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The ITAT ruled that when an assessee received a new flat through a registered agreement in exchange for surrendering their old flat in a redevelopment project, this transaction does not fall within the purview of section 56(2)(x). The Tribunal determined this was a case of extinguishment of the old property with acquisition of a new one, rather than receipt of immovable property for inadequate consideration. The ITAT noted that the transaction might instead attract capital gains provisions, potentially qualifying for section 54 deduction, which would eliminate tax liability. The assessment made by tax authorities under section 56(2)(x) was deemed legally incorrect, and the ruling favored the assessee.
The ITAT ruled that when an assessee received a new flat through a registered agreement in exchange for surrendering their old flat in a redevelopment project, this transaction does not fall within the purview of section 56(2)(x). The Tribunal determined this was a case of extinguishment of the old property with acquisition of a new one, rather than receipt of immovable property for inadequate consideration. The ITAT noted that the transaction might instead attract capital gains provisions, potentially qualifying for section 54 deduction, which would eliminate tax liability. The assessment made by tax authorities under section 56(2)(x) was deemed legally incorrect, and the ruling favored the assessee.
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