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Facts
The assessee and her husband jointly purchased a residential property. A significant portion of the purchase price was paid by the husband. The Stamp Valuation Authority's valuation was higher than the declared sale price. The AO made an addition based on the difference between these values, considering it as income under Section 56(2)(x).
Held
The Tribunal held that the difference between the declared sale price and the Stamp Valuation Authority's value was within the 10% tolerance limit. The amendment to Section 56(2)(x) regarding the tolerance range was considered clarificatory and curative with retrospective effect. Therefore, no addition was liable to be made.
Key Issues
Whether the addition made under Section 56(2)(x) for the difference between sale consideration and stamp duty valuation is valid when the difference is within the prescribed tolerance limit, considering the retrospective effect of the amendment?
Sections Cited
56(2)(x), 254(1)
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PER PAWAN SINGH, JUDICIAL MEMBER;
This appeal by assessee is directed against the order of Ld. CIT(A)/NFAC dated 24.04.2024 for assessment year (AY) 2018-19. The assessee has raised following grounds of appeal:
“1. The learned Assessing officer has erred in observing that the details of the assessee's relationship with her husband was not mentioned along with documentary evidence and that it had any bearing on the taxability of the purchase of immovable property.
The learned Assessing Officer has erred in adding 50% the difference of purchase price and stamp duty value of the jointly purchased residential property as income under section 56(2)(x) even though the same has been offered to tax in the return of the first owner Mr. Rajendra Sawant and the assessee has hardly paid any amount towards the purchase consideration for the said property.
Without prejudice to Ground no. 2 above, the learned assessing officer has erred in making addition to the extent of 50% of the difference, instead of restricting the addition to 16.56% of the difference, being the ratio of purchase consideration for the residential property paid by the assessee.
4. The learned assessing officer has erred in not allowing standard deduction against income from house property.
5. Without prejudice to Ground nos. 1 to 3 above, the learned assessing officer has erred in computing tax on the addition made at special rate of 30% instead of the slab rate applicable to the assessee.” 2. Rival submissions of both the parties have heard and record perused. The learned Authorised Representative (ld. AR) of the assessee submits that a very short question is in the present appeal. During the relevant financial year, the assessee and her husband purchased residential property. Substantial part of sale consideration was arranged from housing loan. More than 80% of purchase consideration was arranged and paid by her husband. The name of assessee was included as a co-owner. There is difference in the agreement value of said property and the value determined by Stamp valuation authority.
The assessee and her husband paid stamp duty of Rs. 8,46,000/- The Stamp Valuation Authority valued the said property for the purpose of registration of transaction at Rs. 1.62 crore. Thus, there was a difference of Rs. 11,40,797/- vis-à-vis ready reckoner rate and the price declared by assessee. The assessing officer treated the assessee as owner of 50% shareholder and 50% of difference of ready reckoner rate and agreement value was added in the income of assessee. The ld. AR of the assessee submits that the difference vis-à-vis ready reckoner rate and agreement value is only 7.00% and within the tolerance range as per prescribed in section 56(2)(x). Thus, no addition is liable to be made against the assessee. Even otherwise the property was purchased from the finances arranged / paid by her husband and no additions were made in the hand of assessee. Majority of amount was paid after filing housing loan i.e. Rs. 1.16 crore and other payments were made by her husband. The lower authorities failed to appreciate such vital fact. The ld. AR of the assessee relied upon the following decision: Puspa Lachman Samtani Vs ITO in ACIT Vs Sunila B Dalal (2022) 145 taxmann.com313 (Mumbai-Trib), Sandeep Kumar Poddar Vs ITO (2023) 151 taxmann.com 18 (Kolkata-Trib) 3. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the revenue supported the order of lower authorities. The ld. Sr. DR submits that addition was made in the assessment order for the want of proper reply and explanation. The assessee has not taken specific ground of appeal for seeking relief of tolerance range of 10% of difference viz a viz sale consideration and the value determined by stamp valuation authority.
I have considered the contentions of both the parties and have gone through the orders of lower authorities carefully. I also deliberated on various case laws relied by ld. AR of the assessee. I find that a very short question is involved in the present appeal. There is no dispute that there was a difference vis-à-vis the value declared by assessee and her husband as per agreement value and the value determined by Stamp Valuation Authority. I find that the assessing officer on page No. 4 of assessment order recorded that purchase consideration as per sale deed 27.06.2017 is of Rs.1,51,46,000/- and the Stamp Valuation Authority valued the asset 1,62,86,797/-, and difference of Rs.11,40,797/-. The assessing officer made addition of Rs.570,399/- that is 50% of Rs.11,40,797/-. Admittedly the difference viz a viz value declared by assessee and her husband and value determined by Stamp Valuation authority is less than 10%, which is with the tolerance range of 10%. I further find that coordinate bench of this Tribunal in ACIT Vs Sunil B Dalal (supra) and in Sandeep Kumar Poddar Vs ITO (supra) by following earlier decision of this bench in Maria Fernandes Cheryl Vs ITO (2021) 123 taxmann.com 252 (ITR (T)/ 674 ITD 738 (Mum) held that amendment to section 56(2)(x) by Finance Act, 2020 with effect from 01.04.2021 pertaining to increase of tolerance range band from 5.00 % to 10.00% is clarificatory / curative in nature having retrospective effect and no addition could be made on account of difference being less that tolerance limit of 10.00% during relevant year 2018-19. This appeal also relates to AY 2018-19. Considering the aforesaid factual and legal position when the difference between the value declared by the assessee and her husband and the value determined by stamp valuation authority is less than the tolerance limit of 10.00%, no addition is liable to be made. Hence, the ld AR of the assessee succeeded on her primary submissions. Once, I accepted the primary submissions of ld AR of the assessee, thus, adjudication of other without prejudice grounds of appeal have become academic.
In the result, the appeal of the assessee is allowed.