COMMERCIAL DEVELOPMENT CORPORATION,MUMBAI V. INCOME TAX OFFICER WARD 24(1)(1), MUMBAI

ITA 3755/MUM/2024

AI Insights

The case involves cross-appeals by the Commercial Development Corporation and the Income Tax Officer, concerning the assessment year 2018-19. The primary issue was the valuation of a property for tax purposes, where the assessee argued that the property should be considered as stock-in-trade and not subjected to the provisions of Section 56(2)(x) of the Income Tax Act, 1961. The Tribunal examined whether the property, purchased in 1978 and treated as stock-in-trade, should be valued at the stamp duty value or the agreement value. The Tribunal referenced decisions from other benches and noted that the property was treated as stock-in-trade in the assessee's financial statements and previous assessments.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 474465 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 30-09-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 26-07-2024
• Other Referred Cases: Satendra Kaushik v. ITO, Mubarak Gafur Korabu v. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R.A. DHYANI
• Assessee Lawyers: . K. SHIVRAM
• Keywords: Set aside; Capital asset; Sale consideration of property below Jantri Value; Rejection of books of accounts; Income from undisclosed sources
• Section: 56

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “C” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER) ITA No. 3755/MUM/2024 Assessment Year: 2018-19 Commercial Development Corporation, 703, Hariom Chambers, B-16, Veera Ind. Estate Off Link Road, Andheri (W), Mumbai-400053. Vs. NFAC/ITO Ward 24(1)(1), Piramal Chambers, 6th floor, Lalbaug, Parel, Mumbai-400012. PAN NO. AAAFC 7020 J Appellant Respondent ITA No. 3791/MUM/2024 Assessment Year: 2018-19 Income Tax Officer, Room No. 604, 6th floor, Piramal Chambers, Lalbaug, Parel, Mumbai-400012. Vs. Commercial Development Corporation, 703, Hariom Chambers, B-16, Veera Ind. Estate Off Link Road, Andheri (W), Mumbai-400053. PAN NO. AAAFC 7020 J Appellant Respondent Assessee by : Mr. Dr. K. Shivram Revenue by : Mr. R.A. Dhyani, CIT-DR Date of Hearing : 30/09/2024 Date of pronouncement : 28/10/2024 PER OM PRAKASH KANT, AM These cross-appeals by directed against order dated 31.05.2024 passed by the Ld. Commissioner of Income Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2018 19. 2. The grounds raised by the R 1. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in considering market value of the property, viz Plot at CTS No. 565 & 566, Newatia Road Malad (W) as on sale agreement date 15.03.1978 Act, when registration/conveyance of sale deed has been done on 23.03.2018 2 (b) Whether on the facts of the case and in law, the Ld. CIT (A) has erred in directing the AO to consider the valuation o 15.03.1978 determined by the district valuation officer, for application of provisions of section 56(2)(x) of the Act, when the facts of payment of amount of consideration for purchase of property is through account payee cheque or account clearing system through bank account on or before the date of agreement for transfer of immovable property has not been established either during the assessment proceeding or the appellate proceedings. 2.1 The grounds raised by the assessee in ITA No. 3755/Mum/2024 are reproduced as under: 1. (a). The Ld. CIT( Appeal)/The National Faceless Appeal Centre( 'NFAC') has erred in not treating the 'Captioned Property' as Stock in trade, not subject to provision of Section 1961. Commercial Development ITA Nos. 3755 & 3791/MUM/2024 ORDER PER OM PRAKASH KANT, AM appeals by the assessee and the Revenue are directed against order dated 31.05.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2018 The grounds raised by the Revenue are reproduced as under: Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in considering market value of the property, viz Plot at CTS No. 565 & 566, Newatia Road Malad (W) as on sale agreement date 15.03.1978 for application of provisions of section 56(2)(x) of the Act, when registration/conveyance of sale deed has been done on (b) Whether on the facts of the case and in law, the Ld. CIT (A) has erred in directing the AO to consider the valuation of property as on 15.03.1978 determined by the district valuation officer, for application of provisions of section 56(2)(x) of the Act, when the facts of payment of amount of consideration for purchase of property is through account payee cheque or account payee bank draft or by use of electronic clearing system through bank account on or before the date of agreement for transfer of immovable property has not been established either during the assessment proceeding or the appellate nds raised by the assessee in ITA No. 3755/Mum/2024 are reproduced as under: (a). The Ld. CIT( Appeal)/The National Faceless Appeal Centre( 'NFAC') has erred in not treating the 'Captioned Property' as Stock in trade, not subject to provision of Section 56(2)(x) of the Income tax Act, Commercial Development Corporation 2 Nos. 3755 & 3791/MUM/2024 the assessee and the Revenue are directed against order