Applicability of Section 56(2)(x) of the Income Tax Act to the ...

Transfer of tenancy rights not taxed but purchase of additional area beyond tenancy is taxable if consideration differs from stamp duty value. (2)(x.

Case Laws     Income Tax

November 11, 2024

Applicability of Section 56(2)(x) of the Income Tax Act to the transfer or surrender of tenancy rights. It states that Section 56(2)(x) is a deeming provision akin to Section 50C, with the former applicable to buyers and the latter to sellers of immovable property. The decisions rendered in the context of Section 50C are applicable to Section 56(2)(x). The transfer of "tenancy rights" has been held to be outside the scope of Section 50C, and following the same reasoning, the provisions of Section 56(2)(x) will not apply to the transfer of tenancy rights. However, in the present case, the assessee purchased additional area beyond the tenancy rights, and the provisions of Section 56(2)(x) will apply to the additional purchase. The difference between the actual consideration and stamp duty valuation for the additional area was less than 10%, and as per the amended tolerance limit, no addition u/s 56(2)(x) is required.

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