TMI Blog2020 (7) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... ling in the definition of capital asset, provisions of section 56(2)(vii)(b) cannot be invoked. In the instant case, whether agriculture land so acquired falls in the definition of capital asset or not, one has to refer to the provision of section 2(14) which exclude agriculture land in India subject to certain exceptions. However, there are no findings of the lower authorities in this regard. Therefore, we deem it appropriate to set-aside the matter to the file of the AO for the limited purposes of examining whether the two plots of agricultural land so acquired falls in the definition of capital asset or not. We find that the AO has not appreciated the objection of the assessee regarding adoption of DLC value as against the sale consideration. Therefore, where the assessee has objected to the stamp duty valuation, as per the provisions of section 50C(2) of the Act which are equally relevant for the purpose of provisions of section 56(2)(vii)(b)(ii) of the Act, the matter should have been referred by the Assessing Officer to the DVO for determination of fair market value. Therefore, in the instant case, where it is so determined by the Assessing officer that the agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded that since the purchased land was agricultural, his case was not covered under section 56(2)(vii)(b). However, on a perusal of the section it is seen that there is no express exclusion provided for agricultural land from the section. Hence this argument of the appellant is not found to be acceptable and the same addition made by the AO amounting to ₹ 3,03,596/- as income from other sources is upheld. 4. The ld AR submitted that during the appellate proceedings, it was specifically contended before the CIT(A) that the assessee had purchased two pieces of agriculture land during the year and the agriculture land not being a capital asset, the provisions of section 56(2)(vii)(b) are not applicable. However, the ld CIT(A) has summarily rejected the contention so advanced by the ld AR and has erred in interpreting the provisions of section 56(2)(vii)(b) in right perspective. 5. Referring to the provisions of 56(2)(vii)(b) and the amendment brought in by the Finance Act, 2010, it was submitted as under: The Finance Act, 2010 made the following amendments to section 56: In section 56 of the Income-tax Act, in sub-section (2),- (a) in clause (vii),- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which does not fit in with the description or the avowed purpose. An Explanation may be added to include something within or to exclude something from the ambit of the main enactment or the connotation of some word occurring in it. Even a negative Explanation which excludes certain types of category from the ambit of the enactment may have the effect of showing that the category leaving aside the excepted types is included within it [ITO(First), Salem vs. Short Brothers Pvt. Ltd. AIR 1967 SC 81 p.83] An Explanation, normally, should be so read as to harmonise with and clear up any ambiguity in the main section. 8. It was submitted that in section 56(2), Explanation has been provided to Clause (vii) to explain the meaning and intendment of the Act itself. As the word property has been used in sub-clause (b) and (c) of Clause (vii), and the Explanation is for the purpose of this clause, i.e. for clause (vii), the Explanation removes all doubts, obscurity or vagueness of the main enactment and clarifies the property to be covered in its ambit, so as to make it consistent with the dominant objective, which it seems to sub serve. It provides an additional support to the dominant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ambit of Section 56(2). If we adopt the latter, any kind of immovable property is covered and there is no necessity to go and examine whether such immovable property would fit under the definition of capital asset. 12. It was submitted that as per the rules of interpretation where the language of the Act is clear, the former is more accurate keeping the intent of the legislature in the background. That is to say, the immovable property which is trying to be taxed under Section 56(2) needs to be a capital asset, in view of the fact that the phrase 'property' uses the phrase 'capital asset'. It may also be noted that the phrase 'capital asset' as defined vide Section 2(14) is not only for the purposes of capital gains but for the entire purposes of the Act and hence the immovable property which is not in nature of capital asset is not taxable under Section 56(2). 13. It was accordingly submitted that from the above analysis of Section 56(2)(vii)(b), it is clear that the taxability under this section would arise only when the property purchased is a Capital asset and not otherwise. In this case, the impugned property is not a capital asset as defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other than cash on or before the date of the agreement for the transfer of such immovable property; (c) any property, other than immovable property,- (i) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property; (ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration : Provided that where the stamp duty value of immovable property as referred to in sub-clause (b) 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 sub-clause (b) as they apply for valuation of capital asset under those sections : Provided further that this clause shall not apply to any sum of money or any property received- (a) from any relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 1st day of October, 2009 but before the 1st day of April, 2017, any immoveable property for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration shall be income chargeable to tax under the head Income from other sources . 18. In the instant case, the assessee has purchased two plots of land during the year under consideration. The sale consideration as per the respective sale deeds amounts to ₹ 5,50,000/- and the stamp duty value of such properties as determined by the Stamp duty authority amounts to ₹ 8,53,636/- and therefore, there is difference to the tune of ₹ 3,03,636/- between the sale consideration as per the sale deeds and the stamp valuation determined by the Stamp Valuation Authority. To this extent, the facts are not disputed and have been accepted by both the parties. The limited point of dispute is the nature of immoveable property which has been purchased by the assessee. The assessee s contention is that which he has purchased are two plots of agricultural land and the same doesn t fall in the definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elief should be granted to the assessee. 21. In a scenario, where it is so determined by the Assessing officer that the agricultural land so acquired falls in the definition of capital asset, the provisions of section 56(2)(vii)(b) of the Act would be applicable. In this regard, the contention of the ld AR is that during the course of assessment proceedings, the assessee has objected to the DLC value adopted by the Assessing Officer and therefore before applying the DLC value, the matter should have been referred to the DVO for determination of fair market value. 22. We note that during the course of assessment proceedings, the assessee was issued a show cause as to why the difference of ₹ 3,03,596/- may not be added u/s 56(2)(vii) of the Act. In reply thereof, the assessee has submitted that the assessee purchased the land on 22.04.2013 for a consideration of ₹ 5,50,000/- only and provisions of section 56(2)(vii) are applicable from 01.04.2014, so no addition should not be made in this case. The AO considered the submissions of the assessee but held that provisions of section 56(2)(vii) are applicable from the A.Y 2014-15 and the case of the assessee is squarely ..... X X X X Extracts X X X X X X X X Extracts X X X X
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