ARUNA JITENDRA MEHTA (WIFE OF LATE JITENDRA JAYANTILAL MEHTA),MUMBAI vs. ITO WARD 41(4)(1), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “H(SMC)”, MUMBAI BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER ITA No.8436/Mum/2025 (Assessment year: 2018-19)

Aruna Jitendra Mehta (Wife vs ITO, Ward 41(4)(1), Mumbai of Late. Jitendra Jayantilal Kautilya Bhavan, BKC, Bandra Mehta) (East), Mumbai-400051 B-304, Sanshkruti, Kedarmal Road, Malad(E), Mumbai- 400097 PAN:AADPM9537D APPELLANT RESPONDENT Assessee by : Shri Hitesh Jain Revenue by : Shri Pravin Salunkhe (Sr. DR)

Date of hearing : 21/04/2026 Date of pronouncement : 28/04/2026 O R D E R Per:Anikesh Banerjee (JM): The instant appeal of the assessee filed against the order of the NFAC, Delhi [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2018-19, date of order 10.11.2025. The impugned order emanated from the order of the National e-

2 ITA No.8436/Mum/2025 Aruna Jitendra Mehta (Wife of Late Jitendra Jayantilal Mehta) Assessment Centre, Delhi (for brevity the ‘Ld. AO’) order passed under section 143(3) r.w.s. 143(3A) and 143(3B) of the Act date of order 15.04.2021.

3 ITA No.8436/Mum/2025 Aruna Jitendra Mehta (Wife of Late Jitendra Jayantilal Mehta) Corporation Rules only, a new unit in the same premises was offered against the unit originally allotted. A Deed of cancellation was drawn up and on the same date new agreement was effected in which the amounts originally paid against the original unit were adjusted against the new unit. No amounts whatsoever were refunded and hence the facts stated by the Learned DCIT NeAC in page 8 of his AO are contrary to what exactly transpired. The Learned DCIT NeAC chose to ignore all the above facts and circumstances which prima facie led to the change in the actual unit purchased and thereby the actual values adopted for the actual areas of the new unit. He chose to ignore the allotment letter originally issued in 2008, the values adopted at that time and the payments already done against the same. Whatever document was executed in 2014 and thereafter in 2017 were just a translation of the entire transaction formally in the nature of a specific Sale Agreement, Cancellation Deed and New Sale Agreement. The values of the respective units originally allotted and finally executed differed only to the extent of the actual areas allotted. Mere fact that the agreements were executed in 2017 being the same year when the provisions of Sec 56 2 x were introduced does not make the appellant liable for the difference in stamp duty valuation because section 56 2 x cannot be applied retrospectively in the appellant case. While passing the order, the Learned DCIT NeAC considered Stamp duty value as on date of agreement 30.12.2014 for determining income from other sources as per section 56 2 x but the section itself is applicable after 1st April 2017 only. As already stated in point no 2 above, since the letter of allotment was received in 2008 against payment of allotment money made in 2008 itself and balance payments were made before 2010, if at all Stamp duty valuation has to be applied then the Learned DCIT NeAC needs to consider the value prevalent in 2008 and not that of 2014. The stamp duty value of the property as per Stamp duty ready reckoner 2008 is Rs 66000 per sq meter for shop commercial. Applying this rate to the actual area of 178.5 sqft 16.583193 Sq meter being the appellants share in the total area in unit B 401 of the building, the stamp duty valuation of the property comes to Rs 1094490 66000 at 16.583193. Further out of total consideration of Rs 10567375 paid for the said unit, the actual transaction value in the appellants case comes to Rs 1126483

4 ITA No.8436/Mum/2025 Aruna Jitendra Mehta (Wife of Late Jitendra Jayantilal Mehta) which is his share in the said unit. This is more than the stamp duty value and hence no addition is warranted. The term agreement has not been defined under the Income Tax Act but for factual representation purposes, reference can be made to definition in sec 2 e of the Indian Contract Act, 1872 which defines the term agreement. Based on the definition the allotment letter can be treated as agreement. Mere fact that Sec 56 2 x does not mention anything about letter of allotment does not make the appellants argument redundant its not a thread bare analysis but when certain terms are not explicitly defined one can definitely draw parallel by taking the benefit of the Act where such terms are clearly stated. The judgements submitted in support of the claim cannot be rejected simply because they speak of a different section but the intent of the section being the same has to be identified and accepted. Without taking cognizance of all the above-mentioned facts, the Learned DCIT NeAC has passed the AO confirming the addition based on stamp duty value on 30.12.2014 for reasons stated that are unjustified and unreasonable. The appellant also put forth a request for personal hearing through video conferencing on 02/04/2021 but the AO was passed on 15/04/2021 without granting this opportunity. The appellant being aggrieved of all the above has therefore preferred this appeal." 3. The Ld. AR argued and filed a paper book comprising pages 1 to 555, which has been placed on record. The Ld. AR contended that the date of allotment of the property, being Flat No. 708-B, was 02.05.2008, whereas the formal agreement for sale in respect of the said flat was executed on 30.12.2014. It was further submitted that the said agreement was subsequently cancelled on 22.09.2017, and in lieu thereof, another flat was allotted to the assessee, being Flat No. 401-B, for which the agreement was also registered on 22.09.2017. The Ld. AR submitted that the allotment of the new flat is a continuation of the earlier allotment, and therefore, for the purposes of section 56(2)(x) of the Act, the relevant date of allotment should be considered as 02.05.2008. It was further

