Applicability of Section 56(2)(vii) to Company or Firm

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  1. bhavesh1963

    bhavesh1963 New Member

    Is Section 56(2)(vii) applicable to Buyer in case Buyer is a Company or Firm?
  2. Yatin Gandhi

    Yatin Gandhi Active Member

    Yes, Section 56(2)(vii) would be applicable to Companies as well as Firms.

    If it was not applicable, anybody could easily evade this section by creating a firm only for the purpose of buying a property.
  3. ZED

    ZED Well-Known Member

    With all due respects to Yatin Sir, but unfortunately the above provision is not applicable on any assessee other than an Individual or HUF.

    I too am of the view that other assessees should have been covered and when the amendment first came thought of it as an unintended mistake but there hasn't been any amendment so far.
  4. Yatin Gandhi

    Yatin Gandhi Active Member

    Thanks @ZED for the correcting me and sharing your knowledge

    So that means that a person can easily evade this section by creating a partnership firm and then buying property in the name of the firm.
    ZED likes this.
  5. ZED

    ZED Well-Known Member

    Yup, since the provision is not applicable on assessees other than an individual or HUF, all such assessees can exploit the lacuna by many ways, for eg think of gifting of sports cars. The provision will not even touch you.
  6. Yatin Gandhi

    Yatin Gandhi Active Member

    Interesting... Thanks for guiding me..
    ZED likes this.
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