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Facts
The assessee purchased land with co-owners for ₹1.50 crores. The stamp valuation authority determined the property value at ₹3,66,00,000. The Assessing Officer added the difference of ₹2.16 crores as income under section 56(2)(vii). The CIT(A) restricted the addition to ₹1,48,35,000 based on the DVO's valuation.
Held
The Tribunal held that as per the proviso to section 56(2)(vii), if the agreement and registration dates differ and payment is made through banking channels before the agreement date, the stamp duty value as of the agreement date should be considered. Since these conditions were met, the addition was not justified.
Key Issues
Whether the stamp duty valuation date for determining deemed income under Section 56(2)(vii) should be the agreement date or the registration date, when payment is made through banking channels prior to the agreement date.
Sections Cited
56(2)(vii)
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Income Tax Appellate Tribunal, ‘B’ BENCH, BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER WASEEM AHMED, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order passed by the NFAC, Delhi vide order dated 28/02/2025 in DIN No. ITBA/NFAC/S/250/2024-25/1073810989(1) for the assessment year 2017-18.
This appeal by the assessee is directed against the order of the learned CIT(A) confirming the addition of ₹1,48,35,000 under section 56(2)(vii) of the Income-tax Act, 1961.
The assessee along with co-owners purchased land for a consideration of ₹1.50 crores. The stamp valuation authority adopted the value of the property at ₹3,66,00,000. The Assessing Officer treated the difference of ₹2.16 crores as taxable under section 56(2)(vii) and added it to the total income of the assessee.
On appeal, the learned CIT(A) referred to the value determined by the Departmental Valuation Officer at ₹2,98,35,000.00 only. Accordingly, he restricted the addition to the difference of ₹1,48,35,000.00 only. Thus, the appeal was partly allowed.
Being aggrieved, the assessee filed the present appeal before us.
The learned AR submitted that the assessee had entered into an agreement to sell with the vendor in the year 2009. The agreement was subsequently revised in the year 2011. Copies of the agreements are placed in the paper book at pages 11 to 57. The ld. AR also pointed out that payment of consideration was made at the time of agreement through banking channels, evidence of which is placed at page 45 of the paper book.
6.1 It was argued that as per the proviso to section 56(2)(vii), where the date of agreement and the date of registration are different, the stamp duty value as on the date of the agreement has to be adopted provided the consideration has been paid by banking channel on or before the date of the agreement. Since the assessee satisfied these conditions, the stamp duty value as on the agreement date should be taken and not the value as on the date of registration.
On the other hand, the learned DR relied upon the orders of the authorities below. It was contended that the agreements were not filed before the lower authorities. According to the ld. DR, there was no valid agreement between the assessee and the vendor. Hence, the documents produced before the Tribunal should not be accepted.
We have carefully considered the rival submissions and examined the records. It is not in dispute that the assessee entered into an agreement to buy the property in 2009, which was revised in 2011. It is also not disputed that the assessee made part payment through banking channels on the relevant dates as per the terms of the agreement. Copies of the agreements and proof of payments have been filed in the paper book as elaborated above.
8.1 The proviso to section 56(2)(vii) is very clear. Where the agreement fixing the consideration and the date of registration are different, the stamp duty value as on the date of agreement shall be adopted, if payment is made through banking channel on or before the date of the agreement. In the present case, these conditions stand fulfilled.
8.2 Therefore, the addition sustained by the learned CIT(A) is not justified. The difference in stamp duty value at the time of registration cannot be applied when the agreement and payments were made earlier. Accordingly, we hold that no addition is called for under section 56(2)(vii) in the hands of the assessee. Hence, we set aside the finding of the ld. CIT-A and direct the AO to delete the addition made by him. Thus, the ground of appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in court on 10th day of September, 2025