Agricultural land which is gifted cannot be taxed as income from other sources

RELEVANT PARAGRAPH

2. We have heard the parties. The brief facts of the case are that the assessee received 33.7 bigha of agriculture land from Smt. Navita Gupta, wife of Shri Ravi Kumar Gupta of Jaipur . The rights on this land were relinquished by Smt. Gupta without any consideration and the same was registered on 25-10-2004 witlj the Sub-Registrar who valued the land i atRs.40,80,380/ – for valuation of stamp duty. The land was not shown in the .balance sheet by the assessee and the reason given was that as the land was received as a capital asset on relinquishment of rights, the same was not shown in the balance sheet. It was stated that Sh. Ravi Kumnr Gupta, husband of the donor is a close friend of Sh.Kushal Chand Bader, father of the assessee. Sh. Ravi Kumar Gupta and Shri Kushal Chand Bader is director in M/s. Arihant Jewels Limited. As the relinquishment of right the agriculture land by Smt Navita Gupta was considered as a gift, the AO applied provisions of section 56(2)(v). The section is reproduced below:-

“Where any sum of money exceeding twenty five thousand rupees is received without consideration by an individual or a HUF from any person on or after 1/9/2004, the whole of such sum will be considered as income from other source. “

The AO interpreted the word “money” by taking support from Oxford Advanced Learner’s Dictionary and held that the word “sum of money” as given in section 56 could not be restricted to hard cash and it should be read in a broader sense because if it was restricted to hard cash the purpose of legislation would to be defeated.” the Act with these findings applied provisions of section 56(2)(v) and value of Rs.40,80,380/ – was treated as income from other source. The AO also held the gill received by the assessee as non-genuine and for this he gave his finding which is summarized below:-

(i) There is no relationship between the donor and donee as both asp from different caste or religion.

Please become a Premium member. If you are already a Premium member, login here to access the full content.