ACIT Vs Chandiwala Enterprises Private Limited (ITAT Mumbai)
ITAT Mumbai held that provisions of section 56(2)(x) of the Income Tax Act doesn’t apply to developer who has taken over the possession of lawn or building or both for the purpose of the development.
Facts-
The assessee is engaged in construction work. Return of income was filed on 14/12/2020, declaring Nil income showing current year loss of Rs.6,37,018/-. The return was selected for CASS and accordingly statutory notices were issued and served upon the assessee.
The AO was in possession of the information that the assessee has purchased two immovable properties at Ambivali village and Wshiwara village in Andheri, Mumbai for the purchases value of Rs.13,81,87,000/- and Rs.32,950/- whereas the stamp duty value of the properties are Rs.80,35,63,000/- and Rs.5,81,96,200/- respectively. The AO sought to add the difference in the stamp duty value and actual purchase value as income from other sources in the hands of the assessee u/s 56(2)(x) of the Act.
Conclusion-
Section 50C of the Act applies to the seller whereas Section 56(2)(x) applies of the buyer. Accordingly, immovable property is restricted only to land or building or both but not applicable to a developer who has taken over the possession of lawn or building or both for the purpose of the development in terms of the relevant development agreement or MOU for development of a property.
