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Facts
The assessee purchased a flat for Rs. 1,06,00,000/-, while the stamp duty value was Rs. 1,53,60,500/-. The Assessing Officer (AO) added the difference as income. The assessee contended that the acquisition date was based on an allotment letter dated 07.09.2012, but the AO and CIT(A) considered the registered agreement date of 15.04.2017.
Held
The Tribunal held that for immovable property transactions, the date of the registered deed is crucial for determining transfer. An allotment letter does not confer legal title. Therefore, the stamp duty value on the date of the registered agreement (15.04.2017) is relevant for calculating the addition under Section 56(2)(x)(b)(B) of the Income Tax Act, 1961.
Key Issues
Whether the date of allotment letter or the date of registered agreement is the relevant date for determining the transfer of immovable property for the purpose of Section 56(2)(x)(b)(B) of the Income Tax Act, 1961.
Sections Cited
250, 56(2)(x)(b)(B), 53A, 17(1A), 56(2)(vii)(b)
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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI SANDEEP GOSAIN
Date of Hearing 02.09.2025 Date of Pronouncement 13.11.2025 ORDER Per: SHRI. SANDEEP GOSAIN, J.M.:
The present appeal has been filed by the assessee challenging the impugned order dt. 17.07.2025 passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC) / CIT(A) for the assessment year 2018-19.
None appeared on behalf of the assessee, when the case was called repeatedly. Even no application for seeking adjournment has been filed. On the other hand, Ld. DR present in the court is ready with the arguments. Therefore considering the non cooperative conduct of the assessee, I have decided to proceed with the hearing of the case ex-parte and on the basis of material available on file.
3. I have gone through the facts of case and heard at length. From the records, we noticed that the addition in the present case were made on account of the fact that assessee along with other person had purchased flat at Rs. 1,06,00,000/-. Whereas the stamp duty value of the property was Rs. 1,53,60,500/-. Therefore after providing opportunity of hearing to the assessee, the difference of purchase price of flat and stamp duty value was added by the AO which was also upheld by Ld. CIT(A), the operative portion is contained in para 7 and 8 and the same is reproduced herein below:
After careful consideration of the submissions made by the assessee, the assessment order, and the case laws cited, I find that the appeal lacks merit for the following reasons: i. Date of Acquisition/Transfer The fundamental issue in this case is determining the date when the assessee acquired the immovable property for the purposes of section 56(2)(x)(b)(B) of the Income Tax Act, 1961. The assessee contends that the property was acquired on 07.09.2012 when the allotment letter was issued. However, this contention is legally untenable for the following reasons: 3 Legal Position on Registration Requirement: For any immovable property transaction to be legally enforceable and to constitute a valid transfer under the Income Tax Act, it must comply with section 53A of the Transfer of Property Act, which requires registration under section 17(1A) of the Registration Act, 1908. The Assessing Officer correctly observed that "for any purchase or sale agreement deed of immovable property to be covered u/s 53A of the Transfer of the Property Act, it is required to be a registered instrument for enforcing civil law rights."
The law is well settled that immovable property is transferred only through a registered deed. Mere allotment letters or agreements to sell do not create any legal title in the property until they are registered in accordance with law. ii. Section 56(2)(x)(b)(B) Applicability and Computation Section 56(2)(x)(b)(B) of the Income Tax Act, 1961, as applicable from AY 201718, provides that where any immovable property is received for a consideration which is less than the stamp duty value of such property, the excess of stamp duty value over consideration shall be chargeable to tax as income from other sources. The facts clearly establish: Date of actual transfer: 15.04.2017 (date of registered agreement) Assessment Year: 201819 Agreement value: Rs. 1,06,00,000/ Stamp duty value: Rs. 1,53,60,500/ Excess: Rs. 47,60,500/ Assessee's 1/3rd share: Rs. 15,86,833/ Since the transfer took place in FY 2016-17 (AY 2017-18) when section 56(2)(x)(b)(B) was applicable, and the excess amount exceeds Rs. 50,000/, the provision is clearly attracted. iii. Distinction from Cited Case Laws The assessee has relied u from the present facts: pon the following cases, which I find are distinguishable Regarding DCIT vs Vembu Vaidyanathan: This case dealt with capital gains computation and the holding period for determining longterm vs shortterm capital gains. The Bombay High Court in this case was examining CBDT Circulars No. 471 dated 15.10.1986 and No. 672 dated 16.12.1993, which specifically dealt with DDA (Delhi Development Authority) allotments. Key Distinguishing Factors:
1. Nature of Authority: The Vembu Vaidyanathan case involved government authority (DDA) allotments, whereas the present case involves a private builder (N.D Developers). The legal framework governing government housing schemes is fundamentally different from private real estate transactions.
2. Purpose of Litigation: The Vembu case dealt with capital gains taxation and holding period computation, not with section 56(2)(x) applicability.
