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Facts
The assessee purchased a flat, and the sale consideration recorded in the agreement was lower than the stamp duty value. The Assessing Officer treated the difference as income under section 56(2)(vii)(b) of the Income Tax Act. The assessee argued that the stamp duty value should be considered as of the booking date in 2010, not the registration date in 2014.
Held
The Tribunal held that the booking of the flat and part payment made by the assessee constituted an agreement, and the stamp duty valuation should be considered as of the booking date (18/10/2010) as per the proviso to Section 56(2)(vii). The orders of the lower authorities were set aside.
Key Issues
Whether the stamp duty valuation for the purpose of Section 56(2)(vii)(b) should be taken as on the date of booking/agreement or the date of registration when part payment was made prior to the agreement.
Sections Cited
143(2), 142(1), 56(2)(vii)(b), 56(2)(vii)
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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SMT. BEENA PILLAI
Per: Smt. Beena Pillai, J.M.: The Present appeal filed by assessee arises out of order dated 12/08/2025 for assessment year 2014-15 on following grounds of appeal:
“1. On the facts and circumstances of the case in Law, Ld. CIT(A) erred in confirming addition of Rs. 17,04,600/- on account of difference of stampt duty and agreement value on account of purchase of property.
2 ITA 5134/Mum/2025; A.Y. 2014-15 Rudaram Dungararamji Choudhary 2. The Appellant reserves the right to add, alter, amend, or modify any of the grounds of appeal at the time of hearing or thereafter.” Brief facts of the case are as under:
The assessee is an individual and filed his return of income on 26/09/2014 declaring total income at Rs.9,37,690/-. The case was selected for scrutiny and notices under section 143(2) of the act along with 142(1) of the act was issued to assessee. In response to a statutory notices assessee file requisite details as called for.
2.1 The Ld.AR observed that assessee during the year under consideration had purchased the property having a transaction value of Rs.1,33,64,550/-. To verify the purchase, requisite documentary evidences were called for wide notice dated 23/08/2016. The assessee in response submitted the registered agreement towards purchase of the flat dated 31/12/2013, that was registered on 05/03/2014. The Ld.AO observed that, sale consideration recorded in the agreement was Rs.1,16,59,950/- but the stamp duty was paid at the value of Rs.1,33,64,550/-.
2.2 The Ld.AO thus made addition of the differential amount in the stamp duty value by invoking provisions of section 56(2)(vii)(b) of the act.
2.3 Aggrieved by the order of the Ld.AO, simplified appeal before the Ld.CIT(A).
2.4 The Ld.CIT(A) after considering the submissions of the assessee observed and held as under: “6.1.1 The appellant raised a ground that the Ld. AO erred in making an addition of Rs 17,04,600/- for the stated difference
3 ITA 5134/Mum/2025; A.Y. 2014-15 Rudaram Dungararamji Choudhary between the stamp duty value and the value of consideration as per the registered deed paid towards acquisition of an immovable property i.e. flat, without ascertaining facts. Learned Assessing Officer has misconstrued the facts and circumstances in case of the assesse and erred in concluding that part payments of Rs 2,25,210/- each dated 18/10/2010 and 02/01/2011 by bank cheques were not on account of the agreed purchase of this flat During the appellate proceedings, the appellant submitted that flat was allotted on 18.10.2010. Letter by the builder confirming the allotment date as well as purchase consideration amount being Rs.1,16,59,950/- along with details of the booking confirmed done by payment of Rs.2.25,210/- by cheque No 893367 dated 18.10.2010. As the date of registration and date of agreement fixing the consideration. is not same then as per Sec 56(2)(vii)(b) date of agreement fixing the consideration le 18.10.2010 to be considered as date for stamp duty value. Appellant further submitted that appellant has not received any possession of the property till date and the case has been filed against the builder in National Company law tribunal Appellant also stated that even if stamp duty value is considered for 2013 then since Completion Certificate or Occupancy certificate has not received at the time of entering into agreement (in fact the same is not received till date), the stamp duty value should accordingly be adjusted for non-receipt of Completion Certificate or Occupancy certificate. Appellant also relied on case laws in support of his case.
6.1.2 I have gone through the assessment order, submissions made by the appellant From the facts of the case it is noticed that during the year under consideration, the appellant has purchased a flat The date of agreement is recorded as 31-12- 2013 and the date of registration is found to be on 05-03-2014. The sale consideration is recorded at Rs. 1,16,59,950/- and the stamp duty value is recorded at Rs.1,33,64,550/-, The consideration paid by the assessee for purchase of the property is lesser than the stamp duty value of the property and the difference is of Rs. 17,04,600/- (Rs.1,33,64,550 Rs.1,16,59,950). Accordingly, AO treated this difference as the income of the assessee under the head "income from other sources' u/s 56(2) (vii) (b) of the Act and added to the total income. Aggrieved with the above addition made in the assessment order, the assessee filed the present appeal and contended that as the first payment for booking was made in the year, 2010, the ready reckoner rate of the year 2010 should be applicable to the said flat and the stamp duty value for the 2010 should be considered.
