NARAIN LAL AGRAWAL,JAIPUR vs. DCIT CIRCLE 1 JAIPUR, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 744/JP/2023 fu/kZkj.k o"kZ@Assessment Years : 2020-21 cuke Narain Lal Agrawal DCIT Circle-01, Vs. 1307 Kedia Bhawan, Gopal Ji Ka Jaipur Rasta, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABRPA 9834 E vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Tarun Mittal (CA) jktLo dh vksj ls@ Revenue by : Sh. A. S. Nehra (Addl. CIT) lquokbZ dh rkjh[k@ Date of Hearing : 08/05/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 25/06/2024 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM

The present appeal filed by assessee aggrieved from the order of the National Faceless Appeal Centre, Delhi dated 19/10/2023 [here in after (NFAC)/ ld. CIT(A)] for assessment year 2020-21. The said order of ld. CIT(A) on account of the assessment order passed on 22.09.2022 by the assessment unit of National Faceless assessment unit [ here in after referred as ld. AO ] under section 143(3) of the Income Tax Act [ here in after referred to as Act ]. filed are: -

1.2 That, ld. CIT(A) has further erred in confirming the addition of Rs.58,36,000/- by not accepting that allotment letter issued by builder, was in substance Agreement fixing the amount of consideration as it was duly signed by both buyer and seller, contained all the terms and conditions of payment of sale consideration, transfer and payment of stamp duty etc. Appellant prays that since payment of part sale consideration was also made through banking channels in terms of such agreement cum letter of allotment, assessee is covered by proviso to section 56(2)(x), according to which date of agreement is to be treated as date of sale for the purpose of invoking 56(2)(x) and addition confirmed by ld.CIT(A) deserves to be deleted.

1.3 That, ld.CIT(A) has further erred in not appreciating the true spirit of proviso to section 56(2)(x), which specifically provides relaxation to the assessee from being taxed under deeming provisions in genuine cases (i.e. cases where though the date of agreement fixing the amount of consideration and date of registration are not the same but as the sale consideration is fixed and part of the sale consideration is paid through banking channels even prior to the date of agreement, thus the possibility of transferring property for inadequate consideration is ruled out, which is presumed to be paid in cash and thus taxed under deeming provisions). 1.4 Ld CIT(A) has erred in not appreciating that the proviso to section 56(2)(x) uses nomenclature “agreement fixing the amount of consideration”, basically means a written understanding between the parties, prior to registration coupled with payment of part of the consideration (other than Cash) prior to such understanding, therefore in present case, letter of allotment is basically an agreement fixing the amount of consideration and addition made by ld.AO and confirmed by ld.CIT(A) deserves to be deleted.

2. The appellant craves the right to add, delete or amend any of the grounds of appeal either before or at the time of hearing of appeal.”

an individual and engaged in the business of Sale of Gold, Diamond and other stones studded Jewellery in the name of M/s Agarwal & Co., 1307 Kedia Bhawan Gopal Ji Ka Rasta, Jaipur. Apart from this, assessee has earned income from House property, Capital Gain and other sources.

Return of Income for the year under appeal was filed by assessee on 13.02.2021, declaring total income of Rs.1,19,33,590/-. After filling the said return of income by the assessee the case of the assessee was selected for Limited Scrutiny assessment under the E-assessment Scheme, 2019 on the issue of “Purchase value of property less than the value as per stamp authority ( u/s. 56(2) or any other relevant provision ) (Business ITR)”.

3.1 Consequently notices were issued and the assessee complied and uploaded the details / documents called for by Assessment unit.

