Agricultural land not covered under ambit of Sec.56(2)(vii)(b) if it is not capital assets u/s 2(14)

Agricultural land purchased by assessee was not governed by provisions of section 56(2)(vii)(b) since said land was not capital asset as per section 2(14) and hence, no addition could be made in hands of assessee

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IN THE ITAT PUNE BENCH 'SMC'

Mubarak Gafur Korabu Vs. Income Tax Officer

Section 56, read with section 2(14) of the Income-tax Act, 1961 - Income from other sources - Chargeable as (Agricultural land) - Assessment year 2015-16 - During year under consideration, assessee made investment in immovable property - Assessing Officer on ground that section 56(2) states any immovable property and did not make any distinction between agricultural or non-agricultural property, treated difference between stamp duty value and actual consideration as income under section 56(2)(vii)(b)(ii) and added same under head 'Income from other sources' - It was noted that assessee purchased agricultural asset which was held as 'current asset' by assessee and when same was sold, business income was declared on said transaction - Further, land held by assessee was agricultural land which was not capital asset as clearly defined under section 2(14) which excluded agricultural land out of definition of 'capital asset' - Whether, in view of aforesaid, said agricultural land purchased by assessee was not governed by provisions of section 56(2)(vii)(b) and, hence, no addition could be made in hands of assessee

Held, yes [Paras 9 and 10] [In favour of assessee]