KANYALAL MANGLANI,KOLKATA vs. ITO, WARD - 40(4), KOLKATA , KOLKATA

This is an appeal filed by the assessee directed against the order of the Commissioner of Income Tax-(A)-12, Kolkata dated 05.03.2018 for A.Y. 2014-15 passed u/s 250 of the Income Tax Act, 1961 (Act).

The assessee is an individual. He is a senior citizen and has filed his return of income on 24.03.2015, declaring total income of Rs.2,85,590/- only. Though a number of grounds were raised, the assessee argued only ground no.4 which reads as under :- “4. That without prejudice to the grounds of Appeal as aforesaid, Ld ITO, Ward 40(4), (A) in brief)Kolkata had erred in law and in facts by making an addition by applying section 56(2)(vii) (b) of the Act which came into force and with effect from 01.04.2014 for transfers taking place from AY 2014-15 onwards, even though transfer of your appellant was completed on 05.09.2011 corresponding to AY 2012-13. Hence the entire assessment order is illegal, invalid, and void ab- initio.”

The facts leading to the ground are that, the assessee along with his wife Smt. Sushila Manglani and son Mr. Govind Manglani purchased an immovable property being a residential flat numbered 11D on 11th floor of Tower 1 ad measuring 1357 sq ft, in Sunrise Tower at 134B, Beliaghata Road, Kolkata-700015 for total consideration Kanyalal Manglani A.Y.2014-15 2 of Rs.23,21,200/- vide agreement for sale dated 5th September, 2011. The assesee submits that full consideration was paid and possession of the flat was handed over to the assessee on 5th September, 2011 itself.

This flat was registered by the seller in favour of the purchasers i.e. the assessee, his wife and son, on 4th August, 2013. The value of the property as per the circle rate prescribed by Registration of Stamps Authority, as on 4th August, 2013 was Rs.56,60,765/-. The difference between the sale consideration actually paid for purchase of the flat and this circle rate of the flat was calculated by the Assessing Officer and 1/3rd of this difference was added in the hands of the assessee u/s 56(2)(vii) of the Act. Aggrieved, the assessee carried the matter in appeal without success. Further aggrieved the assessee is before us.

After hearing rival submissions, we find that in this case, the entire consideration for the flat was paid before 5th September, 2011 and the possession of the flat was also handed over to the assessee on 5th September, 2011. Thus the purchase transaction in question was completed during the financial year 2011-12 relevant to A.Y.2012-13.

Section 56(2)(vii) reads as under :-

This section 56(2)(b)(vii) was inserted w.e.f. 01.04.2014 by the Finance Act, 2013. In this section the first proviso mandates that, where the date of agreement fixing the amount of consideration for transfer of the immovable property and the date of registration are not the same, the stamp duty value on the date of agreement has to be taken for the purpose of this sub-clause. This proviso was not considered by the ld. AO. The circle rate on the date of registration of the document cannot be taken. Hence this addition is deleted. Even otherwise the transfer in this case was completed in A.Y.2012-13 in terms of section 2(47) of the Act. Hence, the addition cannot be made during this assessment year 2014-15.

In view of the above discussion we delete the addition made by the AO and allow this ground of the assessee. All other grounds are dismissed as not argued.

In the result the appeal of the assessee is allowed in part.