5 ITA No.8436/Mum/2025 Aruna Jitendra Mehta (Wife of Late Jitendra Jayantilal Mehta) contended that the Ld. AO had violated the provisions of section 144B(6)(vii) and (viii) of the Act by not affording a reasonable opportunity of being heard to the assessee. The Ld. AR also submitted that the payments made towards the purchase of Flat No. 708-B were duly adjusted against the allotment of the new flat, and in support thereof, the bank statements have been furnished and are placed at pages 497 to 505 of the APB. It was pointed out that the initial payment was made on 26.04.2008 to the same promoter, namely, “Cannonade Constructions Pvt. Ltd”. Accordingly, it was argued that the assessee is entitled to adopt the valuation as on the year 2008 for the purposes of section 56(2)(x) of the Act. 4. The Ld. AR respectfully relied on the order of the Coordinate Bench in the case of Pinstripe Properties Pvt Ltd vs. DCIT reported in (2025) 172 taxmann.com 777 (Mum-Trib). The observation of the bench is reproduced as below:- “6. The First Proviso to section 56(2)(x) of the Act as above provides 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. However, the Second Proviso provides that the provisions of 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 on or before the date of agreement for transfer of such immovable property. In the case of the assessee it has already made part payment of Rs. 25,00,000/- vide RTGS dated 08.02.2011 through banking channel as discussed (supra) in this order. Apart of this even it is settled issue as per the various decisions of ITAT, Mumbai that Stamp Duty Valuation as on date of allotment letter should be considered for purposes of section 56(2)(vii)(b) of the Act. We consider that the respective allotment letters issued to the assessee should be considered as "Agreement to sell" for the purpose of section 56(2)(x) of the Act. Since the assessee has paid the parts of consideration as per the terms and conditions of

6 ITA No.8436/Mum/2025 Aruna Jitendra Mehta (Wife of Late Jitendra Jayantilal Mehta) allotment through banking channels prior to the execution of sale agreement therefore, we consider that proviso to section 56(2)(x) should apply to the facts of the present case. Therefore, as per the proviso to section 56(2)(x) as discussed the date of agreement in the case of the assessee will be taken to 18.03.2011 and not 26.04.2016 since it is clearly demonstrated from the relevant supporting material that allotment of the new flat has been made to the assessee in continuation of the replacing of the earlier allotment which was changed because of the unavoidable circumstances of change in the Development Control Regulation. Therefore, we consider that decision of ld. CIT(A) in sustaining the addition made by the assessing officer is not justified. Accordingly, the ground of appeal of the assessee is allowed.”

7 ITA No.8436/Mum/2025 Aruna Jitendra Mehta (Wife of Late Jitendra Jayantilal Mehta) sell can result only in a suit for damages and breach. Some of the main clauses in agreement to sell are details such as name of both the parties, the date and place of execution of the agreement, the consideration amount, mode and the time of payment, the conditions on which possession shall be delivered, the rights, obligations, and liabilities of each party along with the proportion of expenses to be met by each party. Last but not the least, the execution of an agreement for sale needs to be witnessed by two people from both the parties one from the purchaser's side and one from the seller's side.

(iv) The case laws relied upon by the assessee doesn't actually come to help of the assessee, the facts of the instant case being distinguishable from those cases. The decision of Maharashtra Real Estate Appellate Tribunal is basically on the issue of cancellation of booking by the allottee and claim of refund amount from the promoter. It doesn't deal with the provisions of 56(2)(x) or for that matter 56(2)(vii)(b) of the I.T. Act, 1961. (v) The case laws (i) (1) DCIT vs. Five Star Shipping Agency [59 Taxmann.com 369), (ii) ITO vs. Gopal S. Rajput (2016) [65 Taxmann.com 294] and (iii) Smt. J. Rama v. CIT [2012] 344 ITR 608/[2010] 194 Taxman 37 relied upon are all about the term 'contract for the purpose of TDS under Section 194C of the I.T. Act, 1961 and hence cannot be applied to the facts of the present case.

(vi) The decision of Hon'ble Punjab & Haryana High Court as cited by the assessee in the case of Vinod Kumar Jain vs. CIT &Ors. [2012] 344 ITR 501 is in respect of holding period of a capital asset for the purpose of capital gains and not relating to the facts of the present case. Hence, cannot be applied.

