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Facts
The assessee purchased a flat along with co-owners for Rs. 60.00 lacs. The Stamp Valuation Authority assessed the property's value at Rs. 1.13 crores at the time of registration. The Assessing Officer invoked Section 56(2)(x) treating the difference as income, as the property was allotted in 2010 and registered in 2017.
Held
The Tribunal held that the assessee had made substantial part payment of consideration at the time of allotment in 2010, thus qualifying for the benefit of the first and second proviso to Section 56(2)(x). The addition made by the Assessing Officer was therefore deleted.
Key Issues
Whether the difference between the Stamp Duty Value and purchase consideration for a property is taxable under Section 56(2)(x) when part payment was made at the time of allotment in an earlier year than the registration year, and the Stamp Duty Value increased significantly.
Sections Cited
56(2)(x), 270A, 234A, 234B, 234C
AI-generated summary — verify with the full judgment below
PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assessee is directed against the assessment order of ld.
CIT(A) dated 13.10.2024 for A.Y. 2018-19. The assessee has raised the following grounds of appeal:
The Ld. CIT(A) erred in making an addition of Rs. 17,37,775/- u/s 56(2)(x) treating the same as difference between the Stamp Duty Value and purchase consideration and added the same to the income of the assessee.
2. The Ld. CIT(A) erred in initiating penalty proceedings u/s 270A of the Income Tax Act.
3. The Ld. CIT(A) erred in charging interest 234A, 234B and 234C of the act. 4. The appellant craves leave to add further ground or to amend or alter the existing grounds of appeal on or before the date of hearing.”
Brief facts of the case are that assessee is an individual, filed his return of income for A.Y. 2018-19 on 25.10.2018 declaring income of Rs. 14,50,170/-.
Case was selected for scrutiny. During assessment, the assessing officer noted that assessee purchased flat no. 403, 4th Floor, Avirahi Heights, Jankalyan Nagar, Malvani, Malad West Mumbai, admeasuring 1020 square feet hereinafter referred as “ flat/ property” on a consideration of Rs. 60.00 lacs. The assessing officer was having information from Stamp valuation Authority/ Sub Registrar MSD Borivali-5, Mumbai valued such property / flat for the purpose of registration of transaction at Rs. 1.13 crores. On show cause notice, the assessee submitted that he along with three of his family members purchased the said flat, which was allotted on 12.03.2010. On the date of allotment the stamp value of the said flat/property was at Rs. 41,29,125/- only. The assessee further stated that he is having share of 32.5% only. Copy of valuation by sub registrar office for the year 2010 was furnished. It was further stated that on the date of registration of agreement, the valuation of Stamp Valuation Authority of said flat was at Rs. 1.13 crores.
The assessee and his co-owners have paid agreement value of Rs. 60.00 lacs, which is higher than the stamp valuation value on the date of allotment.
The stamp valuation rate increased/ changed in between from the date of allotment and till the date of registration, hence the rate at the time of allotment has to be considered. The assessee also referred and relied on the decision of Bombay High Court in PCIT Vs Vembu Vaidyanathan in Tax Appeal No. 1459 of 2016 dated 22.01.2019. The reply of assessee was not accepted by assessing officer. The assessing officer by referring the provision of section 56(2)(x) held that there is the difference between the value shown by the assessee and the value determined by Stamp Valuation Authority. The second proviso of section 56(2)(x) is applicable where part consideration is paid by way of cheque or demand draft is paid. No consideration or part thereof is paid by assessee at the time of agreement. The assessing officer accordingly brought difference of 1/3rd vis-a-vis the value declared by assessee and his Co-owner and the value determined by Stamp Valuation Authority for the purpose of registration of transaction.
Aggrieved by the additions in the assessment order, the assessee filed appeal before ld. CIT(A). Before ld. CIT(A), the assessee filed detail written submission and also relied on various case laws. The assessee reiterated the similar submission as made before assessing officer. The assessee also clarified the fact that he has purchased said flat along with his wife, Mrs. Komal Sunil Bajaj, Santosh Lalchand Bajaj and Ranjit Lalchand Bajaj. The assessee explained that he is running business of women’s clothing Amar Enterprises and maintaining current bank account with Union Bank of India in the name of Amar Enterprises. The assessee paid part payment of consideration through banking channel i.e. Union Bank of India. The assessee he assessee also deducted TDS. The assessee furnished bifurcation of various payments made from 15.04.2010 of Rs. 1,51,421/-, Rs. 3,00,000/- on 04.03.2011, Rs. 10,00,000/- on 20.06.2017, Rs. 4,79,079/- on 27.06.2017 that he had paid total consideration of his share of Rs. 19,50,000/- including TDS of Rs. 19,500/-. The assessee also furnished copy of agreement to sale with ABHIGNA Enterprises (builder).
The ld. CIT(A) on considering the submission of assessee, upheld the finding of assessing officer by taking view, the assessee has not produced any tangible material to show that provision of section 56(2)(x) are not applicable and that second proviso of section 56(2)(x) is applicable. Thus, the assessing officer was justified in making addition against the assessee. Further, aggrieved the assessee has filed present appeal before Tribunal.
