2024 (6) TMI 688 - AT - Income Tax

Addition u/s 56(2)(x) - property was agricultural land - difference between the consideration paid on acquisition of an immovable property and the stamp duty value of the said property - As submitted assessee has purchased agricultural land which is not capital asset as per section 2(14) and being agricultural land deeming provision of section 56(2)(x) will not apply - HELD THAT - As per the information available on record, it is clear that assessee has purchased agricultural land of 23 bighas at Village - Prathvipur, Tehsil - Jalalabad, Distt - Shajahnpur. However, the stamp duty value was determined at Rs. 44.54 lacs and further assessee also filed a letter from Tehsildar in the hand written form with Tehsil of Jalalabad, Dist Shajahanpur. Since, Tehsildar had issued the relevant certificate with his signature and stamp, even though, it is in written form, the Ld. CIT(A) should not have rejected the same. In our considered view the assessee has submitted the relevant information which shows that assessee has purchased the agricultural land at Jalalabad. Since, the assessee has purchased agricultural land the same is outside the definition of capital asset, therefore, the deeming provision u/s 56(2)(x) cannot be invoked in this case. Accordingly, the addition made by the Assessing Officer is accordingly deleted. Appeal filed by the assessee is allowed.

Summary

Issues Involved:
The appeal against the order of the Learned Commissioner of Income Tax (Appeals) regarding the addition of Rs. 24,54,000 under section 56(2)(x) of the Act due to the difference between the consideration paid on acquisition of an immovable property and the stamp duty value.

Facts of the Case:
The assessee filed its return of income declaring total income of Rs. 2,98,290. The case was selected for limited scrutiny assessment due to discrepancies in the purchase value of a property compared to the stamp value. Notices u/s 143(2) and 142(1) were issued to verify the same. The Assessing Officer observed a difference in the purchase value and stamp value of the property, leading to an addition of Rs. 24,54,000 as income through other sources under section 56(2)(x) of the Act.

Assessee's Submission and Assessment:
The assessee claimed the purchased land was agricultural and situated outside the Municipal Area. Despite submitting details and a letter from the Tehsildar, the Assessing Officer proceeded with the addition. The assessee appealed before NFAC Delhi, providing detailed submissions. The Ld. CIT(A) dismissed the appeal, citing non-fulfillment of conditions under Section 56(2)(x) and referring to a relevant court decision.

Grounds of Appeal:
The assessee contended that the addition under section 56(2)(x) was unjustified as the property was agricultural land and the transaction was at Arms Length Price without any related party involvement.

Appellate Tribunal's Decision:
After considering submissions and evidence, the Tribunal found that the purchased land was indeed agricultural and outside the definition of a capital asset. The relevant information provided by the assessee, including the letter from the Tehsildar, supported this claim. As a result, the deeming provision u/s 56(2)(x) could not be applied, and the addition made by the Assessing Officer was deleted. The appeal filed by the assessee was allowed.

Conclusion:
The Appellate Tribunal ITAT Delhi ruled in favor of the assessee, allowing the appeal and deleting the addition made under section 56(2)(x) of the Act.