SEEMA HASMUKH SHAH,MUMBAI vs. INCOME TAX OFFICER,WARD 41(4)(4), MUMBAI, MUMBAI

The Ld. Counsel for the assessee, at the outset, submitted that the only dispute in appeal is as to whether the valuation of property for the purpose of stamp duty to be considered as on the date of MOU / agreement for transfer of immovable property or the stamp duty value as on the date of agreement for the purpose of the provision of Section 56(2)(x) of the Act. Ld. Counsel for the assessee submitted that the assessee was a tenant of Unit No. 17 at Bharti Bhavan, 4th floor, Jawahar Nagar, Goregaon (West), Mumbai which was under redevelopment and have been allotted Flat No. 3 in the new building admeasuring about 967 sq. ft. including the additional area of 347 sq. ft. purchased for a consideration of Rs. 42 Lakhs as per MOU dated 08.10.2013 which is placed at pages 40 to 43 of the paper book. Ld. Counsel submitted that the assessee has made payment of Rs. 42 Lakhs in the month of October, 2013 at the time of executing the MOU. The details of payments along with copy of bank statement reflecting the payment is placed at pages 44 to 47 of the paper book. Ld. Counsel for the assessee submitted that a final agreement of permanent Alternate Accommodation / Sales of Additional Area was executed on 7th July, 2017 wherein consideration value for stamp duty was calculated at Rs. 1,39,58,000/- which includes the construction cost of the free area and market value of additional area purchased by the assessee. Ld. Counsel submitted that this value of Rs. 1,39,58,000/- was arrived based on the ready reckoner of 2017 2 whereas the assessee has purchased the said additional area as per the MOU dated 08th October, 2013 and accordingly as per the provisions of Section 56(2)(x) of the Act, the Stamp Duty Value is required to be considered as in the year 2013 and not 2017. The Ld. Counsel invited our attention to the provisions of Section 56(2)(x) specially the Ist proviso. Referring to this proviso, Ld. Counsel stated that it is very much clear from this proviso that if the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, Stamp Duty Value on the date of agreement may be taken for the purpose of sub-clause (x) of Section 56(2) of the Act. Ld. Counsel further submitted that the assessee in the course of assessment proceedings had explained this to the A.O. and also during appellate proceedings, the same was explained before the Ld. JCIT(A). However, both the authorities failed to consider the submissions of the assessee in proper perspective and confirmed the addition. Ld. Counsel further placed reliance on the following decisions in support of his contentions:

Ld. D.R. placed reliance on the orders of the authorities below.

Heard, rival contentions and perused the orders of the authorities below, material placed before us and the decisions relied on. The facts as narrated above are not in dispute. Therefore, the only question to be considered in this appeal is whether there is any difference in valuation for the purpose of the provisions of Section 56(2)(x) when the date of agreement for purchase of property and the date of registration occurred on two different dates. In the case in hand, the assessee entered into an MOU for redevelopment of the property in the month of October, 2013 and paid the sale consideration in October, 2013 only. Subsequently, the agreement of Permanent Alternate Accommodation / Sale of Additional Area was executed on 17.07.2017 and while executing these documents, the Stamp Duty was calculated based on a consideration as per ready reckoner at Rs. 1,39,63,000/-. First proviso to Section 56(2)(x) is very much clear in the sense that when the date of agreement and the date of execution of registration are two different dates the Stamp Duty Value on the date of agreement may be taken for the purpose of sub-clause (x) of Section 56(2) of the Act. Applying the first proviso to the facts of the assessee’s case since the MOU was entered into 2013 according to which the sale consideration was Rs. 42 Lakhs. Therefore, for the purpose of Section 56(2)(x) the sale consideration to be adopted is only 42 Lakhs and not 1,39,63,000/- as calculated based on ready reckoner value when the final registration was made for transfer of property. The decisions relied by the assessee also supports the contentions of the assessee that the first proviso to Section 56(2)(x) applies to the assessess’s case. Thus respectfully, following the said decisions, we direct the Assessing Officer to delete the addition made u/s 56(2)(x) of the Act.

Since, we have deleted the addition made by the Assessing Officer u/s 56(2)(x) of the Act, the penalty levied u/s 270A of the Act based on such addition made in the quantum assessment has no legs to stand. Accordingly, such penalty is directed to be deleted.

In the result, both the appeals of the assessee are allowed.