We have heard the submission of learned authorised representative (ld. AR) of the assessee and the learned senior departmental representative (ld. Sr.
DR) for the Revenue. The ld. AR of the assessee also filed his written synopsis on record. The ld. AR of the assessee submits that assessee is engaged in the business of textile trading and manufacturing of retail textile goods with specialization women’s clothing in the name of ‘Amar Enterprises’.
The assessee along with his wife Mrs. Komal Sunil Bajaj and Santosh Bajaj and Ranjeet Bajaj purchased a flat from ABHIGNA (builder). The share of assessee is only 32.5%. The flat was allotted vide allotment letter dated 12.03.2010. In pursuance of allotment, the first instalment of Rs. 1,51,421/- was paid on 05.04.2010. Stamp valuation value in the year 2010 was of Rs. 41,29,125/-. The transaction of property was registered with the Stamp Valuation Authority on 23.06.2017. All such facts were brought in the notice of lower authorities. The assessee specifically stated that Rs. 151,142/- was paid through banking channel on 05.04.2010 and Rs. 3.00 lac was paid on 04.03.2011 by way of cheque. As per assessee’s share her was required to to pay Rs. 19,50,000/-. The assessee also deducted TDS of Rs. 19,500/- qua the share of sale consideration paid to seller. Since from the date of allotment till date of registration of transaction the value of stamp valuation was increased and assessee has paid stamp duty at the date of registration of transaction. Thus, as per first proviso to section 56(2)(x), when the date of agreement fixing the consideration of transfer of immovable property and the date of registration are not the same, the stamp valuation on the date of registration may be taken for the purpose of Clause (x) of sub-section (2) of section 56 as the assessee had made part payment through banking channel.
To support his submission, the ld. AR of the assessee furnished the copy of allotment letter issued by ABHIGNA Enterprises wherein acknowledgement of Rs. 1,51,420/- paid through cheque no. 97550 dated 05.04.2010 from Union Bank of India as earnest money is reflected. The assessee also furnished copy of bank statement showing the payment of Rs. 1,51,421/- cleared on 09.04.2010 and clarifies of Rs. 3.00 lacs was paid on 04.03.2011. Such bank account is of Amar Enterprises, which is propriety concern of assessee. Rest of the amount was paid just before the date of registration of transaction in June 2017. In alternative submissions, the ld AR of the assessee submits that provisions of clause (x) of sub-section (2) 0f section 56 was inserted by Finance Act 2017, effective from 01.04.2017, thus, clause (x) of section 56(2) was not on the statue book when the assessee purchased the flat, so invoking of such provision by assessing officer is not correct.
In support of his submission, the ld. AR of the assessee relied on the following decisions; PCIT vs Naina Saraf (2022) 142 taxmann.com 147 (Rajasthan HC), Benudhar Gokulanand Biswal Vs NFAC (2023) 153 taxmann.com 112 (Mumbai- Trib.), Smt. Kajari Banerjee vs ITO (2025) 171 taxmann.com 468 (Kolkata-Trib.), Smt. Shashi Jain vs PCIT (2023) 150 taxmann.com 393 (Koklata-Trib.), Pooja Dipen Joshi vs ITO (2024) 162 taxmann.com 768 (Ahmedabad-Trib.).
On the other hand, ld. Sr. DR for the Revenue supported the order of lower authorities. The Sr. DR for the revenue submits that only part payment was paid at the time of allotment. No substantial payment was paid at the time of allotment for seeking benefit of proviso to section 56(2)(x).
We have considered the rival submissions of both the parties and have gone through the lower authorities carefully. We find that there is no much dispute on the fact. It is an admitted position that assessee purchased flat along with three other co-owners namely Mrs. Komal Sunil Bajaj, Santosh Bajaj and Mr. Ranjeet Bajaj. Admittedly, the assessee is having 32.5% share. Before us, the assessee has filed copy of allotment letter dated 12.03.2010 wherein the sale consideration of Rs. 60.00 lacs is clearly mentioned. The allotment letter also contained the reference of a deposit of earnest money by way of post-dated cheque 05.04.2010 and Rs. 1,51,421/- on perusal of bank statement, we find that said cheque was cleared on 19.04.2010. The allotment letter also contained the payment of schedule of consideration. We further find that Rs. 3.00 lacs was also paid by assessee by way of cheque on 04.03.2011.
Remaining consideration on assessee’s share was paid on 20.06.2017 and 27.06.2017 that is soon before registration of agreement. Thus, we find that Rs. 4,51,421/- was made in financial year 2010-11. We find that the assessee has successfully proved the fact that he has made part payment of consideration on the date of agreement in April 2011. Therefore, the assessee is eligible for the benefit of first and second proviso to section 56(2)(x). In the result, the grounds of appeal raised by the assessee are allowed. Considering the facts, the we have accepted primary submissions of the ld AR of the assessee, therefore, consideration and adjudication on alternative submissions have become academic.
9. In the result, the appeal of assessee is allowed.