ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(3), MUMBAI, MUMBAI vs. ASHJIT REALTIES PRIVATE LIMITED, MUMBAI

This appeal by the Revenue is directed against the order dated 07.11.2025 passed by the Commissioner of Income-tax (Appeals)-48, Mumbai [hereinafter referred to as “the Ld. CIT(A)”], under section 250 of the Income-tax Act, 1961 (“the Act”), arising from the assessment order dated 17.03.2021 passed by the National e-Assessment Centre, Delhi, under section 143(3) read with sections 143(3A) and 143(3B) of the Act for Assessment Year 2018-19.

Before the Ld. CIT(A), the assessee submitted that the sale deed had been executed on 13.10.2016, the entire consideration had been paid much earlier, between March 2011 and August 2012, and possession had also been handed over before the registration of the document. It was contended that section 56(2)(x), inserted with effect from 01.04.2017, could not be applied to a transaction completed before that date merely because the instrument was registered thereafter. Reliance was placed, inter alia, on the decision of the Coordinate Bench in DCIT v. Romell Housing LLP [2024] 168 taxmann.com 536 (Mumbai - Trib.). The Ld. CIT(A) accepted the contention that registration related back to the date of execution, held the transaction to have crystallised in Financial Year 2016-17 and deleted the addition. The Revenue is in appeal against the said relief.

The Ld. Departmental Representative relied upon the assessment order and the grounds of appeal. He submitted that an immovable property of the value prescribed by law can be validly transferred only

The Ld. Authorised Representative supported the impugned order. He submitted that the entire purchase consideration had been paid before 02.12.2015; the sale deed was executed and possession was delivered on 13.10.2016; and the delay in registration occurred on account of adjudication before the stamp duty authority. Reliance was placed on DCIT v. Romell Housing LLP (supra), Rajib Rathindra Saha v. ITO in ITA No.7352/Mum/2019 dated 21.02.2022 and other decisions cited in the written submission. It was also submitted, without prejudice, that the property was acquired as stock-in-trade for redevelopment and that the assessment was completed without a show-cause notice/draft variation contemplated under section 144B of the Act.

We have heard the rival submissions and perused the material available on record. The chronology placed before us shows that the assessee paid the entire sum of Rs. 21,00,00,000/- to Rohan Developers Pvt. Ltd. between March 2011 and August 2012. Under the amended term sheet dated 02.12.2015, the vendor agreed to sell the property to the assessee if the amount was not refunded by 30.06.2016. Thereafter, the sale deed was executed and possession was handed over on 13.10.2016. The assessee applied to the stamp duty authority for adjudication of the stamp duty valuation on 22.03.2017. An interim order was passed on 24.03.2017, the property was recorded as an asset of the assessee in its audited financial statements as on 31.03.2017,

The above events have to be considered cumulatively. This is not a case where the assessee first negotiated, paid for or took steps to acquire the property after 01.04.2017. The entire consideration of Rs. 21,00,00,000/- had been paid several years earlier; the binding sale deed was executed and possession was delivered on 13.10.2016; and, significantly, the assessee itself applied for adjudication of stamp duty on 22.03.2017. Thus, all material acts on the part of the contracting parties as well as the initiation of the statutory process for registration stood completed before 01.04.2017. The subsequent registration on 15.04.2017 was the culmination of the process already commenced before that date.

We also notice that the valuation adopted by the Assessing Officer at Rs. 38,68,86,000/- did not attain finality. The adjudication order was set aside by the Hon’ble High Court on 09.10.2018 with a direction to decide the matter afresh. Further, the report of the Government Registered Valuer valued the property as on 13.10.2016 at Rs. 13,47,96,000/-, which was below the consideration of Rs. 21,00,00,000/- paid by the assessee. These material facts were available on record, but the Assessing Officer made the addition only with reference to the registration date and the then stamp duty valuation.

In these peculiar facts, the conclusion of the Ld. CIT(A) that section 56(2)(x), inserted with effect from 01.04.2017, could not be applied to the transaction does not call for interference. Accordingly, we find no infirmity in the order of the Ld. CIT(A) deleting the addition of Rs. 17,68,86,000/-. Since the issue is decided on this ground, the alternative

In the result, the appeal filed by the Revenue is dismissed.