If I can recall on amendment that the previous government brought that was illogical and unconstitutional in my opinion then I would select the tax on the basis of stamp duty valuation for buying immovable property. Under this provision , if you buy property, the difference between the paid price as written in the agreement and the valuation for stamp duty purpose is deemed as income from other sources under section 56(2)(vii)(b)(ii) of the Income Tax Act. The underlying thought was that the common citizen are paying consideration for buying property out of black money. But note that companies are not included for application of section 56(2)(vii)(b)(ii) . How illogical and convenient for the politician knowing fully well that all the money made out of 2G and Coal Block scheme were done through the private limited companies.Â
Fortunately, the Tax Simplification Committee (TSC) has recommended for the deletion of the provision u/s 562)((vii)(ii)(b) of the Income Tax Act . The report saysÂ ThisÂ Â presumptionÂ Â isÂ Â notÂ Â inÂ Â accordanceÂ Â withÂ Â judicial interpretation and therefore deserves to be deleted.”
TSC Report on Non Application of Stamp Duty Valuation for Buying Property
7.1 DELETION OF Â SECTION 56(2)(vii)(b)(ii)
The existingÂ provisionsÂ of Â sectionÂ 56(2)(vii)(b)(ii) provide Â that where any immovable Â property is Â received Â for a consideration Â which is Â less Â than the stamp duty value Â of Â the property by Â an amount exceeding Â 50,000, the stamp duty value Â of Â such property as exceeds such consideration, shall be chargeable Â to tax in the hands Â of the individual or HUF as income from other Â sources. Â ThisÂ provision Â works on the Â assumption Â that the buyer of the property would have paid consideration more than the stated consideration.Â Â ThisÂ Â presumptionÂ Â isÂ Â notÂ Â inÂ Â accordanceÂ Â withÂ Â judicial interpretation and therefore deserves to be deleted.
7.2 Â Hence, it Â is Â proposed that Â section Â 56(2)(vii)(b)(ii) Â beÂ deleted w.e.f. 1.4.2017.