Loading judgment…
Facts
The assessee purchased an immovable property, and the stamp duty valuation was higher than the sale consideration. The Assessing Officer (AO) treated the difference as income under Section 56(2)(vii) of the Income Tax Act, 1961. The assessee contended that only the usable carpet area should be considered for valuation, not the total area including passage and niche.
Held
The Tribunal noted that the property was registered for the entire area for which stamp duty was paid. The issue was not about usable vs. non-usable area but whether the stamp duty value should be taken as the consideration under Section 56(2)(vii) when it exceeds the sale price. The Tribunal found no error in the lower authorities' findings.
Key Issues
Whether the stamp duty valuation of an immovable property, exceeding the sale consideration, should be treated as income under Section 56(2)(vii) of the Income Tax Act, 1961, irrespective of the usable area.
Sections Cited
56(2)(vii)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC ” BENCH, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYA, HON’BLE & SHRI SUNIL KUMAR SINGH, HON’BLE
| आयकर अपीलीय अधिकरण न्यायपीठ, म ुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “SMC ” BENCH, MUMBAI BEFORE SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER & SHRI SUNIL KUMAR SINGH, HON’BLE JUDICIAL MEMBER (Assessment Year: 2015-16) Syed Kalbay Rizvi, Dy. Commissioner of Income Tax, 103, Jahangir Mansion, Cinema 10(2)(2), Vs Lane, Behind Metro Cinema, Mumbai Mumbai [PAN: AADPR7737C] अपीलार्थी/ (Appellant) प्रत्यर्थी/ (Respondent) Assessee by : Shri Haridas Bhat Revenue by : Shri R. R. Makwana, Sr. DR सुनवाई की तारीख/Date of Hearing : 03.09.2024 घोषणा की तारीख /Date of Pronouncement: 05.09.2024 आदेश/O R D E R
PER NARENDRA KUMAR BILLAIYA, AM
This appeal by the assessee is preferred against the order dated 12.10.2023 of ld. NFAC, Delhi pertaining to Assessment Year 2015-16.
The grievance of the assessee reads as under:- “A. On the facts and circumstances of the case, and in Law, the CITA erred in confirming the addition of Rs. 30,17,500/- u/s 56(2)(vii) of the Act. B. On the facts and circumstances of the case, and in Law, the AO and CIT(A) failed to appreciate that:
Syed Kalbay Rizvi 2 1. The CITA passed the order ignoring the assesse request to refer the matter to Valuation Officer (DVO) for a fair valuation without giving any justification. ii. The difference in purchase value vis-à-vis stamp duty valuation was on account of niche and passage area being included in area in the agreement which should have been excluded from stamp duty valuation. iii. The assessee has paid for usable area on 523.70 sq ft area only out of total area of 783.40 sq ft, differential area being Passage area 185.83 sq. ft. and niche area 73.93 sq ft as per the approved building plan to support his claim. C. The Appellant therefore prays that the disallowance addition of Rs. 30,17,500/- u/s 56(2)(vii) of the Act may please be deleted.” 3. briefly stated the facts are that the assessee filed his return of income on 22.11.2015 declaring income of Rs. 8,97,080/-. The return was processed u/s 143(1) of the Act and subsequently selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee.
While scrutinizing the return of income the AO noticed that the assessee has purchased immovable property for a consideration of Rs. 2,00,17,500/-. The assessee was asked to explain and furnish the source of purchase of the said immovable property. In its reply, the assessee explained that he had purchased the immovable property at Andheri (West) for a consideration of Rs. 1.70 crores and submitted the source of fund utilized for acquiring the said immovable property.
On perusal of the copy of the purchase agreement the AO noticed that the Stamp Valuation Officer for the purpose of stamp duty valuation valued the property at Rs. 2,00,17,500/-. Invoking the Syed Kalbay Rizvi 3 provisions of Section 56(2)(vii) of the Act, the AO sought clarification from the assessee why the stamp duty value should not be taken as a consideration of the said immovable property.
In his reply the assessee stated that he has entered to purchase of 523.70 sq ft. of actual usable carpet area for a consideration of Rs. 1.70 crores. It was pointed out that the stamp duty value of Rs. 2,00,17,500/- is calculated at 783.4 sq ft which includes non-usable area of passage and areas of niche. It was strongly contended that the passage and niche are not usable for office purpose therefore the stamp duty valuation should be reduced proportionately. The reply of the assessee did not find any favour with the AO who completed the assessment by making addition of Rs. 30,17,500/- being the difference in value of property and treated as income u/s 56(2)(vii) of the Act.
The assessee agitated the matter before the ld. CIT(A) but without any success. 7. Before us the counsel for the assessee reiterated what has been stated before the lower authorities. Drawing our attention to the map of the property the ld. counsel pointed out that the assessee has actually agreed to purchase 523.70 sq ft being the usable area but the builder registered the property of an area of 783.4 sq ft and stamp duty has been paid on this area which has not been purchased by the assessee. Therefore, the stamp duty value should not have been considered. The counsel further point out that the matter should have been referred to Syed Kalbay Rizvi 4 the Valuation Officer as prayed before the ld. CIT(A) but the ld. CIT(A) choose not to adjudicate on the same. Per contra the ld. DR strongly supported the findings of the AO and vehemently contended that no such request was made during the assessment proceedings. 8. We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that the said immovable property was registered with Sub-