3.2 On examination of the details so furnished by the assessee the ld. AO noted that the assessee furnished the copy of the purchase deed. The ld. AO also noted that in the instant case, agreement for booking of that property was made in the F. Y. 2014-15 for a sum of Rs. 1,70,40,000/- and support of this the assessee filed a letter of booking cum allotment letter dated 14.07.2014. After making all the payment of the said flat booked the purchase deed was executed in May 2019. On the date of registration of the property the stamp duty value noted at Rs. 2,28,76,000/-. Since, the assessee has already paid consideration while booking the flat the subsequent increase in the stamp duty amount does not attract the provision of section 56(2) of the Act as contended by the assessee before the ld. AO. The ld. AO noted that in the case of the assessee only an agreement stated to have entered into between the assessee, the purchaser and Shree Sukhakarta Developers P. Ltd., the builder / seller of the flat, it is merely a “Letter of Allotment” which the ld. AO said cannot be considered as being an agreement registered with the stamp authority dated 14.07.2014. Thus, the assessment unit referred the case to Technical unit [ TU ] for estimating the purchase value. For that the assessment unit has written letter dated 12.09.2022, 15.09.2022 and 19.09.2022 but the ld. AO noted that due to technical glitches in the ITBA, the data uploaded to the TU has failed. considered Rs. 2,28,76,000/- taken as the stamp value as consideration and the difference of Rs. 58,36,000/- added as other income in the hands of the assessee.

4. Aggrieved from the order of the assessment, assessee preferred an appeal before the ld. CIT(A)/NFAC. Apropos to the grounds so raised the relevant finding of the ld. CIT(A)/NFAC is reiterated here in below:

“I have carefully considered Form 35, statement of facts, order u/s 143(3), submission/details uploaded in the system, computation of total income and the Grounds of Appeal raised. The present appeal is filed against the order u/s 143(3) dated 22/09/2022, wherein, the Assessing Officer has brought to tax the difference between the value assessed under Stamp Act amounting to Rs.2,28,76,000/- and the purchase consideration shown in the sale deed Rs.1,70,40,000/- being Rs.58,36,000/- by applying the provisions u/s 56(2)(x). The grounds of appeal raised are adjudicated as under :- The Ground Nos. 1, 1.1 and 1.2 are interconnected to each other, as such, they are adjudicated together as under: Ground No.1: On the facts and in the circumstances of the case, the Ld. AO has grossly erred in making addition of Rs. 58,36,000/- u/s 56(2) of the Income Tax Act, arbitrarily. Ground No. 1.1 : That, Id. AO has further erred in making addition of Rs.58,36,000/- by disregarding the submission filed and evidences adduced, thus the addition so made deserves to be deleted. Ground No.1.2: That, Id. AO has further erred in making addition of Rs.58,36,000/- solely for want of agreement to sell by not accepting that allotment letter cum agreement to sell issued by builder to assessee was in substance Agreement to sell, as it was duly signed by both buyer and seller, contained all the terms and conditions of payment of sale consideration, transfer and payment of stamp duty etc. Appellant prays that since payment of part sale consideration was made through banking channels in terms of such agreement cum letter of 6 Narain Lal Agrawal vs. DCIT allotment, assessee is covered by section 56(2)(x) and date of agreement is to be treated as date of sale, and no addition is warranted in the year under consideration.

It is understood from the Assessment Order that the appellant has been allotted with a flat bearing flat no.4602, 46th floor, Ruparel Areana Jarbai, Wadia Road, Parel, Mumbai which was proposed to be constructed by M / s_{f} Shree Sukhakarta Developers Pvt Ltd, Mumbai. This letter of allotment dated 14th July 2014 issued by the developer has been claimed as agreement for sale, for purchase of the flat by the appellant. The AO examined the claim, the submission, the letter of allotment furnished and after providing opportunities came to the conclusion that the allotment letter cannot be construed as agreement for sale. As such, the difference between the purchase price mentioned in the sale deed and stamp value levied under Stamp Duty Act amounting to Rs.58,36,000/- has been brought to tax.

During the course of appellate proceedings, the appellant has uploaded written submission, letter of allotment and the case laws relied upon in support of his contention and claimed that the addition made deserves to be deleted. INCOME PARTMENT

The discussion made in the Assessment Order, the submission of the appellant and the provisions of 0.56(2)(x) have been examined.

