Section 56(2)(x)(b)

Section 56(2)(x)(b) — the law in short

What the courts have decided on section 56(2)(x)(b), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Clayking Minerals LLP v ITO ITATCuts both waysNo later treatment found
  I bought agricultural land below the jantri rate. Can s.56(2)(x) apply when the land is not even a capital asset?
  Yes on this bench's reasoning, though it never decided whether this land was agricultural at all. Proceeding on an assumption for argument's sake that the land qualified as agricultural, the Tribunal held that s.56(2)(x) speaks of 'any immovable property' and does not exclude agricultural land; the exclusion of rural agricultural land from 'capital asset' in s.2(14) protects the seller's capital gain, not the buyer. On the second point it held that where the buyer disputes the stamp duty value the Assessing Officer has to refer the valuation to the Departmental Valuation Officer, and restored the matter to him for that reference. The addition was not deleted.
• Statutory position — the inadequate-consideration margin in section 56(2)(x)(b): none before AY 2019-20, five per cent from AY 2019-20, ten per cent from AY 2021-22 CBDT Circulars & InstructionsCuts both ways
  The stamp duty value of the flat my client bought exceeds the price by about eight per cent. Is there a tolerance band, and what was it in the year of my assessment?
  There is, but only from AY 2019-20, and its size changed. Item (B) of section 56(2)(x)(b) was substituted by the Finance Act 2018 with effect from 1 April 2019 to charge the excess only where it is more than the higher of Rs 50,000 and five per cent of the consideration, and the word 'five' was substituted by 'ten' by the Finance Act 2020 (Act No. 12 of 2020) with effect from 1 April 2021. For AY 2018-19 and earlier there was no percentage band at all under this clause: any excess over Rs 50,000 was chargeable.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.