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.
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 says This presumption is not in accordance with judicial interpretation and therefore deserves to be deleted.”
TSC Report on Non Application of Stamp Duty Valuation for Buying Property
7.1 DELETION OF SECTION 56(2)(vii)(b)(ii)
The existing provisions of section 56(2)(vii)(b)(ii) provide that where any immovable property is received for a consideration which is less than the stamp duty value of the property by an amount exceeding 50,000, the stamp duty value of such property as exceeds such consideration, shall be chargeable to tax in the hands of the individual or HUF as income from other sources. This provision works on the assumption that the buyer of the property would have paid consideration more than the stated consideration. This presumption is not in accordance with judicial interpretation and therefore deserves to be deleted.
7.2 Hence, it is proposed that section 56(2)(vii)(b)(ii) be deleted w.e.f. 1.4.2017.