Section 56(2)(x)(b) provides for taxation of immovable property received by any person under certain circumstances. These circumstances are:
(A) immovable property received without consideration and the stamp duty value of such property exceeds Rs.50,000. In such circumstances, the stamp duty value of such property is taxable.
(B) immovable property received for a consideration and the stamp duty value of such property exceeds (‘excess amount’) such consideration. The excess amount will be taxable if same is more than the higher of the following amounts, namely:
(i) the amount of Rs.50,000; and
(ii) the amount equal to 5% (10% from AY 2021-22) of the consideration:
Similar provisions were contained in erstwhile section 56(2)(vii)(b), which was applicable upto AY 2016-17.
The term “Property is defined in Explanation (d) section 56(2)(vii). It defines “property” to mean the following capital asset of the assessee, inter alia, include immovable property being land or building or both.
In the context of above provisions, issue has arisen before the Courts as to whether gift of agricultural land is hit by the provisions of section 56(2)(x) or 56(2)(vii). The definition of capital asset u/s. 2(14) of the Act specifically excludes “agricultural land” within its ambit. Since, to qualify as “property” as per Explanation (d), the asset should be “capital asset”, a proper view would be that gift of agricultural land is not hit by the provisions of section 56(2)(x) or 56(2)(vii).
However, Courts have taken contrary views and same are discussed below.
Gift of Agricultural Land not covered
Sh. Prem Chand Jain v ACIT  117 taxmann.com 370/183 ITD 372 (Jaipur – Trib.)– The AO had added the difference between the sale consideration and the stamp duty value of the two agricultural lands purchased by the assessee during the AY 2014-15, by invoking Sec.56(2)(vii)(b). The ITAT observed that the term “property” has been defined to mean capital asset of the assessee namely, immovable property being land or building or both. The ITAT held that the agricultural land, not being a capital asset u/s 2(14) cannot be subject to provisions of Sec.56(2)(vii)(b).
Mubarak Gafur Korabu v. ITO  117 taxmann.com 828 (Pune – Trib.) – The ITAT held that 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. The ITAT also distinguished Trilok Chand case (infra) onthe ground that it had not considered the definition of ‘property’ in Explanation (d) to section 56(2)(vii).
Yogesh Maheshwari v. DCIT  125 taxmann.com 273 (Jaipur – Trib.) – The ITAT held that the agricultural land purchased by assessee was not a capital asset as defined under section 2(14) and therefore, provision of section 56(2)(vii)(b) were not applicable to case of assessee.
ITO v Shri Trilok Chand Sain  101 taxmann.com 391 (Jaipur-Trib.), TS-8-ITAT-2019(JPR)]: Individual Assessee purchased 3 plots of agricultural land for Rs 23 lacs as against the stamp duty value of Rs 1.74 crore. The AO invokes sec 56(2)(vii)(b), makes addition of Rs 1.51 crore and Rs 23 lacs u/s 69 as unexplained investment. CIT(A) deletes addition of 1.51 crore stating its agricultural land and not capital asset u/s 2(14) of the Act.
He further held that the assessee was in the business of sale/purchase of property and the land so purchased was his stock-in-trade and since the stock-in-trade is also excluded from the definition of capital asset, provisions of section 56(2)(vii)(b) of the Act were not applicable. He deleted the addition of Rs. 1,51,06,224 made to the total income of the assessee.
The CIT(A) further reduced addition u/s 69 from 23 lacs to 8.41 lacs u/s 69 after considering the remand report considered.
On appeal by Revenue, the ITAT confirmed the addition of Rs 1.51 core and agrees to Rs 8.41 lacs u/s 69. The ITAT held that Section 56(2)(vii)(b) applies to all immovable properties i.e. Nature of land whether agricultural land or stock in trade is irrelevant in case of differences in consideration amount and stamp duty value.
Comments – Appeal admitted by Rajasthan HC ITA No. 70/2019. However, subsequently withdrawn by Assessee on 14.8.2020.