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Issues: Whether the addition made under section 56(2)(vii)(b) on account of difference between the declared purchase price and the stamp duty valuation of agricultural land was sustainable when the land was claimed to be rural agricultural land and, therefore, not a capital asset.
Analysis: The assessee purchased land described in the sale deed as agricultural land. The record showed that the land was situated beyond the municipal limits and was treated as agricultural land. The addition was made only because the stamp valuation exceeded the consideration shown. The governing principle applied was that section 56(2)(vii)(b) operates in relation to property which falls within the statutory definition of capital asset, and agricultural land excluded from the definition of capital asset under section 2(14) does not attract that provision. Following the coordinate bench view that rural agricultural land is outside the ambit of section 56(2)(vii)(b), the lower authorities' approach could not be sustained.
Conclusion: The addition under section 56(2)(vii)(b) was not tenable and the assessee succeeded on this issue.
Ratio Decidendi: Rural agricultural land excluded from the definition of capital asset does not fall within the mischief of section 56(2)(vii)(b) for taxing the difference between declared consideration and stamp duty value.
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