SHRI. VARDHMAN STHANAKWASI SHRAWAK SANGH,MUMBAI vs. ITO EXEMPTION, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “G”, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER And SHRI RAKESH KUMAR LODHA, ACCOUNTANT MEMBER ITA No. 3631/MUM/2026 Assessment Year: 2018-2019 SHRI VARDHMAN Income Tax Officer – STANAKWASI SHRAWAK Ward 32(2)(1) SANGH B-64, Next to Vijaynagar Kautilya Bhavan, Vs. School, Near Swaminarayan Mumbai - 400051 Maharashtra Temple, Borivali West Mumbai - 400091 Maharashtra PAN- AAETS0702R (Appellant) (Respondent) Assessee Represented by : Shri Saurav Bhatt CA Revenue Represented by :Shri Rajgopal Parthasarathi (SR DR)

Date of Hearing : 13.08.2026 Date of Pronouncement : 15.09.2026

O R D E R PER : Shri Rakesh Kumar Lodha, Accountant Member:

This appeal has been filed by the Assessee against the order

under section 250 of the Income-tax Act, 1961 ( in short “the Act”)

passed by the learned Commissioner of Income-tax (Appeals), dated

12th January, 2026, for the assessment year 2018-19, arising out of

the assessment order under section 143(3) of the Act dated 01-02-

2021.

trust engaged in charitable/religious activities and registered under

section 12A of the Act vide registration order dated 2 24.06.2004/24.03.2004 bearing Registration No.TR-38344, filed its

return of income for the assessment year 2018-19 declaring total

income at Rs. Nil. Subsequently, the case was selected for scrutiny

assessment vide notice under section 143(2) of the Act dated 22nd

September, 2019 for the issue of difference in stamp duty value and

purchase consideration found from registered purchase deed of an

immovable property took place on 29th March, 2018. The assessee has

acquired an immovable property, flat No. 201, Building No. 65, Yogi

Nagar, Borivali West, Mumbai, for purchase consideration of

₹38,94,296/- in the FY 2001-02 and registration of deed took place in

current year. Before the Assessing Officer, it was submitted that the

assessee trust had purchased the said immovable property for

₹38,94,296/- from the seller M/s Vijaynagar Corporation, Mumbai on

24-04-2001 through advance payment of ₹11,00,000/- by cheque No.

38281 drawn on Dena Bank account No. 18056 of the assessee, being

booking amount and balance amount of purchase consideration was

also during 2001-2005 period, taken the possession of property paid

commenced utilization of that with electricity connection etc in its name. 3

by the developer, Vijaynagar Corporation, Dena Bank pass book cover

page, registered sale deed dated 31st March, 2018 containing the

payment of ₹38,94,296/- placed before the Assessing Officer for

examination and verification of facts.

regarding the advance payment of ₹11,00,000/- to the developer on

24th April, 2001, for the reason that, registration u/s 12A was granted

in 2004, the date of incorporation of an institution appearing on the PAN

card was 1st April, 2002, thus, it could not possible to made payments

prior to incorporation and rejected the contention of purchase of

property in FY 2001-02, accordingly, made an addition under section

56(2)(x)(b) of the Act of Rs. 1,42,89,204/- being difference between

stamp duty value and purchase consideration paid for aforesaid

purchase.

preferred an appeal before the Ld. Commissioner of Income-tax (Appeals) on 25th February, 2021, where contended that impugned

property was purchased through booking on 27-04-2001, through the

allotment letter with advance payments of Rs 11,00,000/- by cheque of

bank account of assessee, with further installments upto 2005. It was

also placed on record that formation of the trust carried out in executive

committee meeting held on 25-06-2000 that was the date of existence

of trust, following that bank account no. 091110011428 with the then

Dena Bank, Yogi Nagar Branch, Boriwali, opened on 28-06-2000. The

property was in continuous possession of assessee from 2001 and

utilizing for charitable activities with Electricity, water connection etc in

its name, the copy of bills of utility services were also produced. The

Commissioner Income tax, appeals also doubted that how appellant

trust entered into agreement for purchase of an immovable property

before its incorporation, when there was no legal existence of trust. The

mere date of incorporation mentioned in the PAN alone cannot be basis

for denial of its existence, however, other material documents like bank

statement, affidavit of the trust member etc also proved that it was in

existence prior to that date. However, the CIT (appeals) did not endorse 5 its contention, and observed that no agreement to sale between the

seller and assessee was executed in 2001, allotment letter could not be

treated as an agreement to sale of an impugned property and utility

bills furnished by the Assessee to prove its continuous possession and

enjoyment of property, were also not found in support to the

foundational question of its existence in year 2001. Accordingly,

confirmed addition under section 56(2)(x)(b) of Rs 1,42,89,204/- vide

order dated 12th January, 2026.

documents, namely, the allotment letter dated 27th April, 2001 issued

by the developer, the bank account passbook containing the date of

opening of the bank account i.e. 28-09-2000 with Dena Bank, in the

name of the Assessee itself. Apart from that he also raised legal issue

that in terms of first and second proviso to section 56(2)(x), the date of

comparison for finding the difference between stamp duty value and

purchase consideration, the date of allotment is relevant, not the date

of registration of sale deed.

