RAJESH KUMAR JHA,HOWRAH vs. ITO, WARD - 47(2), KOLKATA, KOLKATA

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ITA 1114/KOL/2018Status: DisposedITAT Kolkata26 April 2019AY 2014-153 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the provisions of the first and second provisos to Section 56(2)(vii)(b) were applicable. Since payments were made by banking channels on or before the date of the agreement (allotment letter), the addition could not be sustained.

What were the facts?

The assessee, a medical practitioner, purchased a flat for Rs. 26,24,255. The stamp duty value assessed by the registering authority was Rs. 38,78,330. The Assessing Officer added the difference of Rs. 12,69,415 to the assessee's income under Section 56(2)(vii)(b).

What were the issues?

Whether the difference between the sale consideration and the stamp duty value of an immovable property can be added to the income when payments are made through banking channels prior to the registration date.

Which sections of the Income-tax Act were involved?

Section 56(2)(vii)(b)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA

Before: Sri J. Sudhakar Reddy]

Date of concluding the hearing : March 12th, 2019 Date of pronouncing the order : April 26th, 2019 O R D E R Per J. Sudhakar Reddy :- This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) - 14, Kolkata, (hereinafter the ‘ld. CIT (A)’), passed u/s 250 of the Income Tax Act, 1961 (the ‘Act’), dt. 28/03/2018, for the Assessment Year 2014-15.

2.

The assessee is a medical practitioner. The assessee purchased a flat located at Eden City, Tower No. D1, Flat No. 203, 2nd Floor, Mahestala, South 24 Parganas, Kolkata – 700 137, measuring 1377 sq. ft. The assessee was allotted this flat by the vendor vide allotment letter dt. 28/01/2011. This is stated in the registered sale deed dt. 24/01/2014 at para 13. The sale consideration was paid in the following manner:-

Date Cheque No. Bank Amount (in Rupees) 16.12.2010 890870 ICICI 1,00,000 26.09.2011 738975 HDFC 2,05,693 01.05.2011 4996 ICICI 1,90,626 01.05.2011 4997 ICICI 2,34,585 23.05.2011 731818 HDFC 15,80,925 09.05.2013 233251 HDFC 81,126 14.05.2013 18964 ICICI 2,31,300 TOTAL 26,24,255 2.1. The total sale consideration paid by the assessee was Rs.26,24,255/-. As on the date of registration of the sale deed, the market value assessed by the registering authority was Rs.38,78,330/-. The Assessing Officer added the difference between the purchase price and the market value assessed by the Assessment Year: 2014-15 Rajesh Kumar Jha registration authorities under the Stamps and Registration Act, of Rs.12,69,415/- u/s 56(2)(vii)(b) of the Act. On appeal, the ld. First Appellate Authority confirmed the addition.

3.

Aggrieved the assessee is before me.

4.

I have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, I hold as follows:-

5.

The first and second provisos to Section 56(2)(vii)(b) of the Act, read as follows:-

[(b) any immovable property,— (i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; (ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration: Provided that where the date of the 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 the agreement may be taken for the purposes of this sub-clause: Provided further that the said proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by any mode other than cash on or before the date of the agreement for the transfer of such immovable property;]

6.

In the case on hand, the assessee applied for and was allotted a flat vide allotment letter dt. 28/01/2011. The payments in question were made by cheque from 16/12/2010, onwards. The application for purchase of flat and allotment, in my view, is an agreement. The payments in question have been made by banking channels. Thus, this case is covered by the provisos to Section 56(2)(vii)(b) of the Act. Hence the addition in question cannot be sustained and the same is hereby deleted.

7.

In the result, appeal of the assessee is allowed.

Kolkata, the 26th day of April, 2019.

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