dated 31.05.2024 passed by the Ld. National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2018- evenue are reproduced as under: Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in considering market value of the property, viz Plot at CTS No. 565 & 566, Newatia Road Malad (W) as on sale agreement for application of provisions of section 56(2)(x) of the Act, when registration/conveyance of sale deed has been done on (b) Whether on the facts of the case and in law, the Ld. CIT (A) has f property as on 15.03.1978 determined by the district valuation officer, for application of provisions of section 56(2)(x) of the Act, when the facts of payment of amount of consideration for purchase of property is through account payee bank draft or by use of electronic clearing system through bank account on or before the date of agreement for transfer of immovable property has not been established either during the assessment proceeding or the appellate nds raised by the assessee in ITA No. (a). The Ld. CIT( Appeal)/The National Faceless Appeal Centre( 'NFAC') has erred in not treating the 'Captioned Property' as Stock in 56(2)(x) of the Income tax Act, b) Your appellant prays that, on the facts and circumstances of the case, the Assessing Officer may be directed to consider the 'Captioned Property' as Stock in Trade, not subject to provisions of Section 56(2)(x) of the Income tax Act, 1961, and thereby no addition to income on this ground is warranted 2. (a) The Ld. CIT( Appeal)/The National Faceless Appeal Centre( 'NFAC') has erred in sustaining addition of Rs.8,79,263/ Value determined by DVO as value to Value' on the date of Agreements, even though as per applicable Law on levy of Stamp duty, the concept of Levy of duty on market rate / reckoner rate is not in existence as on date of Agreement i.e 14 1978. b) Your appellant case, the Assessing Value as 'Stamp Duty Value' as on date of Agreements and thereby delete the addition made under section 56(2)(x) of the Act. 3. Briefly stated, facts of the case are that the assessee partnership firm, was engaged in the business of real estate development. For the year under consideration, the assessee filed return of income on 25.06.2018 declaring total income at Rs.8,18,890/-. The retur selected for limited scrutiny for verification of the fact that purchase value of the property recorded in the sale consideration was less than the value as per the stamp duty value authorities. The statutory notices under the Act were issued and complied by the assessee. In the course of the assessment proceedings, it was noticed that assessee firm had purchased land along with tenants and dwelling house standing thereon vide two agreements each dated 15.03.1978 for a building and Rs.3,25,000/ of the land is still occupied by unauthorized hutments which are Commercial Development ITA Nos. 3755 & 3791/MUM/2024 b) Your appellant prays that, on the facts and circumstances of the case, the Assessing Officer may be directed to consider the 'Captioned Property' as Stock in Trade, not subject to provisions of Section 56(2)(x) the Income tax Act, 1961, and thereby no addition to income on this ground is warranted (a) The Ld. CIT( Appeal)/The National Faceless Appeal Centre( 'NFAC') has erred in sustaining addition of Rs.8,79,263/- Value determined by DVO as value to be considered as 'Stamp Duty Value' on the date of Agreements, even though as per applicable Law on levy of Stamp duty, the concept of Levy of duty on market rate / reckoner rate is not in existence as on date of Agreement i.e 14 b) Your appellant prays that, on the facts and circumstances of the case, the Assessing Officer may be directed to consider Agreement Value as 'Stamp Duty Value' as on date of Agreements and thereby delete the addition made under section 56(2)(x) of the Act. ted, facts of the case are that the assessee was engaged in the business of real estate development. For the year under consideration, the assessee filed return of income on 25.06.2018 declaring total income at . The return of income filed by the assessee was selected for limited scrutiny for verification of the fact that purchase value of the property recorded in the sale consideration was less than the value as per the stamp duty value authorities. The nder the Act were issued and complied by the assessee. In the course of the assessment proceedings, it was noticed that assessee firm had purchased land along with tenants and dwelling house standing thereon vide two agreements each dated 15.03.1978 for a total consideration of Rs.4,25,000/ building and Rs.3,25,000/- for land respectively. The large portion occupied by unauthorized hutments which are Commercial Development Corporation 3 Nos. 3755 & 3791/MUM/2024 b) Your appellant prays that, on the facts and circumstances of the case, the Assessing Officer may be directed to consider the 'Captioned Property' as Stock in Trade, not subject to provisions of Section 56(2)(x) the Income tax Act, 1961, and thereby no addition to income on this (a) The Ld. CIT( Appeal)/The National Faceless Appeal Centre( - based on be considered as 'Stamp Duty Value' on