purchase of property would be considered as date of acquisition, in

support of that he relied upon judgments of the coordinate Benches of

the ITAT, Mumbai, wherein, it is held that where an allotment letter is

issued and consideration is paid through banking channels prior to the

date of registration, for the purpose of the determination of deemed

income under section 56(2)(x) of the Act, the stamp duty value of the

property as on the date of allotment/agreement and payment of

advance through banking channel, is relevant, not the subsequent date

of registration of the conveyance deed. Here in the case advance

payment of Rs. 11,00,000/- paid through cheque no. 18056 of the Dena

Bank to seller in FY 2001-02 and as per the ready reckoner stamp duty

value as on 27-04-2001 was Rs 32,94,198/-, which was lower than

actual purchase consideration of Rs 38,94,296/- paid by assessee,

resulting in no addition u/s 56(2)(x) of the Act on that account was

warranted for computation of deemed income. The another ground of

appeal being legal that, the 12A registered charitable institution are out

of the applicability of provisions of section 56(2)(x) of the Act. 7

Tribunal dated 5th September, 2022, in the case of Shri Sajjan Raj

Mehta v. Income-tax Officer, ITA No. 56/Mum/2021, wherein the

Tribunal has held that in cases where assessee has made advance

payments through banking channel, is entitled to the benefit of the

proviso to section 56(2)(x)(b) of the Act.

a General Body Resolution dated 25th June, 2000 and, in support

thereof, placed on record an affidavit dated 23rd January, 2021 of the

trustee, Shri Kishore Durlabhji Ghatani, affirming the said facts.

payment receipts, water, electricity and gas bills relatable to the

property since 2003 and a copy of the passbook containing the name of

the account holder and showing that the bank account was opened on

28th September, 2000. Further, contended that the trust had taken

possession of the property in 2003 and relied upon the contemporaneous documents in evidence to support its possession over

the property from 2003-04.

provisions of section 56(2)(x) are not applicable on trust registered

under section 12A of the Act, in respect of acquisition of immovable

property are not applicable. The assessee placed reliance on the ITAT,

Indore Bench, order in the case of Shri Sai Samarpan Trust v. ITO,

(2018)94 Taxmann.com 346 (ITAT Indore), and the judgment of

the Hon’ble Karnataka High Court in the case of DIT (Exemption) v.

Sri Belimatha Mahasamsthana Samsthana Mutt, for the proposition

that the assets of a trust registered under section 12A cannot be

brought to tax under section 56 of the Act.

the lower authorities and stated that, as on the date of advance

payment of ₹11,00,000/- by the Assessee, the Assessee could not have

existed for the reason that its date of incorporation was 1st April, 2002,

as appearing on the PAN.

date of advance payment of ₹11,00,000/- by the assessee to seller on

27-04-2001, the Assessee was in existence or not; whether the

payments for purchase of the immovable property were made prior to

the date of registration of the sale agreement/conveyance by the

Assessee or not; and whether the provisions of section 56(2)(x) of the

Act are applicable to a trust registered under section 12A of the Act.

on record, considering the decisions relied upon by the Assessee,

observed that assessee was formally constituted through passing of a

resolution dated 25th June, 2000 by the executive committee members

in their meeting, however, did not executed formal deed and obtained

PAN at that time. In support to that a duly sworn affidavit dated 23rd

January, 2021 of trustee, Shri Kishore Durlabhji Ghatani, placed before

the Assessing Officer and CIT(Appeals). It is noticed that neither the

Assessing Officer nor the CIT(A) has raised any doubt regarding the

contents of the affidavit or found that fictitious. Contrary to that, date of incorporation 01-04-2002 as mentioned in the PAN is considered as its

date of existence, however, the bank passbook containing the date of

opening of bank account as 28-09-2000 proved otherwise with the

existence prior to date mentioned in PAN, the name of the Assessee

thereupon proves that it was in existence prior to the date of

incorporation, i.e., 1st April, 2002. The date appearing on the PAN

cannot, by itself, deny the existence of the trust prior thereto.

₹11,00,000/- for booking of the flat at Mumbai on 24th April, 2001,

further, confirmed by the seller, Vijaynagar Corporation. As the

assessing officer has neither rejected that fact nor carried out any

independent enquiry for verification of averment of the affidavit to

prove otherwise.

01-04-2002, banking transactions carried out prior to that date, we are

of the opinion that it was in existence.

As we are satisfied about its existence prior to 1st April, 2002, the

advance payment of ₹11,00,000/- transferred through banking channel

to the seller, Vijaynagar Corporation, also satisfies the condition of the

proviso to section 56(2)(x) for the purpose of adoption of the stamp

duty value of FY 2001-2002 of the flat for determination of difference in

value for computation of deemed income. The proviso to section

56(2)(x) of the Act is mentioned hereunder:

Where any person receives, in any previous year from any person or persons on or after 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

(A) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property,

(4) for a consideration, the stamp duty value of such property as exceeds such consideration, if the amount of such excess is more than the higher of the following amounts, namely

(i) the amount of fifty thousand rupees, and

(ii) the amount equal to ten per cent of the consideration:

Provided that 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:

Provided further that the provisions of the first proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed28, on or before the date of agreement for transfer of such immovable property.”