3. CBDT Circulars Scope: As noted in the case itself, the circulars were specifically issued for DDA type allotments and cannot be mechanically applied to private builder transactions. Regarding Sujauddin Kasimsab Sayyed vs ITO (ITAT Mumbai): This case supports the Revenue's position rather than the assessee's contentions. The Hon'ble ITAT Mumbai in this case specifically dealt with similar facts and held that for section 56(2)(vii) (b) purposes, the date of execution of the registered agreement should be considered, not the date of allotment letter. it was held that immovable property is considered to be transferred on the date of execution of registered document and not on the date of delivery of possession. Thus, date of receipt in Tribunal's view is date of execution of registered document. The above view of Tribunal in Sujauddin's case is based on Supreme Court's decision in Alapote Venkatramiah v. CIT [1965] 57 ITR Cements (P.) Ltd. [1997] 1541 92 Taxman Key findings from Sujauddin case that support Revenue's position: As quoted from the Hon'ble ITAT order in Sujauddin case: "Sale agreement is different from saledeed. Sale agreement contains agreed upon terms and conditions between seller and buyer for the sale of property... On the other hand, sale deed is executed at the time of actual transfer of property i.e. transfer of ownership from the seller to the buyer." The Hon'ble ITAT further held: Immovable property is not conveyed by delivery of possession, but by a duly registered deed. Further, it is the date of execution of registered document, not the date of delivery of possession or the date of registration of document which is relevant." Most importantly, the Hon'ble ITAT concluded: "In the instant case, there is no dispute that the 'Agreement for Sale' is dated 10.09.2014. The 'Letter of Allotment' dated 27.04.2012 cannot be considered as the date of execution of agreement by any stretch of imagination." The Hon'ble ITAT dismissed the assessee's appeal in that case, confirming that allotment letters cannot be treated as transfer documents for the purpose of section 56(2)(vii)(b). iv. Applicability of CBDT Circulars The assessee has relied upon CBDT Circulars No. 471 dated 15.10.1986 and No. 672 dated 16.12.1993. However, these circulars have limited applicability to the present case for the for the following reasons:
1. 1. Specific Context: These circulars were issued in the specific context of DDA allotments and government housing schemes where the legal framework is different.
2. Capital Gains: The circulars dealt with capital gains computation and holding period determination, not with section 56(2)(x) applicability.
3. The law has evolved significantly since 1986/1993, and the introduction of section 56(2)(x) in 2017 has created a different legal framework for taxing property transactions.
4. Analysis of First Proviso to Section 56(2)(x)(b)(B) The assessee has argued that the first proviso to section 56(2)(x)(b)(B) applies, which allows consideration of stamp duty value on the date of agreement (rather than registration) provided certain conditions are met. This argument does not sustain because: 1. The allotment letter dated 07.09.2012 cannot be considered as an "agreement" within the meaning of the proviso. It was merely an allotment letter expressing the builder's willingness to allot the flat, subject to various terms and conditions that were finalized much later.
2. Even if the allotment letter is considered as an agreement, the conditions of the proviso are not satisfied as there was no complete agreement on all terms and conditions on 07.09.2012.
The actual legal transfer occurred r occurred only on 15.04.2017 when the registered agreement was executed, and this is the relevant date for all purposes. V. Factual Findings and Verification The assessment order clearly establishes the following undisputed facts: * Joint Purchase: The flat was purchased jointly by three individuals with 1/3rd share each * Total Consideration: Rs. 1,06,00,000/ * Assessee's Share: Rs. 35,33,333/ * Stamp Duty Value: Rs. 1,53,60,500/ (as per registered deed dated 15.04.2017) * Total Excess: Rs. 47,60,500/ * Assessee's Share of Excess: Rs. 15,86,833/ * Date of Legal Transfer: 15.04.2017 (date of registered agreement) These factual findings are supported by documentary evidence and have not been successfully challenged by the assessee. vi. Legal Precedents Supporting Revenue's Position The legal position is well-established through various judicial pronouncements: 1. Registration Requirement: Section 53A of the Transfer of Property Act requires registration for enforceability M 2. Transfer Date: Legal transfer of immovable property occurs only upon registration 3. The Sujauddin case directly supports the Revenue's position vii. Alternative Arguments: arguments:
Valuation Report: The assessee has mentioned a valuation report showing fair market value of Rs. 1,03,00,000/ as on 07.09.2012. However, this is irrelevant because: The law requires consideration of stamp duty value, not fair market value The relevant date is 15.04.2017, not 07.09.2012 No such valuation report has been filed before me 2. Payment Through Banking Channels: While payments were made through proper banking channels, this does not alter the legal position regarding the date of transfer 3. Section 56(2)(x) Applicability: The assessee argues that section 56(2)(x) was not applicable in AY 201314. This argument is misconceived because: The transfer took place in AY 201718, not AY 201314 Section 56(2)(x)(b)(B) was introduced w.e.f. 01.04.2017 and is applicable to the present case 4. The assessee has also contended that in the case of Shri Pannalal Shantilal Jain (relative of the assessee) who is also the joint owner of the property purchased by Anil Pannalal Jain (i.e assessee) is also assessed on same issue for AY 2018-19 and no additions for difference in purchase value and stamp duty market value was done by Assessing Officer. The contention of the assessee does not support his case as the Law has been rightly applied in the instant case. 8. CONCLUSION After examining all the submissions, case laws, documentary evidence, and the assessment order , I find that:
1. 1. The Assessing Officer has correctly applied section 56(2)(x)(b)(B) of the Income Tax Act, 1961.
2. The date of acquisition/transfer for the purpose of the said section is 15.04.2017 (date of execution of registered agreement) and not 07.09.2012 (date of allotment letter).
3. The case laws cited by the assessee are clearly distinguishable from the present facts, and the Sujauddin Kasimsab Sayyed case supports the Revenue's position.
The addition of Rs. 15,86,833/ representing the assessee's share (1/3rd) of the excess of stamp duty value over the agreement value is legally justified and factually correct.
5. The assessee has failed to demonstrate any legal or factual error in the assessment order.
The CBDT circulars relied upon by the assessee have limited applicability to private builder transactions and do not support the assessee's contentions.
The conditions for applying the first proviso to section 56(2)(x)(b)(B) are not satisfied in the present case.
4. No new facts or circumstances have been placed on record before me in order to controvert or rebut the findings so recorded by Ld. CIT(A). Therefore, I see no reasons to interfere into or to deviate from the lawful findings so recorded by Ld. CIT(A). Hence, the grounds raised and by the assessee stands dismissed.
In the result, the appeal filed by the assessee stands dismissed.
Order pronounced in the open court on 13/11/2025