the date of Agreements, even though as per applicable Law on levy of Stamp duty, the concept of Levy of duty on market rate / reckoner rate is not in existence as on date of Agreement i.e 14-03- prays that, on the facts and circumstances of the Officer may be directed to consider Agreement Value as 'Stamp Duty Value' as on date of Agreements and thereby ted, facts of the case are that the assessee, a was engaged in the business of real estate development. For the year under consideration, the assessee filed return of income on 25.06.2018 declaring total income at n of income filed by the assessee was selected for limited scrutiny for verification of the fact that purchase value of the property recorded in the sale consideration was less than the value as per the stamp duty value authorities. The nder the Act were issued and complied by the assessee. In the course of the assessment proceedings, it was noticed that assessee firm had purchased land along with tenants and dwelling house standing thereon vide two agreements each total consideration of Rs.4,25,000/- for land respectively. The large portion occupied by unauthorized hutments which are declared as Slum by the appropriate authority. The agreement executed and possession of the property was taken by the assessee in the year 1977- discharged by the banking channels was however registered in the year under consideration. As the conveyance of the pro purchase, the assessee took the matter to Hon’ble High Court Bombay, wherein the grant of conveyance in favour of the assessee. On further appeal, the Hon’ble Supreme Court also allowed the issue in favour of the assessee. Consequently, in the year under consideration, the assessee registered the conveyance of the property stamp duty value of the property is assessed at Rs.80,34,09,000/ Accordingly, in the course of the assessment proceedings Assessing Officer asked property should not be taken a stamp duty value authorities. The Assessing Officer rejected the submission of the assessee and held the sale consideration at Rs.80,34,09,000/- and computed the addition in terms of section 56(2)(x) of the Act. 4. On further appeal, the assessee submitted tha dispute was stock-in 56(2)(x) of the Act were not applicable in the case of the assessee. The assessee also contested that provisions of section 56(2)(x) of the Commercial Development ITA Nos. 3755 & 3791/MUM/2024 declared as Slum by the appropriate authority. The agreement ession of the property was taken by the assessee -78. The purchase consideration was also discharged by the banking channels but the conveyance was however registered in the year under consideration. As the conveyance of the property was not passed on after transaction of assessee took the matter to Hon’ble High Court wherein the Hon’ble High Court directed the conveyance in favour of the assessee. On further appeal, e Court also allowed the issue in favour of the assessee. Consequently, in the year under consideration, the assessee registered the conveyance of the property stamp duty value of the property is assessed at Rs.80,34,09,000/ the course of the assessment proceedings Assessing Officer asked as why the sale consideration of th property should not be taken at the value which is recorded by the stamp duty value authorities. The Assessing Officer rejected the assessee and held the sale consideration at and computed the addition in terms of section On further appeal, the assessee submitted tha in-trade and therefore, the provisions of sec 56(2)(x) of the Act were not applicable in the case of the assessee. The assessee also contested that provisions of section 56(2)(x) of the Commercial Development Corporation 4 Nos. 3755 & 3791/MUM/2024 declared as Slum by the appropriate authority. The agreement was ession of the property was taken by the assessee 78. The purchase consideration was also conveyance of property was however registered in the year under consideration. As the after transaction of assessee took the matter to Hon’ble High Court of Hon’ble High Court directed the seller for conveyance in favour of the assessee. On further appeal, e Court also allowed the issue in favour of the assessee. Consequently, in the year under consideration, the assessee registered the conveyance of the property, wherein the stamp duty value of the property is assessed at Rs.80,34,09,000/-. the course of the assessment proceedings, the why the sale consideration of the t the value which is recorded by the stamp duty value authorities. The Assessing Officer rejected the assessee and held the sale consideration at and computed the addition in terms of section On further appeal, the assessee submitted that property in trade and therefore, the provisions of section 56(2)(x) of the Act were not applicable in the case of the assessee. The assessee also contested that provisions of section 56(2)(x) of the Act have been inserted by way of Finance Act, 2009 w.e.f. 01.10.2009 and whereas property in dispute were enter books of accounts of the assessee assessment year corresponding to the previous year 1977 therefore said provisions cannot be invoked in the year under consideration. The assessee also submitted that invoking pro section 56(2)(x) of the Act then the value of the property the agreement in the year 1997 Assessing Officer referred the matter the report of the DVO was received during the appellate proceedings and therefore, the Ld. CIT(A) applied the rate estimated by the DVO at Rs.16,29,263/- as against the agreement value of Rs.7,50,000/ shown by the assessee. The addition of Rs.8,79,263/ Rs.80,34,09,000/- made by the Assessing Officer. 