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. However, the second proviso contemplates that the stamp duty

value on the date of agreement may be taken only in a case where the

payment or advance payment was paid by the purchaser through an

account payee cheque or bank draft or through electronic clearing

system.

₹11,00,000/- on 24th April, 2001 through cheque No. 38281 of Dena

Bank, Account No. 18056. The Assessee has demonstrated the payment

through the bank by way of confirmation of receipt issued by the seller,

Vijaynagar Corporation.

Bench, in the case of M/s. Pinstripe Properties Private Limited v.

DCIT, ITA No. 3756/Mum/2024, wherein, held that where the

assessee had paid part of the purchase consideration for acquisition of a

flat as per the terms of allotment and the payment was made through

banking channels prior to execution of the sale agreement, the proviso

to section 56(2)(x) should apply and no addition could be made to the

assessee's income by adopting the stamp duty value of the property on

the date of registration of the sale deed. The relevant findings of the

Tribunal are extracted hereunder:

“5. Heard both the sides and perused the material on record. During the course of assessment, the assessing officer noticed that assessee had purchased flat no. 204, B-Wing, “Insignia” building situated at Kalina, Santacruz (E), Mumbai for a consideration of Rs. 1,79,94,452/-. However, the value of the said property as per the stamp duty was determined at Rs. 2,73,41,000/-. Therefore, the assessing officer has added difference of Rs. 93,46,548/- in the total income of the assessee after applying the provisions of section 56(2)(x) of the Act. The assessee has submitted the copies of allotment letter of flat no. 1601 & 1701 dated 18.03.2011 wherein it is categorically stated that said flat has been allotted to the assessee and the assessee had paid Rs. 25,00,000/-. The assessee has also referred the allotment letter issued on 26.04.2016 placed in the paper book filed before us. We have perused the said allotment letter wherein it is specifically incorporated that due to change in Development Control Regulation for Greater Mumbai the builder was constrained to alter/amend the building plans. In view of the same assessee has been allotted another flat no. 204 on the 2nd floor in “Insignia” building in place of the flat no. 1601 & 1701 which was earlier allotted in A-Wing in “Insignia” building on 16th floor for a total consideration of Rs. 1,78,91,327/-. It is also mentioned in the allotment letter that acknowledgement of advance payment already made shall be considered and be treated to have been issued in respect of flat no. 204 in place of the earlier allotment. The assessee has also referred the copy of agreement for sale dated 11.09.2017 placed in the paper book. He also referred copy of bank statement showing that part of the sale consideration has been paid through banking channel on 08.02.2011. After perusal of the copies of material placed on record, it is evident that assessee has brought before the lower authority that due to change in Development Control Regulation for Greater Mumbai, 1991, the builder was constrained to alter/amend the building plans and in view of the same the builder allotted another flat on a lower floor. We find that this fact was not disproved by the assessing officer neither by making any enquiry from the builder nor brought any material on record to controvert the claim of the assessee. The allotment letter issued to the assessee dated 26.04.2016 substantiate that booking of old flat no. 1601 and 1701 15 was replaced by flat no. 204 because of the circumstances of change in Development Control Regulation as discussed (supra) in this order. We have also perused the provision of section 56(2)(x) of the Act applicable from A.Y. 2017-18, the relevant extract of the provision of section 56(2)(x) is reproduced as under:

“Section 56(2)(x)

Where any person receives, in any previous year from any person or persons on or after 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

(A) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property,

(4) for a consideration, the stamp duty value of such property as exceeds such consideration, if the amount of such excess is more than the higher of the following amounts, namely

(i) the amount of fifty thousand rupees, and

(ii) the amount equal to ten per cent of the consideration:

Provided that 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:

Provided further that the provisions of the first proviso shall apply only in a case where the amount of consideration referred to therein, or a part 16 thereof, has been paid by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed28, on or before the date of agreement for transfer of such immovable property.”

decisions relied upon, we find substance in the contentions raised by

the assessee. We, therefore, respectfully following the aforesaid

decisions, in the light of the facts of the instant case, and are of the

considered view that, for the purpose of application of section 56(2)(x),

the stamp duty value for the financial year 2017-18 does not have any

relevance. In terms of the above, the stamp duty value of the property

for the financial year 2001-02 is relevant, however, the Stamp duty

value of that period is less than the purchase consideration, so, there

would be no positive difference for making an addition u/s 56(2)(x) of

the Act.

addition based on the stamp duty value adopted from the registered sale deed dated 31st March, 2018. Under the circumstances, the appeal

of the assessee is allowed.

56(2)(x) of the Act, we do not find any reason to adjudicate other

grounds, which have become academic and are left open.

Order pronounced in the open court on 15.09.2026.

Sd/- Sd/- (NARENDER KUMAR CHOUDHRY) (RAKESH KUMAR LODHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 15.09.2026 SK, Private Secretary.

Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.