Loading judgment…
Facts
The assessee appealed an order from the NFAC affirming an addition made by the AO. The addition was based on the difference between the stamp duty valuation and the sale consideration, which was found to be within a 3.09% tolerance band.
Held
The Tribunal held that the 5% tolerance band, introduced by the Finance Act, 2018, is curative in nature and applies retrospectively. Therefore, the marginal variation between stamp duty value and sale consideration, if within the band, cannot be added to the assessee's income.
Key Issues
Whether the 5% tolerance band under Section 56(2)(10)(B)(b) of the Income Tax Act, as amended by the Finance Act, 2018, applies retrospectively to the assessment year 2018-19.
Sections Cited
250, 56(2)(10)(B)(b), 43CA, 50C, 56
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JM (Assessment Year: 2018-19) Mrs. Rajani Jagannath Shetty Assessing Officer 19 2 2, A 3102, RA Residence Opposite Mumbai Sharada Talkies, Dr. Babasaheb Vs. Ambedkar Road, Dadaw East, Mumbai – 400014. PAN/GIR No. AQPPS2210P (Appellant) : (Respondent) Assessee by : Shri Vimal Punmiya Respondent by : Shri Sandeep Jumale - SR. DR Date of Hearing : 19.11.2025 Date of Pronouncement : 27.11.2025 O R D E R Per Narender Kumar Choudhry, J M:
This appeal has been preferred by the Assessee against the order dated 12.08.2025, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2018-19.
In this case, admittedly the difference between the value adopted by stamp duty valuation authority to the tune of Rs. 6,99,00,000/- and the agreement value/purchase consideration shown by the assessee to the tune (A.Y. 2018-19) Mrs. Rajani Jagannath Shetty of Rs. 6,78,00,000/- is of Rs. 21,00,000/- only i.e., 3.09%, which is within the tolerance band granted by the statute, in the provisions of Section 56(2)(10)(B)(b) of the Act, which has been held applicable retrospectively by various Courts including by the Hon'ble Coordinate Bench of the Tribunal in the case of Lakhdhir Virji Gala vs. ITO (ITA No. 4301/Mum/2025), decided on 26.09.2025, by observing and holding as under: “We have heard the rival submissions and perused the materials available on record. The only moot issue that requires adjudication is whether the assessee is entitled to the 5% tolerance band provided by the Finance Act, 2018 by amendment to Section 43CA, 50C and 56 is applicable retrospectively or not. It is observed that the issue in hand has already been dealt with in various decisions by the coordinate benches, where it has been held that the changes brought about by the Finance Act, 2018 in accordance with the tolerance band of 5% was curative in nature and is therefore applicable to earlier assessment years also. It has held that when the difference between the stamp duty value and the sale consideration is less than 5% as per Section 56 r.w.s. 50C of the Act then the said marginal variation cannot be added in the hands of the assessee. Further, it held that the benefit of the availing 5% marginal difference in the variation between the sale consideration and the stamp duty value has to be extended to the assessee retrospectively, for the reason that the said amendment in the Finance Act, 2018 w.e.f. 01.04.2019 was curative in nature and beneficial provision. The ld. AR extensively relied on the decision of the jurisdictional coordinate bench in the case of Joseph Mudaliar vs. DCIT, CC-4(3), Mumbai in order dated 14.09.2021, which has elaborately dealt with the issue in hand. In the absence of any contrary decisions cited by the revenue, we deem it fit to allow the grounds raised
by the assessee by respectfully following the said decision. “
3. Thus, on the aforesaid aspects, the addition of Rs. 21,00,000/- made by the Assessing Officer (AO) and affirmed by the Ld. Commissioner vide impugned order, is liable to be allowed by allowing Assessee’s appeal.
(A.Y. 2018-19) Mrs. Rajani Jagannath Shetty 4. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 27.11.2025.