6. Aggrieved, both the assessee and the Revenue before the Tribunal by way of raising grounds as reproduc 7. Before us, the Ld. counsel for the assessee has filed a Paper Book containing pages 1 to 298. 8. We have heard rival submission of the parties and perused the relevant material on record filed by the assessee. We find that the Ld. CIT(A) has c Commercial Development ITA Nos. 3755 & 3791/MUM/2024 Act have been inserted by way of Finance Act, 2009 w.e.f. 01.10.2009 and whereas property in dispute were enter books of accounts of the assessee as stock-in assessment year corresponding to the previous year 1977 therefore said provisions cannot be invoked in the year under consideration. The assessee also submitted that invoking pro section 56(2)(x) of the Act, if at all any addition has to be made then the value of the property as per stamp duty value the agreement in the year 1997-1998 should be considered. The Assessing Officer referred the matter of valuation to the DVO and the report of the DVO was received during the appellate proceedings and therefore, the Ld. CIT(A) applied the rate estimated by the DVO as against the agreement value of Rs.7,50,000/ shown by the assessee. The Ld. CIT(A) accordingly sustained addition of Rs.8,79,263/- as against the addition of made by the Assessing Officer. both the assessee and the Revenue before the Tribunal by way of raising grounds as reproduc Before us, the Ld. counsel for the assessee has filed a Paper Book containing pages 1 to 298. We have heard rival submission of the parties and perused the relevant material on record including Paper Book page see. We find that the Ld. CIT(A) has c Commercial Development Corporation 5 Nos. 3755 & 3791/MUM/2024 Act have been inserted by way of Finance Act, 2009 w.e.f. 01.10.2009 and whereas property in dispute were entered in the in-trade in the assessment year corresponding to the previous year 1977-1978 and therefore said provisions cannot be invoked in the year under consideration. The assessee also submitted that invoking proviso to addition has to be made, stamp duty value as on date of 1998 should be considered. The to the DVO and the report of the DVO was received during the appellate proceedings and therefore, the Ld. CIT(A) applied the rate estimated by the DVO as against the agreement value of Rs.7,50,000/- Ld. CIT(A) accordingly sustained as against the addition of both the assessee and the Revenue are in appeal before the Tribunal by way of raising grounds as reproduced above. Before us, the Ld. counsel for the assessee has filed a Paper We have heard rival submission of the parties and perused the including Paper Book pages 1 to 298 see. We find that the Ld. CIT(A) has considered the property as stock-in Revenue. The relevant finding of the Ld. CIT(A) is reproduced as under: “12.1.4 DECISION: | have carefully examined the rival contentions. It pertinent to note that the Appellant is engaged in the business of real estate development. The Appellants' submission that the captioned property as purchased in 1978 has been treated as stock in trade and accepted as such in assessment proceedings in from the perusal of assessment orders and its financial statements. Appellant still shows the said land as its stock in trade in its financials of A Y 2018-19 and stamp duty paid during the year added to the said plot treated as stock in trade/ work in progress. The Assessing Officer has not disputed the said treatment or rejected the books of accounts or given any deduction of stamp duty paid while making addition under section 56(2) (x) of the Act. The A O has not brought on rec may point out / conclude that the captioned property is a different property.” 8.1 Further, on the applicability of section 5 the stock-in-trade, the Ld. CIT(A) rejected the contention of the assessee. The finding of the Ld. CIT(A) is reproduced as under: “12.2.1 DECISION: I have carefully examined submission of the Appellant as to applicability of provisions of section 56(2)(x) to the immovable property acquired as stock in trade. The CBDT Circular as relied upon the Appellant is relating to the provision of section 56(2)(vii) of the Act and as such not helpful in the present case. definite finding either by the Assessing Officer or as per any clear cut proof/organic evidence above ,whether the property is stock in trade or not, it is not entitled to any relief on the ground and contention that it is out of the ambit of Section 56 (2)(x) of the Act and therefore the Appellant any relief on this ground alone. The contention of the appellant that the captioned property is in the nature of stock