4 ITA 5134/Mum/2025; A.Y. 2014-15 Rudaram Dungararamji Choudhary 6.1.2.1 During scrutiny proceedings, AO recorded statement u/s 131 of the Act from the assessee. During his statement, the assessee furnished copy of letter dated 26.12. 2016 issued by the builder acknowledging the receipt of booking amount from the assessee towards the flat on 18.10.2010 and it is also mentioned in the letter that the cost of the flat is Rs.1,16,59,950/-. However, when the assessee was asked that whether any agreement was entered into with the builder at the time of payment of booking amount or after, the assessee replied that no such agreement was made. The only agreement which was made was that entered on 31.12.2013 and the same had been registered on 05.03.2014.
6.1.2.2 As per the provisions of sec. 56(2) (vii) (b) of the Act, in a case where an assessee, being an individual, purchases any immovable property for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration shall be chargeable to income-tax under the head income from other sources. There are certain safeguards available to the assessee in respect of applicability of sec.56(2) (vii) (b) of the Act. First one is mandated in first proviso to the said section wherein it is mentioned that in case of delayed registration, the date of agreement fixing the amount of consideration' may be taken for the purpose of referring to stamp duty value. Further, second proviso to the said section is also there, but it is basically dependent on the first proviso. In the second proviso, it is mandated that in case any payment has been made on or before the date of agreement fixing the amount of consideration, then only first proviso shall apply. When the facts of the case of the assessee are examined vis-à- vis the statutory provisions, it is seen that though the assessee has made payment of Rs. 2,25,210/-on 18.10.2010, but there is no agreement made on or before this date. Therefore, the contention of the appellant that the rate for the year 2010 should be applied to the property is not acceptable, Further, the argument of the appellant that the stamp duty value should be adjusted for non-receipt of Occupancy certificate is also not acceptable since the date of registration of property and the stamp duty value on the date of registration has to be considered as per law for the purpose of computation of income. In view of the above discussion, the action of AO is justified in making addition of Rs. 17,04,600/- u/s 56(2) (vii) (b) of the Act. Accordingly, the grounds raised by the appellant are 'dismissed'”
5 ITA 5134/Mum/2025; A.Y. 2014-15 Rudaram Dungararamji Choudhary 3. Aggrieved by the order of the Ld.CIT(A), assessee is in appeal before this Tribunal.
The Ld.AR’s during assessment proceedings assessee had furnished letter dated 26/12/2016 issued by the builder acknowledging receipt of booking amount from the assessee towards the flat on 18/10/2010. The said letter also has a reference to the total cost of the flat to be Rs.1,16,59,950/-. The Ld.AR the submitted that based on this later issued by the builder assessee had subsequently various occasions during 2010, 2011 and 2012 as in when assessee was called upon to make payments by the builder.
4.1 He submitted that merely because the agreement was registered on 31/12/2013 at the time when the stamp duty authority determine the value of the flat at Rs.1,33,64,550/-, cannot be the reason to invoke provisions of section 56 (2)(vii) (b) of the act. He submitted that the 1st payment made by the assessee’s on 18/10/2010 towards the purchase of the flat as earnest money has to be treated as the date on which the assessee agreed to purchase the flat from the builder. He submitted that subsequently assessee had made various payments in instalments on 20/03/2010 to 11/01/2011, 20/01/2011, 21/01/2012.
The Ld.AR submitted that admittedly there is no allotment letter that was issued by the builder however the receipts against which the payments were made categorically shows that they were the part payment towards the consideration agreed between the assessee in the builder. Thus, the Ld.AR submitted that once
6 ITA 5134/Mum/2025; A.Y. 2014-15 Rudaram Dungararamji Choudhary the assessee brought on record documentary evidence for the part payment of the purchase consideration during 2010 through cheques and the builder having accepted the booking of the flat in the name of the assessee on 19/10/2010 then the booking of purchase of flat coupled with the payment made by the assessee in pursuant to the booking of the flat constitute an agreement as provided U/s 56(2)(vii) of the Act. The Ld.AR contended that the Ld.AO wrongly adopted the stamp duty value as on the date of registration of the document on 31/12/2014 instead of stamp duty valuation on 18/10/2010.
On the contrary the Ld. DR placed reliance on the orders passed by the authorities below. He submitted that, provisions of section 56 (2) (vii) is very clear and will be applicable to the present facts of the case as there is a difference between the agreement value and the value determined by the stamp authority.
I have perused the submissions advanced by both sides is the light of the records placed before me.
There is no dispute that the assessee purchased a flat in question from HDIL vide sale agreement dated 31/12/2014 registered with Sub-Registrar, Mumbai for a consideration of Rs.1,16,59,950/-. The valuation made for the purpose of stamp duty purposes at the time of registration is at Rs. 1,33,64,550/-. The Ld.AO invoked provisions of section 56(2)(vii) of the Act for making the addition of the differential amount between the stamp duty valuation and purchase consideration paid by the assessee.
