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TMI Blog2024 (9) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... he Collector, as a matter of convenience only so that the assessee could easily use it for non-agriculture purpose, if required, but the land had been purchased as agriculture land and for agriculture purpose only; That therefore, the stamp duty valuation of the land as non-agricultural residential use was always disputed. These facts were brought out before us through the relevant sale deed, and through the contentions made to the authorities below, and which have not been disputed/controverted by the ld.DR also. Therefore, it is evident that the assessee had disputed the stamp duty valuation of the land. In terms of provisions of section 56(2)(x) read with section 50C(2) of the Act, therefore, there is no doubt that the AO ought to have referred the valuation of the property to the AO. We find merit in this contention of assessee. No material difference between the purchase consideration of the property and its fair market value - Since on a valid reference made to the DVO for the valuation of the fair market value of the impugned property/land in terms of provisions of law in this regard, the FMV has been found to be in excess of approximately of Rs.20 lakhs only, i.e within 10% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed on 15.03.2022 by NFAC, Delhi upholding the invocation of the provisions of sec.56(2)(x) and consequential addition of Rs.62,52,900/- towards purchase of immovable property is wholly illegal, unlawful and against the principles of natural justice. 2.1 The Id. NFAC has grievously erred in law and or on facts in upholding the invocation of the provisions of sec.56(2)(x) and consequential addition of Rs.62,52,900/- towards purchase of immovable property. 2.2 That the in the facts and circumstances of the ld. NFAC ought not to have upheld the invocation of the provisions of sec.56(2)(x) and consequential addition of Rs.62,52,900/-towards purchase of immovable property. 3.1 That in the facts and circumstances of the case as well as the law, both the lower authorities ought to have referred the matter to DVO for determination of fair market value as on 29/05/2017 and examine the applicability of sec.56(2)(x) in respect of the valuation so made by DVO. 3. Ground no.1, it was stated to be general, and therefore, is not being adjudicated by us. Ground No.2.1 and 2.2 and 3.1 pertain to the merits of the case, and arguments accordingly were made on the grounds so raised. 4. Brief facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property sold was consistently described as agricultural land, and nowhere mentioned the property as non-agricultural land, and (ii) he drew our attention to the approval granted by the Collector on 15.2.2017 for conversion of the land into non-agriculture land and pointed out that certain conditions were mentioned therein, which were to be fulfilled by the user of the land, subject to which the land would be treated as non-agriculture land. He drew our attention to the judgement of Hon ble jurisdictional High Court in the case of Kishorbhai Harjibhai Patel vs Income Tax Officer (2014) 417 ITR 547 pointing out therefrom that the Hon ble Court had categorically stated that when permission is granted by authorities concerned for sale of agricultural land to non-agriculturist, the land does not cease to be agricultural land merely because of such permission being granted; that if the conditions of the permission are not complied with, the land in respect of which permission was granted would revert to its original character of agricultural land. In this regard, our attention was drawn to para-38 of the order of the Hon ble High Court. 7. Besides it was pointed out that the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade to the seller of the land. The land said to be purchased at the time of entering to bhanakhat was an agricultural land. Subsequently, on 3.5.2017, the assessee executed the sale deed for the purchase of the impugned land for consideration of Rs.2.01 crores. The stamp duty value of the same was Rs.3,32,64,000/- for non-agricultural residential use purpose. The assessee s share in the impugned property was 47.5%. 11. An application for the conversion of the said land from agricultural to non-agricultural land was made by the vendor, which was approved by the District Collector vide his order dated 15.2.2017. Thus, chronology of events is that - on 31.8.2016 the assessee entered into a bhanakhat for purchase of agricultural land; on 15.2.2017 the agricultural land was converted into non- agricultural land vide order of the Collector; on 3.5.2017, the land was ultimately purchased for a consideration of Rs.2.01 crores and stamp duty levied thereon was for the purpose of non-agricultural residential use amounting to Rs.3,32,64,000/-. 12. We shall first deal with the contention of the assessee that he had objected to the stamp duty valuation of the said property at Rs.3.32 crores, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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: 15. It is evident from bare perusal of the above that in terms of provisions of section 56(2)(x) of the Act, wherein any person receives an immovable property for purchase consideration which is less than the stamp duty value the difference is liable to be taxed in his hands subject to the condition that the difference does not exceed Rs.50,000/- or 10% of the consideration whichever is more. The third proviso to the section clearly provides that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter sale. The assessee had contended that the approval for its non-agriculture use had been taken from the Collector, as a matter of convenience only so that the assessee could easily use it for non-agriculture purpose, if required, but the land had been purchased as agriculture land and for agriculture purpose only; That therefore, the stamp duty valuation of the land as non-agricultural residential use was always disputed. These facts were brought out before us through the relevant sale deed, and through the contentions made to the authorities below, and which have not been disputed/controverted by the ld.DR also. Therefore, it is evident that the assessee had disputed the stamp duty valuation of the land. In terms of provisions of section 56(2)(x) read with section 50C(2) of the Act, therefore, there is no doubt that the AO ought to have referred the valuation of the property to the AO. We find merit in this contention of the ld.counsel for the assesse. 18. Going forward from here, the ld.counsel for the assessee has also pointed out to us that in the case of one of the co-purchaser of the property having 5% share in the property, the AO during the assessment proceedings, while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the FMV of the land to be far less than its stamp duty value being Rs.2.23 Crs as opposed to its stamp duty value of Rs.3.32 crs, there is no case with the Revenue for considering the stamp duty value of the land for computing the addition to be made to the income of the assessee in terms of section 56(2)(x) of the Act. At the most, the FMV could be taken for the purpose of determining the excess between the FMV and the purchase consideration, but since the difference is only to the tune of Rs.20 lakhs, which is approximately 10% of the purchase consideration of the property of Rs.2 .01 Crs, it is not a material difference. Therefore, there is no occasion for making any addition in the hands of the assessee for receiving immovable property for consideration which is less than its stamp duty value/FMV for the above reasons. We direct the AO to delete the addition made in the hands of the assessee under section 56(2)(x) of the Act amounting to Rs.62,52,900/-. Ground No.3.1 is allowed 22. Having directed the deletion of addition made for the above reasons, we do not consider it necessary to deal with other arguments of the assessee that the stamp duty valuation of the land ought to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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