amendment by the Finance Act, 2010 wherein the expression 'property' has been defined in cla clarifying that \"with effect from 01.04.2009, the property would only include capital assets is misplaced as the amendment solely dealt with the issues related section 56(2)(vii) and its meaning was not s be imported to the fabric of the provisions 56(2)(x) of the Act. The contention of the appellant on this ground is therefore rejected as dismissed and not admissible. Commercial Development ITA Nos. 3755 & 3791/MUM/2024 in-trade which has not been disputed by the Revenue. The relevant finding of the Ld. CIT(A) is reproduced as 12.1.4 DECISION: | have carefully examined the rival contentions. It pertinent to note that the Appellant is engaged in the business of real estate development. The Appellants' submission that the captioned property as purchased in 1978 has been treated as stock in trade and accepted as such in assessment proceedings in those years is evident from the perusal of assessment orders and its financial statements. Appellant still shows the said land as its stock in trade in its financials of 19 and stamp duty paid during the year added to the said plot stock in trade/ work in progress. The Assessing Officer has not disputed the said treatment or rejected the books of accounts or given any deduction of stamp duty paid while making addition under section 56(2) (x) of the Act. The A O has not brought on record any material which may point out / conclude that the captioned property is a different on the applicability of section 56(2)(x) of the Act on trade, the Ld. CIT(A) rejected the contention of the g of the Ld. CIT(A) is reproduced as under: 12.2.1 DECISION: I have carefully examined submission of the Appellant as to applicability of provisions of section 56(2)(x) to the immovable property acquired as stock in trade. The CBDT Circular as relied upon the Appellant is relating to the provision of section 56(2)(vii) of the Act and as such not helpful in the present case. Further, there is no clear cut and definite finding either by the Assessing Officer or as per any clear cut proof/organic evidence of the property being stock in trade. In view of the above ,whether the property is stock in trade or not, it is not entitled to any relief on the ground and contention that it is out of the ambit of Section 56 (2)(x) of the Act and therefore the Appellant is not eligible for any relief on this ground alone. The contention of the appellant that the captioned property is in the nature of stock-in-trade in view of the amendment by the Finance Act, 2010 wherein the expression 'property' has been defined in clause (d) of the Explanation below section 56(2)(vii) clarifying that \"with effect from 01.04.2009, the property would only include capital assets is misplaced as the amendment solely dealt with the issues related section 56(2)(vii) and its meaning was not s be imported to the fabric of the provisions 56(2)(x) of the Act. The contention of the appellant on this ground is therefore rejected as dismissed and not admissible.” Commercial Development Corporation 6 Nos. 3755 & 3791/MUM/2024 trade which has not been disputed by the Revenue. The relevant finding of the Ld. CIT(A) is reproduced as 12.1.4 DECISION: | have carefully examined the rival contentions. It is pertinent to note that the Appellant is engaged in the business of real estate development. The Appellants' submission that the captioned property as purchased in 1978 has been treated as stock in trade and those years is evident from the perusal of assessment orders and its financial statements. The Appellant still shows the said land as its stock in trade in its financials of 19 and stamp duty paid during the year added to the said plot stock in trade/ work in progress. The Assessing Officer has not disputed the said treatment or rejected the books of accounts or given any deduction of stamp duty paid while making addition under section ord any material which may point out / conclude that the captioned property is a different 6(2)(x) of the Act on trade, the Ld. CIT(A) rejected the contention of the g of the Ld. CIT(A) is reproduced as under: 12.2.1 DECISION: I have carefully examined submission of the Appellant as to applicability of provisions of section 56(2)(x) to the immovable property acquired as stock in trade. The CBDT Circular as relied upon by the Appellant is relating to the provision of section 56(2)(vii) of the Act and Further, there is no clear cut and definite finding either by the Assessing Officer or as per any clear cut of the property being stock in trade. In view of the above ,whether the property is stock in trade or not, it is not entitled to any relief on the ground and contention that it is out of the ambit of is not eligible for any relief on this ground alone. The contention of the appellant that the trade in view of the amendment by the Finance Act, 2010 wherein the expression 'property' use (d) of the Explanation below section 56(2)(vii) clarifying that \"with effect from 01.04.2009, the property would only include capital assets is misplaced as the amendment solely