The assessee claimed that the he booked the flat on 7 ITA 5134/Mum/2025; A.Y. 2014-15 Rudaram Dungararamji Choudhary 18/10/2010 and made advance payment of Rs.2,25,210/- on 18/10/2010. He further submitted that same amount was made on 23/10/2010. The Ld.AO has not disputed these payments made by the assessee vide two cheques dated 18/10/2010 and 23/10/2010.
The only dispute is regarding whether the stamp duty valuation has to be taken as on the date of booking of the flat and part payment made by the assessee or at the time of final registration of the purchased document. The assessee produced confirmation of the builder regarding the payments received at the time of booking of flat of Rs. 2,51,000/- vide letter dated 26/12/2016, wherein the builder confirmed that the cost of flat to beRs.1,16,59,950/-and the booking was done by payment of Rs.2,25,210/- by cheque dated 18/10/2010 drawn on Canara Bank. We further note that even in the final agreement which is registered on 31/12/2014, the payment schedule is given which is as per the various stages of completion of project, therefore, the parties at the time of booking, agreed for the payment as it is part of the agreement registered on 31/12/2014. All these facts and undisputed part payment made by the assessee through cheques during 2010 clearly established that at the time of booking, there was an agreement between the parties regarding the purchase and sale of the flat in question and payment of the purchase consideration as per the agreed schedule between the parties. Thus, even if there is no separate agreement between the parties in writing but the agreement which is registered itself shows that the terms and conditions as contained in the said agreement were agreed between the parties at the time of booking
8 ITA 5134/Mum/2025; A.Y. 2014-15 Rudaram Dungararamji Choudhary of the flat. Hence, in our considered opinion that there was an agreement between the parties regarding purchase and sale of flat in question at the time of booking of the said flat and part payment made by the assessee on 18/10/2010 through cheque and there is subsequent payment on 23/10/2010 through cheque. Thus, the booking of the flat and part payment by the assessee constitute agreement between the parties as the terms and conditions which are reduced in writing in the agreement registered on 31/12/2014 relates to the performance of both the parties right from the beginning i.e. date of booking of the flat. The provisions of section 56(2)(vii) of the Act reads as under:
"Section 56
(1)……….
(2) In particular, and without prejudice to the generality of the provisions of sub-section (1), the following incomes, shall be chargeable to income-tax under the head "Income from other sources", namely :—
……….
(vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009 but before the 1st day of April, 2017,—
(a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;
(b) any immovable property,—
(i) without consideration, the stamp duty
9 ITA 5134/Mum/2025; A.Y. 2014-15 Rudaram Dungararamji Choudhary value of which exceeds fifty thousand rupees, the stamp duty value of such property;
(ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration:
Provided that where the date of the 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 the agreement may be taken for the purposes of this sub-clause:
Provided further that the said proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by any mode other than cash on or before the date of the agreement for the transfer of such immovable property;
11. Thus, as per clause (b) of sub-section (2)(vii), if the assessee has received immovable property for a consideration which is less
10 ITA 5134/Mum/2025; A.Y. 2014-15 Rudaram Dungararamji Choudhary than the stamp duty value, the value of such property as exceeds such consideration shall be chargeable to income tax under the head income from other sources.
However, the first and second proviso carve out the exception for taking stamp duty value on the date of agreement prior to the date of registration if an amount of consideration or part thereof has been paid by any mode other than the cash before the date of agreement for transfer of such immovable property.
Therefore, if there is an agreement between the parties, fixing the amount of consideration for transfer of immovable property prior to the date of registration and the purchaser has made the payment of consideration or part thereof before the date of that registered agreement for transfer by any mode other than cash then the value as determined for the stamp duty will be taken on the date of such earlier agreement.
In the case in hand, all these facts are duly acknowledged by the parties in the registered agreement that earlier there was a booking of flat and the assessee paid part payment of consideration. Hence, the proviso first and second to section 56(2)(vii) of the Act would be applicable in the case and the stamp duty valuation or the fair market value of the immovable property shall be considered as on the date of booking and payment made by the assessee towards booking of the flat. Accordingly, the orders of the authorities below are set aside and the matter is remanded to the record of the Ld.AO to apply the stamp duty valuation as on 18/10/2010 when the assessee booked the flat
11 ITA 5134/Mum/2025; A.Y. 2014-15 Rudaram Dungararamji Choudhary and made part payment of consideration and consequently, if any difference in the stamp duty valuation is higher than the purchase consideration paid by the assessee, the same would be added to the income of the assessee under the provisions of section 56(2)(vii)(b) of the Act.
Accordingly grounds raised by the assessee stands allowed. In the result appeal filed by the assessee stands allowed. Order pronounced in the open court on 30/09/2025