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Whether Gift Received Of Agricultual Land Is A Property For Section 56?

QUERY: As per S. 56(2)(vii)(b), when an individual or HUF receives, on or after 1.10.2009, any immovable property without consideration, the stamp duty value of which exceeds Rs. 50,000, the stamp duty value of such property is chargeable to tax u/s. 56(2)(vii)(b). Agricultural land {which is not capital asset u/s. 2(14)} is immovable property. Therefore, is stamp duty value of agricultural land received {which land is admittedly not a capital asset u/s 2(14)} without consideration chargeable under this clause? This question arises since 2nd proviso to S. 56(2)(vii) inter alia provides that property received from any relative is not covered by this clause. The term ‘property’ is defined in Explanation (d) to S. 56(2)(vii) to mean the following capital asset of the assessee, namely, (i) immovable property being land or building or both. Thus, property is defined to mean capital asset namely immovable property being land or building or both but 56(2)(vii)(b) does not use the word ‘property’ but directly makes a reference to immovable property. The question is whether the term ‘capital asset’ used in Explanation (d) should be understood as it is defined in S. 2(14) or should it be understood to mean something which is not stock-in-trade?
ANSWER: Yes, stamp duty value of agricultural land received without consideration exceeding Rs. 50,000/- is chargeable u/s. 56(2)(vii) of the Act except property received from relatives. The explanation (d) to the section clarifies that for the purpose of S. 56(2)(vii) “property”, inter-alia means “immovable property being land or building or both” Thus, though, agricultural land is not “a capital asset” u/s. 2(14) of the Act, but, for the purpose of this clause it is a property being immovable property being land or building or both. So, even if, land or building or both may not be a property u/s. 2(14) i.e. a stock -in-trade; but for s. 56(2)(vii) it would be a “property”.
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3 comments on “Whether Gift Received Of Agricultual Land Is A Property For Section 56?
  1. RANGANATH SHENOY says:

    Sir if agri land is not liable to cap gain tax , why should gift of agri land be taxed . The explanation starts with capital asset comprising of …..

    That would mean , it should first be a capial asset but restricted to ceryain assets for the purpose of sec 56

  2. Sushil says:

    (d) “property” means the following capital asset of the assessee, namely:—
    (i) immovable property being land or building or both;
    (ii) shares and securities;
    (iii) jewellery;
    (iv) archaeological collections;
    (v) drawings;
    (vi) paintings;
    (vii) sculptures;
    (viii) any work of art; or
    (ix) bullion;
    (e) “relative” means,—

  3. Vijay says:

    Sir, is the central govt authorised to tax sale/purchase/gifting of agriculture land. That is to say that agriculture land is a subject on the State List and not Centeral or Concurent list. So can subordinate legislation extend the domain of the central authorities ?
    Capital gains on agriculture land is also only when the land is a “capital asset” as center has no power to tax agriculture land or agriculture income

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