Question And Answer
Subject: Applicablity of Section 56(2)(vii)(b) on purchase of rural agricultural land -A.Y.2014-15
Querist: SURENDRA MEHTA, Advocate
Answered by:
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Date: November 12, 2021
Query asked by SURENDRA MEHTA, Advocate

Rural agricultural land purchased as per documents at Rs. 9,00,000/- and DLC rate was 37,00,000/- (Local stamp duty rate). AO made addition of this difference u/s 56(2)(vii)(b). whether AO’s action is correct when rutal agricultural agricultural land is not subject to capital gain in thehands of saller. Kindly quote case laws on the subject.

Smilar situation is in the A.Y. 2015-16,2016-17 and 2017-18. Kinly guide.

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Answer given by

In Premchand Jain v.ACIT ( 2020) 183 ITD 372 ( Jaipur ) ( Trib) dealing with section 56(2) (vii) (b ) of the Act has held that if the agricultural land does not fall in definition of capital asset , difference between district level value and sales consideration cannot be brought to tax . The same principle will apply.

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