DHARMESH RAMESH JHAVERI,MUMBAI vs. THE ASSESSING OFFICER, ASSESSMENT UNIT FACELESS ASSESSMENTS, DELHI

Assessment Year : 2017-18 Dharmesh Ramesh Jhaveri, The Asst./Dy. Commissioner of 1 & 2,Bhagyodaya Building, Income Tax, Sarojini Road, vs. Circle-2(2)(1), Vile Parle (West), Room No. 545, 5th Floor, Mumbai. Aayakar Bhavan, PAN : AACPJ6530G M.K. Road, Mumbai. (Appellant) (Respondent) For Assessee : Shri Lalchand Choudhary, For Revenue : Shri R.R. Makwana, Sr.DR Date of Hearing : 04-12-2024 Date of Pronouncement : 04-12-2024 O R D E R PER B.R. BASKARAN, A.M : The assessee has filed this appeal challenging the order dt. 28-08- 2024 passed by the Ld. Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [„Ld.CIT(A)‟] and it relates to AY. 2017-18. The assessee is aggrieved by the decision of the Ld.CIT(A) in confirming the addition of Rs.50.06 lakhs made by the AO u/s. 56(2)(vii)(b)(ii) of the Income Tax Act, 1961 („the Act‟).

a. Mr. Sajjanraj Mehta vs. ITO in (AY. 2014-15), dt. 05-09-2022; b. Parth Dashrath Gandhi vs. Addl./Deputy/Asst. Commissioner of Income Tax in (AY. 2018-19), dt. 31-01-2023;

(a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; (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;”

Even though the provisions of sec.56(2)(vii)(b) of the Act creates a deeming fiction for assessing the difference between the stamp duty value and the consideration, if the consideration is less than the stamp duty value, an exception is provided in the two provisos below it. If the date of agreement fixing the amount of consideration was not the same as the date of registration, then the stamp duty value as on the date of fixing the consideration should be considered for the purposes of this section, provided the assessee had paid a part of consideration by any mode other than cash on or before the date of the agreement for the transfer of such immovable property.

4.1. In the instant case, the purchase consideration on the date of allotment was more than stamp duty value and further, the assessee has paid a sum of Rs. 1 lakh by way of cheque prior to the date of allotment. Accordingly, for the purpose of section 56(2)(vii)(b)(ii) of the Act, the stamp duty value as on the date of allotment should be recognized in determining any addition u/s. 56(2)(vii)(b)(ii) of the Act. We notice that the tax authorities have taken the view that the letter of allotment cannot be considered to be the agreement mentioned in the provisos to sec. 56(2)(vii)(b) of the Act. However, we notice that the co- ordinate benches of Tribunal has held in the two cases relied upon by the assessee (referred supra) that the letter of allotment or letter of intent can be considered as the agreement mentioned in the proviso to the above said section. Following the above said decisions of the co- ordinate benches, we hold that the allotment letters should be considered as the agreement referred to in the provisos to sec. 56(2)(vii)(b) of the Act. We noticed earlier that the stamp duty value as on the date of allotment of flat, in the instant case, was lower than the consideration determined between the parties. Hence, there is no question of making any addition u/s 56(2)(vii)(b) of the Act.

4.2. In view of the above, we set aside the order passed by the Ld.CIT(A) and direct the AO to delete the addition made u/s. 56(2)(vii)(b)(ii) of the Act in the hands of the assessee during the year under consideration.