The taxpayer contended that section 56(2)(viia) was introduced as an anti-abuse provision. The legislative history links section 56(2)(viia) to section 56(2)(vii)—which clearly applies only to capital assets. Accordingly, section 56(2)(viia) should not apply to genuine business transactions involving trading stock.
The Mumbai Bench of the Tribunal accepted the taxpayer’s interpretation, relying on legislative intent, CBDT circulars, and judicial precedents.
