Loading judgment…
Facts
The Assessee purchased a property for Rs. 5,78,550/-, but the Assessing Officer made an addition of Rs. 7,23,950/- under Section 56(2)(x) based on a higher stamp duty valuation of Rs. 13,02,500/-. The agreement to sell was dated 14/11/2011, but the sale deed was executed on 20/06/2017, and lower authorities failed to consider the agreement date as per the first proviso to Section 56(2)(x).
Held
The Tribunal set aside the orders of the lower authorities, allowing the Assessee's appeal. It directed the Assessing Officer to recompute the tax liability by considering the stamp duty value of the property as on the date of the agreement to sell (14/11/2011), in line with the first proviso to Section 56(2)(x) of the Income Tax Act.
Key Issues
Whether the addition made under Section 56(2)(x) for the difference between stamp duty valuation and purchase consideration was valid, given that the agreement to sell date, rather than the registration date, should have been considered as per the first proviso to Section 56(2)(x).
Sections Cited
250, 143(3), 144B, 56(2)(x)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI “SMC” BENCH :: MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY
This appeal has been preferred by the Assessee against the order dated 27/05/2023 impugned herein passed by the National Faceless Appeal Centre (NFAC)/Commissioner of Income Tax (Appeals), Delhi (in short, ‘Ld. Commissioner’) u/sec. 250 of the Income Tax Act, 1961 (in short, ‘Act’) for the A.Y. 2018-19.
(Shri Gajanan Prasana nstha) 2. In the instant case, the Assessing Officer (AO), vide assessment order dated 07/06/2021, u/sec. 143(3) r.w.s. 144B of the Act, has made the addition of Rs. 7,23,950/- being difference between stamp duty valuation at Rs. 13,02,500/- and purchase consideration amount shown by the Assessee to the tune of Rs.5,78,550/- as per the provisions of section 56(2)(x) of the Act and in respect of property situated numbered as C-406, situated at Royal Samrat, S.V. Road, Goregaon, Mumbai-400062
The Assessee, though being aggrieved, challenged the said addition by filing first appeal before the Ld. Commissioner, however, of no avail.
4. Admittedly, the Assessee had purchased the property under consideration through agreement to sell dated 14/11/2011 on a total consideration of Rs. 5,78,550/- by paying the amounts in installments, such as, 10,000/- on 02/12/2011 vide cheque no. 180806 of Punjab & National Bank, as it clearly appears from the receipt attached the agreement to sell being part of the same (page No.35 of paper book).
4.1 Further, it clearly appears from para 4 of the agreement to sell that the Assessee was supposed to pay the remaining amounts in installments, such as, Rs. 1,44,638/- on casting of plinth; Rs. 1,44,638/- on casting of 2nd of slab; Rs. 1,15,710/- on casting of 4th slab; and Rs. 1,15,710/- on casting of 6th slab and Rs. 57,854/- within ten days from the date of intimation by the owner/landlord to the tenant/purchaser that the said flat is ready for use and to obtain the possession.
4.2 Thus, from the aforesaid agreement and recitals, it clearly appears that the consideration was fixed by way of said agreement (Shri Gajanan Prasana nstha) on 14/11/2011, however, the sale deed was executed subsequently on dated 20/06/2017. But both the authorities below, made and affirmed the addition, without considering the aforesaid agreement to sell dated 14/11/2011 and first proviso to section 56(2)(x) of the Act, which prescribes as under:
“Where the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration, are not the same, the stamp duty value on the date of agreement may be taken for the purposes of this sub-clause.
Thus, considering the agreement to sell dated 14/11/2011 and 1st proviso to section 56(2)(x) of the Ac, this Court is inclined to set aside the orders passed by the authorities below and consequently, by allowing the appeal filed by the Assessee, directing the AO to consider the stamp duty value of the property as on the date of agreement to sell i.e. 14/11/2011 and recompute the tax liability accordingly.
Thus, the case is accordingly remanded to the file of the AO with aforesaid direction.
In the result, appeal filed by the Assessee is allowed in the aforesaid terms.
Order pronounced in the open court on 30.09.2025.