(vii) The assessee has also put forth alternative argument giving examples of retrospective and retroactive legislation relating to Section 50C of the Act stating that the same is akin to Section 56(2)(vii)(b). But this is not correct. Section 50C deals with the capital gains arising in hands of the seller and Section 56(2)(x) deals with income from other sources in the hands of the buyer of the property.

(viii) In fact, there is neither any retrospective nor any retroactive implementation of the provisions of Section 56(2)(x) in this case as has been stated by the assessee. For the sake of clarity, it may be mentioned here that the agreement dtd.30.12.2014 for the property No.708-B on 7th floor of the project 55, Corporate Avenue B Wing has been cancelled vide Cancellation Deed dated 22.09.2017, ie. prior to the date of registration (30.09.2017) of the new property B-401 on the 4th floor of the same building and all the amounts paid prior to that date has been refunded by the promoter to the purchasers on the date of cancellation. From the copy of the cancellation deed and money receipt furnished by the assessee, it is

8 ITA No.8436/Mum/2025 Aruna Jitendra Mehta (Wife of Late Jitendra Jayantilal Mehta) found that the assessee along with other purchasers have stated and declared that besides refund of the consideration money paid, they have no right, title, interest claim or demand of whatsoever nature in the said premises from 22.09.2017. Actually the property B-401 has been received by the assessee for inadequate consideration during the FY 2017-18, the sale deed for such property being executed on 30.09.2017. Allotment letter for such property B- 401 has been issued by the promoter on 06.07.2017 which is again during the FY 2017-18 relating to AY 2018-19. If at all the claim of the assessee is taken into consideration, then this allotment letter did. 06.07.2017 for the property B-401 is to be taken into consideration and even though the date of allotment and date of sale/registration are different, still there will have no effect, both the dates being fallen during the same FY and hence no change of stamp duty valuation of the property will be there. In that case also, there will be difference between the govt. valuation of the property for stamp duty purpose and the actual transaction amount. Only because the sale deed dtd 30.09.2017 refers to the earlier agreement for sale dtd.30.12.2014 and cancellation of the same at pages-8 and 9 of the document, the stamp duty valuation of the property as on the date of said agreement 30.12.2014 has been adopted here for the purpose of Section 56(2)(x) of the I.T. Act, 1961. (x) The Hon'ble ITAT, Mumbai 'G' Bench, Mumbai in the case of SujauddianKasimsabSayyed vs. ITO, 2(2), Kalyan, in ITA No.5498/Mumbai/2018, dtd.10.06.2019 have held that the letter of allotment cannot be considered as the date of execution of agreement by any stretch of imagination. Hence, have upheld the addition made by the AO u/s.56(2)(vii)(b) of the L.T. Act, 1961. Since the facts of the assessee's case are identical to those of the case of SujauddianKasimsabSayyed, the said decision of the Hon'ble ITAT is squarely applicable in this case.

4.8 In view of the above discussions, the explanation furnished by the assessee is not acceptable and hence not satisfactory. Therefore, the differential amount of stamp duty valuation of the property and the actual transaction amount of the property as on the date of agreement, i.e. 30.12.2014 coming to Rs.8,63,646/- as discussed in Para-4.5 above, is hereby added to the total income as income from other sources u/s.56(2)(x) of the I.T. Act, 1961 and charged to tax accordingly.” Addition: Rs.8,63,646/-“

9 ITA No.8436/Mum/2025 Aruna Jitendra Mehta (Wife of Late Jitendra Jayantilal Mehta) allotment of Flat No. 708-B in the year 2008 culminated in an agreement dated 30.12.2014, which was subsequently cancelled vide cancellation deed dated 22.09.2017. Upon such cancellation, the parties have expressly relinquished all their rights, title, and interest in the said property, and a fresh allotment/transaction in respect of Flat No. 401-B was executed on the same date, i.e., 22.09.2017. In view of these undisputed facts, the earlier transaction cannot be said to have continued, and therefore, the contention of the assessee that the valuation as on the date of allotment in 2008 should be adopted for the purposes of section 56(2)(x) of the Act is not sustainable. The ratio laid down in the order of the Coordinate Bench in Pinstripe Properties Pvt Ltd (supra) is factually distinguishable. We do not find any infirmity in the observation of the Ld. AO. Accordingly, the ground raised by the assessee seeking adoption of valuation as on 2008 stands rejected.

10 ITA No.8436/Mum/2025 Aruna Jitendra Mehta (Wife of Late Jitendra Jayantilal Mehta) adjudication after obtaining the DVO’s report, with due opportunity of being heard to the assessee. 8. In the result, the appeal of the assessee bearing ITA No.8436/Mum/2025 is partly allowed for statistical purposes. Order pronounced in the open court on 28th day of April 2026. - Sd/- Sd/- (OM PRAKASH KANT) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 28/04/2026 SAUMYASr.PS Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. 3. आयकरआयु� CIT 4. िवभागीय�ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाड�फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI