SHRI BHAGWATILAL BHIMSHANKAR JOSHI ,MUMBAI vs. ITO WARD 19(1)(1), MUMBAI

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ITA 7351/MUM/2025Status: DisposedITAT Mumbai26 May 2026AY 2020-2117 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the date of allotment and initial payment is relevant for determining the property's value for tax purposes, not the later registration date. The increase in flat area due to building plan amendments did not alter the fundamental rights accrued to the assessee at the time of allotment.

What were the facts?

The assessee booked a flat in 2012 and paid an advance. The agreement was registered later in 2019 due to construction delays. The Assessing Officer made an addition under Section 56(2)(x) based on the difference between the stamp duty value and the consideration paid, considering the later registration date.

What were the issues?

Whether the stamp duty value on the date of allotment or the date of registration should be considered for additions under Section 56(2)(x) when there are delays in registration due to construction issues.

Which sections of the Income-tax Act were involved?

Section 56(2)(x),Section 50C(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: HON’BLE SANDEEP GOSAIN & HON’BLE JAGADISH

For Respondent: Shri Swapnil Choudhari ( SR

आदेश / ORDER

PER SANDEEP GOSAIN, JUDICIAL MEMBER:

This appeal is filed by the Assessee against the order of Ld. NFAC dated 22-Sep-2025 for the Assessment Year 2020-21. The Assessee has raised the following grounds of appeal:

1.

The Ld. Commissioner of Income Tax (Appeals) (hereinafter referred to as "CIT (A)"] erred in passing the appellate order dated 22.09.2025 under section 250 of the Act confirming the addition made by the Ld. Assessing Officer without 1 appreciating the facts and circumstances of the case. Hence, the impugned order passed by the Ld. CIT(A) is arbitrary and unlawful.

2.

The Ld. CIT(A) fell in error of law in confirming the addition of Rs.51,23,000/- invoking the provisions of section 56(2)(x) of the Act by treating the difference between the Fair Market Value and the actual consideration paid for the purchase of residential Flat at Lifescapes Kshitij Mumbai without appreciating that the provisions of section 56(2)(x) is not at all applicable to the facts of the present case. Hence, the arbitrary addition of Rs.51,23,000/- under section 56(2)(x) of the Act is unjustified and the same may be deleted.

3.

The Ld. CIT(A) failed to appreciate that the Appellant had booked the flat at Lifescapes Kshitij Mumbai by paying Advance of Rs.15,43,500/- on 12.11.2012 and also received allotment letter on 14.12.2012. The actual purchases price as on date of allotment is as per agreement. Hence, the impugned order passed by the Ld. CIT(A) is arbitrary and unlawful.

4.

The Ld. CIT(A) further failed to appreciate that the Appellant has purchased the bare shell flat ie. without any civil work, without flouring, without electrical fitting and without bathroom fitting. The building was without OC and still as on 1.11.2025 is under Construction. Thus, the addition of Rs.51,23,000/- is without any basis and the same may be deleted.

5.

Without prejudice to the above, the Ld. CIT(A) further, erred in not directing the Ld. AO to refer the matter to the Departmental Valuation Officer, despite specific request made by the Appellant, thereby violating Section 50C(2) read with judgments requiring DVO reference wherever valuation is disputed. Thus, the impugned addition of 51,23,000/- under section 56(2)(x) of the Act is against the provisions of law and the same may be deleted.

6.

The Appellant denies any liability to pay interest under section 234B and 234C of the Act. Hence, the same are not leviable.

7.

The Appellant seeks leave to add, alter, and amend the above grounds whenever required.

2. Ground Nos. 1 to 4 raised by the assessee relates to challenging the order of the Ld. CIT(A) in upholding the additions made by the AO under section 56(2)(x) of the Act. Therefore, we have decided to adjudicate these grounds through the present consolidated order. The Ld. AR reiterated the same arguments as were raised before the Revenue Authorities and also relied upon the written submissions submitted before the Ld. CIT(A) and the same is reproduced herein below:

3.

Whereas, on the contrary, the Ld. DR relied upon the orders passed by the Revenue Authorities.

4.

We have heard counsel for both the parties, perused the material placed on record, the judgments cited before us, and also the orders passed by the Revenue Authorities. From the records, we noticed that the assessment in the case of the assessee was completed under section 143(3)

of the Act, thereby making additions under section 56(2)(x) of the Act on account of the difference in stamp duty value and agreement value of Rs. 51,23,000.

5.

As per the facts of the present case, the assessee had agreed to purchase Flat No. 501 from Roxina Real Estate Pvt. Ltd. and the said flat was booked on 12.11.2012, and an amount of Rs. 15,43,500/- was paid by Cheque No. 470897 dated 12.11.2012 drawn on UCO Bank. The stamp duty value of the property on 12.11.2012 was Rs. 1,36,80,000/-. The assessee was allotted Flat No. 501 on the 5th Floor, B Wing, in the building “Lifescapes Kshitij” at Paramanand Wadi, Babasaheb Jaikar Marg, Mumbai, for a total consideration of Rs. 1,36,80,000 vide letter of allotment dated 14.11.2012. However, the assessee got the said agreement registered on 24.04.2019 as there was delay in construction work.

6.

However, the Revenue rejected the contentions of the assessee on the ground that, on the date of allotment, only a small amount of payment was made and, further, it was noticed that the area of the flat had increased as per the registered agreement of sale dated 24.04.2019 in relation to. the initially booked flat as on 12.11.2012.

7.

We further noticed that the flat bearing No. 501 on the 5th Floor was allotted to the assessee vide letter of allotment dated 14.11.2012 and the assessee had paid consideration through cheque dated 12.11.2012. However, the building plan of the said building was amended, pursuant to which the size of the flat was altered to 1062.83 sq. ft. in place of 889 sq. ft. Thus, only the area of the flat was increased, whereas there was no change in the Flat No., Floor, or Building. Therefore, the area was

increased because of the amendment in the building plan, but the whole case relates back to the letter of allotment, as the flat and location remained unchanged.

8.

Therefore, merely because the area of the flat increased due to amendment in the building plan, the right of the assessee cannot be taken away, as the right in the said property accrued by virtue of payment made by the assessee pursuant to the letter of allotment. The said letter contains all the material details, i.e., Flat No., Floor No., and Building Address. Since the letter of allotment holds prime importance and contains all the ingredients of an agreement, the date of allotment can be considered as the date of acquisition for the purpose of calculating LTCG.

In this regard, reliance is placed upon the following decisions:

a) "Siraj Ahmed Jamalbhai Bora vs. ITO Ward 1(3) (1) ITA No. 1886/M/2019 dtd. 28/10/2020, (Mum.) (Trib.): Date of registration irrelevant for Sec 56(2) (vii) (b) as substantial obligation discharged on date of agreement.

b) Radha Kishan Kungwani vs. ITO Ward 1(2) ITA No. 1106/JP/2018 dtd. 19/08/2020, [185 ITD 433 (Jaipur - Trib.)] Where assessee entered into agreement for purchase of flat and had made certain payment at time of booking of flat, stamp duty valuation or fair market value of immovable property was to be considered as on date of payment made by assessee towards booking of flat

c) Sanjay Dattatraya Dapodikar v/s ITO Ward 6(2), Pune ITA No. 1747/PN/2018 dtd. 30/04/2019 (Pune) (Trib) Where date of agreement for fixing amount of consideration for purchase of a plot of land and date of registration of sale deed were different but assessee, prior to date of agreement, had paid a part of consideration by cheque, provisos to section 56(2) (vii) (b) being fulfilled, stamp value as on date of agreement should be applied for purpose of said section

d) Ashutosh Jhavs. ITO Ward-2(5), Ranchi ITA No. 188/Ranchi/2019 dtd. 30/04/2021, [190 ITD 450 (Kolkata Trib.).] Where assessee purchased a property and made part payment of sale consideration by cheque on very next day of execution of purchase agreement and registry was done after a year, since such part payment made by cheque on very next day of execution of agreement was towards fulfilment of terms of purchase contract itself and there was no mala fide or false claim on part of assessee, no addition could be made on account of difference between amount of sale consideration for property shown in purchase agreement and stamp duty value of said property on date of registry by invoking section 56(2) (vii) (b)

e) Dy. CIT-5(3) (1) vs. Deepak Shashi Bhusan Roy ITA No. 3204 & 3316/M/2016 dtd. 30/07/2018(Mum.) (Trib.) In order to determine taxability of capital gain arising from sale of property, it is date of allotment of property which is relevant for purpose of computing holding period and not date of registration of conveyance deed

f) Mohd. Ilyas Ansari v. ΙΠΟ-23(2) (3), Mumbai [ITA No. 6174/M/2017dtd. 06/11/2020, 186 ITD 407 (Mumbai Trib.)] Where Assessing Officer mechanically applied provisions of section 56(2) to difference between stamp duty value and actual sale consideration paid by assessee and made additions, without making any efforts to find out actual cost of property, additions made by Assessing Officer were to be set aside."

g) In the case of Mrs. Madhu Kaul v. CIT & Anr. [(2014) 363 ITR 54 (P&H)], the Hon'ble Punjab & Haryana High Court analysed various circulars and provisions of the Act that on allotment of flat and making 14 first installment the assessee was conferred with a right to hold a flat which was later identified and possession delivered on later date. The mere fact that possession was delivered later, would not detract from the fact that assessee (allottee) was conferred a right to hold the property on issuance of an allotment letter. The payment of balance amount and delivery of possession are consequential acts that relate back to and arise from the rights conferred by the allotment letter upon the assessee.

h) In the case of Vinod Kumar Jain v CIT & Ors. [(2012) 344 ITR 501 (P&H)] it was held by Hon'ble Punjab & Haryana High Court that conjoined reading of section 2(14), 2(29A) and 2(424) clarifies that holding period of the assessee starts from the date of issuance of allotment letter. Since allottee gets title of the property on the issuance of allotment letter and payment of first installment is only a consequential action upon which delivery of possession flows. Even if the sale deed or agreement to sell is executed or registered subsequently but the assessee always had a right in the property since the date of issuance of allotment letter. Therefore, it can be said that assessee held the property immediately from the date of allotment letter.

i. CIT vs. K. Ramakrishnan 363 ITR 59 (Delhi)

ii. CIT vs. S. R. Jeyashankar 373 ITR 120 (Mad.)

iii. Partha Pratim Chakrabarty Vs ITO (ITAT Kolkata)

9.

Therefore, considering the totality of the facts and circumstances discussed above, we find that the assessee had already paid part of the consideration by cheque. Therefore, the stamp duty value as on the date of allotment/agreement, i.e., 14.11.2012, is liable to be adopted. Accordingly, we allow the grounds raised by the assessee, set aside the additions made by the AO and upheld by the Ld. CIT(A), and direct the AO accordingly.

10. The assessee has also filed an application for raising additional grounds. Since we have already adjudicated Ground Nos. 1 to 4 and deleted the additions made by the AO, the application filed by the assessee for raising additional grounds does not require separate adjudication at this stage.

11.

In the result, appeal filed by the Assessee is partly allowed.

Order pronounced in the open court on 26.05.2026.

Sd/- Sd/-

JAGADISH SANDEEP GOSAIN ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 26.05.2026 RY-Sr. PS Copy to: SHRI BHAGWATILAL BHIMSHANKAR JOSHI , 1103, EARTH BAUG, PRINCES STREET, 1 SHAMALDAS GANDHI ROAD,, MUMBAI-400002, MAHARASHTRA

ITO WARD 19(1)(1), 2 PIRAMAL CHAMBER LALBAUG PAREL, MUMBAI-400012, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE

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