dealt with the issues related section 56(2)(vii) and its meaning was not supposed to be imported to the fabric of the provisions 56(2)(x) of the Act. The contention of the appellant on this ground is therefore rejected as 8.2 Before us, the Ld. counsel for the assessee has referred to the decision of the Co-ordinate Bench of the Jaipur in the case of Satendra Kaushik v. ITO [2019] 106 taxmann.com 244 (Jaipur) (Trib.), wherein it is held that provisions of section 56(2)(x) of the Act have application to the property which is in the nature of the capital asset of the recipient piece of land as its stock Assessing Officer invoking provisions of section 56(2)(x) of the Act was set aside. The relevant finding of the Co Tribunal is reproduced as under: “10. I have considered the rival contentions and carefully gone through the orders of the authorities below. The provisions of section 56(2)(vii) were introduced as a counter evasion mechanism to prevent laundering of unaccounted income. The provisions were intended to extent the tax net to such transactions in kind. The intent is not to tax the transactions entered into in the normal course of business or trade, the profits of which are taxable under specif Therefore, the definition of property has been amended to provide that section 56(2)(vii) will have application to the 'property' which is in the nature of a capital asset of the recipient and therefore would not apply to stock-in-trade, of such recipient. However, a property is defined in a very specific way, which includes agricultural and non appears that the lower authorities have not properly appreciated relevant provisions of the Act with regard to the land purchased by the assessee, which is part of stock justice, we restore the matter back to the file of the AO for deciding the matter afresh after giving due 8.3 Similarly, the Co Mubarak Gafur Korabu v. ITO [2020] 11 Trib.) has adjudicated “10. In the totality of above definitions, purchased by assessee is not governed by Commercial Development ITA Nos. 3755 & 3791/MUM/2024 Before us, the Ld. counsel for the assessee has referred to the ordinate Bench of the Jaipur in the case of Satendra Kaushik v. ITO [2019] 106 taxmann.com 244 (Jaipur) wherein it is held that provisions of section 56(2)(x) of the Act have application to the property which is in the nature of the tal asset of the recipient. In said case, the assessee purchas piece of land as its stock-in-trade, therefore, addition made by the Assessing Officer invoking provisions of section 56(2)(x) of the Act was set aside. The relevant finding of the Co-ordinate Bench of the Tribunal is reproduced as under: I have considered the rival contentions and carefully gone through the orders of the authorities below. The provisions of section 56(2)(vii) were introduced as a counter evasion mechanism to prevent undering of unaccounted income. The provisions were intended to extent the tax net to such transactions in kind. The intent is not to tax the transactions entered into in the normal course of business or trade, the profits of which are taxable under specific head of income. Therefore, the definition of property has been amended to provide that section 56(2)(vii) will have application to the 'property' which is in the nature of a capital asset of the recipient and therefore would not apply trade, raw material and consumable stores of any business of such recipient. However, a property is defined in a very specific way, which includes agricultural and non-agricultural land or both. It appears that the lower authorities have not properly appreciated relevant provisions of the Act with regard to the land purchased by the assessee, which is part of stock-in-trade. In the substantial interest of justice, we restore the matter back to the file of the AO for deciding the matter afresh after giving due opportunity of hearing to the assessee. Similarly, the Co-ordinate Bench of the Tribunal in the case of Mubarak Gafur Korabu v. ITO [2020] 117 taxmann.com 828 (Pune has adjudicated he issue as under: 10. In the totality of above definitions, we hold that agricultural land purchased by assessee is not governed by the provisions of section Commercial Development Corporation 7 Nos. 3755 & 3791/MUM/2024 Before us, the Ld. counsel for the assessee has referred to the ordinate Bench of the Jaipur in the case of Satendra Kaushik v. ITO [2019] 106 taxmann.com 244 (Jaipur) wherein it is held that provisions of section 56(2)(x) of the Act have application to the property which is in the nature of the assessee purchased a addition made by the Assessing Officer invoking provisions of section 56(2)(x) of the Act ate Bench of the I have considered the rival contentions and carefully gone through the orders of the authorities below. The provisions of section 56(2)(vii) were introduced as a counter evasion mechanism to prevent undering of unaccounted income. The provisions were intended to extent the tax net to such transactions in kind. The intent is not to tax the transactions entered into in the normal course of business or ic head of income. Therefore, the definition