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Query Answer
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Sir

Our assessee purchase rural agricultural land below the value of Sec 50C.

Whether difference between values under sec 50C. and purchase price taxable under Section 56(2)(viib)

In my opinion as per explanation D of  Section 56(2)(viib), not applicable in case of rural agricultural land (not a capital assets)

Please guide me. 

Reply

As per section 56(2)(vii)(b) any immovable property purchased whose actual cost is less than stamp value by amount exceeding Rs. 50,000/- is brought to tax in hands of purchaser. This section uses the term "any immovable property" and it has neither differentiated it into capital and non-capital asset nor has defined the term "immovable property" by way of any explanation. Definition of "property" given in explanation is related to clause (c) of sec 56(2)(vii). As a result, when a rural agricultural land is sold for less than stamp value there is no taxation for difference in stamp value and actual consideration in hands of seller, however this difference is chargeable to tax in hands of purchaser.

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