relied upon by the assessee, the Co-ordinate bench of Jaipur Tribunal had held that provision of section 56(2)(vii)(b) refer to any immovable property and the same is not circumscribed or limited to any particular nature of property. It was categorically held that the agricultural land falls under the definition of an immovable property and it was immaterial whether they fall under the definition of capital asset or stock-in-trade. The Co-ordinate bench of Ahmedabad Tribunal in the case of Clayking Minerals LLP [174 taxmann.com 1111 (Ahd)] has held that going by the plain words of section 56(2)(x) of the Act, which uses the term immovable property, agricultural land cannot be taken out of purview of section 56(2)(x) of the Act. Respectfully following these decisions and also considering the provisions of the Act, we hold that the AO had rightly invoked the provision of section 56(2)(x) of the Act in the present case.
10. The AO had proposed to make the addition for the difference between purchase consideration paid by the assessee and the stamp duty value of the property. The assessee had taken a plea before the AO that the property acquired by the assessee was referred to the DVO in the case of co-owner Shri Mahavir Prasad S Jain and the DVO had determined the value of the property at Rs.75,25,400/- only. Accordingly, a request was made to consider the valuation of the DVO for making the addition u/s. 56(2)(x) of the Act. In fact, the proviso to section 56(2)(x) of the Act stipulated that where the stamp duty value is disputed, the AO can make a reference to the DVO for determining the fair market value of the property. The AO in all fairness had accepted the alternate contention of the assessee and worked out the addition of Rs.14,16,098/- on the basis of DVO’s report. From the copy of DVO report brought on record in the paper-book, it is found that the DVO had considered the objection of the co-owner and thereafter determined the value of the property. Once having taken a plea that the DVO’s report in the case of co-owner should be considered in accordance with the 3rdproviso of section 56(2)(x) of the Act, the assessee cannot take a plea now that the report of the DVO was wrong. Since the objection of the co-owner was duly considered by the DVO, we do not find any merit in the contention of the assessee to set aside the matter for determination of FMV by the DVO afresh. Accordingly, the addition of Rs.14,16,098/- made on the basis of the difference between the DVO’s report and the purchase consideration, is upheld. The ground taken by the assessee is dismissed.
11. In the result, the appeal of the assessee is dismissed.
Order pronounced in the Court on 13/05/2026 at Ahmedabad.
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