Skip to content

CA Intermediate · Taxation · Income from Other Sources

Vikram, a resident individual, is the owner of a plot of land. In the tax year 2026-27 he transferred it to Tara Traders, a partnership firm in which he is not a partner, for Rs 30,00,000. The stamp duty value on the date of transfer was Rs 33,00,000. The agreement date and the registration date of the sale coincide. Tara Traders is not a person to whom the exempt limit relaxation applies, and the land is its stock in trade. What is the amount taxable in Tara Traders' hands as income from other sources?

Nothing is taxable under income from other sources. The deemed income rule on inadequate consideration for immovable property applies only when the property is a capital asset of the buyer. Since the land is Tara Traders' stock in trade, the rule is not triggered despite the Rs 3,00,000 difference.

  1. ARs 3,00,000
  2. BNilCorrect
  3. CRs 33,00,000
  4. DRs 30,00,000

Explanation

The stamp duty value rule on purchase applies only to immovable property received without consideration or for inadequate consideration, and the property must be a capital asset in the recipient's hands. Because the land is stock in trade of Tara Traders, it is not a capital asset, so the rule does not apply and nothing is taxable under this head. Rs 3,00,000 is the difference and would apply only if the land were a capital asset and the difference exceeded the threshold.

Did you get it right without looking?

One question tells you little. A timed set on Income from Other Sources shows your real accuracy, how long you take and where you lose marks.

Practise Income from Other SourcesFree diagnostic mock

More Income from Other Sources questions