YUKTI ANAND KHANNA ,MUMBAI vs. INCOME TAX OFFICER, WARD 41(1)(5), MUMBAI., MUMBAI

On the facts and circumstances of the case as Rs. 10,87,860/- well as in law, the Learned C1T(A) has erred in confirming the action of the Learned Assessing Officer in making an addition of Rs.41,18,760/- u/s 56(2)(x) of the Income Tax Act,1961 being difference between purchase consideration and stamp duty value of the property, without considering the facts and circumstances of the case.

On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of the Learned Assessing Officer in not considering the facts that the said residential flat was purchased in the financial year 2016-17 and hence stamp duty rate of FY 2016-17 is to be considered.

The only issue to be adjudicated in this case is which financial year is to be taken into consideration for reckoning the addition under section 56(2)(x) of the Income Tax Act, i.e., whether the year of registration or the year of allotment of property to buyer.

During the hearing proceedings before the ITAT, the Ld. AR of the appellant pleaded that section 56(2)(x) of the Act is unambiguous and value of property should be taken at the time of allotment provided the appellant paid part consideration through account payee cheque to the seller. It was argued that the allotment letter is dated 7.3.2017, i.e. agreement fixing the amount of consideration is to be considered for the purpose of stamp duty valuation. The Revenue has not disputed the date of allotment and payment by account payee cheque, hence the value of F.Y. 2016-17 should be adopted for the purpose of section 56(2)(x) of the Act. The Ld. AR of the appellant filed written submissions in which a tabular form was also given and the same is reproduced below :-

The Ld. DR relied on the orders of lower authorities where it was held that the value of circle rate of the year of registration should be taken for computing the value under section 56(2)(x) of the Act.

After hearing both sides, it is decided that the circle rate of the year in which allotment was finalised, should be taken for making the computation under section 56(2)(x) of the Act because the section clearly says so and the section is reproduced as under :- “56(2) [(x)...................... Provided 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 for the purposes of this sub-clause :

Thus, the perusal of proviso to section mandates two conditions, i.e., the date of agreement fixing amount of consideration and date of allotment letter should be taken and secondly part payment should be made to seller through account payee cheuqe. Since both the conditions are fulfilled, the circle rate of F.Y. 2016-17 should be adopted to find out the variation between circle rate and sale consideration. If this computation is done, the variation is Rs. 8,20,580/- which is less than 4%, and the same is well within the tolerance limit of 5% and hence the addition made by Ld. AO is not warranted. In view of the above discussion, the addition made by Ld. AO is deleted and appellant’s appeal is allowed. Order pronounced in the open Court on 17/03/2025. (BEENA PILLAI) ACCOUNTANT MEMBER Mumbai; Dated: 17/03/2025

The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file.