of property has been amended to provide that section 56(2)(vii) will have application to the 'property' which is in the nature of a capital asset of the recipient and therefore would not apply raw material and consumable stores of any business of such recipient. However, a property is defined in a very specific agricultural land or both. It appears that the lower authorities have not properly appreciated the relevant provisions of the Act with regard to the land purchased by the trade. In the substantial interest of justice, we restore the matter back to the file of the AO for deciding the opportunity of hearing to the assessee.” ordinate Bench of the Tribunal in the case of 7 taxmann.com 828 (Pune- we hold that agricultural land the provisions of section 56(2)(vii)(6) of the Act being not capital asset and also because of the fact that the assessee was holding it as stock in trade. Hence, it is outside the pur the hands of assessee. 8.4 Respectfully, following above that section 56(2)(x) of the Act cannot be invoked in the case of the transactions of the assessee stock in trade. Further, the provisions of section 56(2)(x) of the Act have been introduced by Finance Act, 2009 w.e.f. 01.10.2009 whereas transaction of the purchase of the land in question has been recorded by in assessment year corresponding to the previous year 1977 therefore, now the provision of section 56(2)(x) of the Act c applied over the case, m been registered now. Si Act is not applicable over the transaction in dispute in this case the addition cannot be made in the case of the assessee and therefore, the grounds raise dismissed. The grounds raised by the assessee in its appeal ar rendered merely academic, adjudicate,when we have already held the application of section 56(2)(x) of the Act as unsustainable in law in the case of the assessee. The grounds as infructuous. Commercial Development ITA Nos. 3755 & 3791/MUM/2024 )(6) of the Act being not capital asset and also because of the assessee was holding it as stock in trade. Hence, it is outside the purview of said section and no addition has to be made in the hands of assessee.” following above decisions of Tribunal that section 56(2)(x) of the Act cannot be invoked in the case of the transactions of the assessee, which are undisputed Further, the provisions of section 56(2)(x) of the Act have been introduced by Finance Act, 2009 w.e.f. 01.10.2009 whereas transaction of the purchase of the land in question has its books of accounts as stock assessment year corresponding to the previous year 1977 therefore, now the provision of section 56(2)(x) of the Act c applied over the case, merely for the reason that said property has been registered now. Since, we have held that section 56(2)(x) of the is not applicable over the transaction in dispute in this case addition cannot be made in the case of the assessee and therefore, the grounds raised by the Revenue in its appeal are ounds raised by the assessee in its appeal ar rendered merely academic, which we are not required we have already held the application of section 56(2)(x) of the Act as unsustainable in law in the case of the assessee. The grounds of appeal of the assessee are also dismissed Commercial Development Corporation 8 Nos. 3755 & 3791/MUM/2024 )(6) of the Act being not capital asset and also because of the assessee was holding it as stock in trade. Hence, it is view of said section and no addition has to be made in decisions of Tribunal, we hold that section 56(2)(x) of the Act cannot be invoked in the case of the disputed for purchase of Further, the provisions of section 56(2)(x) of the Act have been introduced by Finance Act, 2009 w.e.f. 01.10.2009, whereas transaction of the purchase of the land in question has counts as stock-in-trade in the assessment year corresponding to the previous year 1977-78 and therefore, now the provision of section 56(2)(x) of the Act cannot be erely for the reason that said property has nce, we have held that section 56(2)(x) of the is not applicable over the transaction in dispute in this case, addition cannot be made in the case of the assessee and by the Revenue in its appeal are ounds raised by the assessee in its appeal are also are not required to we have already held the application of section 56(2)(x) of the Act as unsustainable in law in the case of the of appeal of the assessee are also dismissed 9. In the result, the appeal of the Revenue is dismissed, whereas appeal of the assessee stand allowed. Order pronounced in the open Court on Sd/ (SANDEEP SINGH KARHAIL JUDICIAL MEMBER Mumbai; Dated: 28/10/2024 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Commercial Development ITA Nos. 3755 & 3791/MUM/2024 In the result, the appeal of the Revenue is dismissed, whereas appeal of the assessee stand allowed. nounced in the open Court on 28/10/2024. Sd/- Sd/ (SANDEEP SINGH KARHAIL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Commercial Development Corporation 9 Nos. 3755 & 3791/MUM/2024 In the result, the appeal of the Revenue is dismissed, whereas /10/2024. Sd/- PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai "