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Black Money & Section 56(2)(x)

ITAT Tightens the Screws


In a striking move, the Income Tax Appellate Tribunal (ITAT) has ruled that agricultural land qualifies as an "immovable asset" under Section 56(2)(x) of the Income Tax Act—potentially reshaping decades-old practices of farmland-based cash whitening.

 

What’s the scheme? Buy agricultural Land well below market value (predominantly in cash), then sell it later at market price in a formal transaction to legitimize the difference.

Why it matters: This ruling creates a tax liability on the buyer for purchasing agri land below fair market value—turning what was once a quiet loophole into a spotlighted compliance red flag.

(i) Implication: If upheld by higher courts, this could significantly disrupt traditional land transactions used to clean cash—particularly in rural and semi-urban economies.
A reminder that even long-standing “informal” practices are not immune from statutory interpretation
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