On perusal of the letter of allotment issued on 14th July 2014 clearly indicates that it was only the letter of allotment, but not agreement for sale. The subject mentioned in the letter states that there was an allotment of flat bearing flat No. 4602, 46th floor, Ruparel Areana Jarbai, Wadia Road, Parel, Mumbai.

The para 6 of the letter of allotment clearly states that this letter of allotment was issued on the understanding and assurance given by the appellant to the developer that he will enter in to a regular flat ownership Agreement for Sale, under the provisions of Maharashtra Flat Ownership Act, 1963. This clause substantially establishes that there are two documents that were required to be executed, one being letter of allotment and another agreement for sale. Therefore, the claim that letter of allotment itself is agreement for sale is incorrect.

Further, para 8 of the letter of allotment states that it shall be mandatory and binding on appellant to return this letter of allotment issued by the developer, on executing the agreement for sale. Accordingly, the letter of allotment shall automatically stands cancelled. It needs to be appreciated here that the developer in the letter of allotment requires the appellant that a separate agreement for sale shall be executed towards the sale of flat. For the sake of argument, if the letter of allotment is to be accepted as agreement for sale, then it needs to be emphasized as to why in this clause a separate mentioning has been made that the developer would be executing the agreement for sale separately.

Moreover, at Clause 9 of the letter of allotment states that the allotment letter issued is only provisional and based on tentative understanding of the parties. It also states all the terms and conditions mentioned in the agreement for sale shall be binding on the appellant when such agreement is executed. This shows that an agreement for sale will be prepared at a future date which will be binding on the appellant. As such, it could be safely concluded that this letter of allotment is not agreement for sale.

It is also to be kept in mind that at clause 10 10 of the letter of allotment states that in case of any dispute of the terms and conditions on such agreement for sale which will be executed later, then the letter of allotment shall stand cancelled. It means that if the appellant disputes to any of the clauses and conditions that will arise in the agreement for sale that will be executed at a later period, then, this letter of allotment would stand cancelled. Hence, the letter of allotment cannot be considered as agreement for sale.

Similarly, at clause 16 of the letter of allotment states that the appellant shall be liable to pay the stamp duty and the registration charges on all the documents including the agreement for sale and register the same. This clause emphasizes that there shall be a registration charges on agreement for sale that is required to be borne by the appellant. In view of this, the letter of allotment clearly states that there will be a separate agreement for sale that requires registration. Therefore, the letter of allotment cannot be given the treatment of agreement for sale.

It may not be out of place to mention here that the letter of allotment is only the allotment letter issued under the scheme of construction indicating the allotment of a particular flat to the prospective buyer. Such letter of allotment is not an enforceable contract. Therefore, the letter of allotment cannot be given the treatment of agreement for sale.

It is interesting to note here that execution of a registered agreement for sale is a mandatory requirement u/s 13 of the Real Estate Regulation Act 2016 (RERA 2016). Such agreement has necessarily required to be executed by the developer with the prospective flat buyer. In the instant case no such agreement for sale has been entered into or produced before the authorities. Therefore, in the absence of such agreement for sale, the letter of agreement cannot be considered as agreement for sale. Accordingly the claim of the appellant is not maintainable.

At this juncture it also needs to be mentioned here that in the ground os appeal mentioned above the appellant claimed the letter of allotment as letter of allotment cum agreement to sell. This claim has been examined in detail and found that nowhere in the letter it is mentioned as letter of allotment cum

8 Narain Lal Agrawal vs. DCIT agreement to sell. Therefore, when such title is not mentioned in the letter, it is incorrect to make such claim. It must be mentioned here that the Hon'ble Supreme Court in the case of CIT, Chennai Vs Mohammed Meeran Shahul Hameed reported in 438 ITR 288 (2021) at Para 4.3 of Page 4 has held that as per the cardinal principle of law the provision of the Statute/Act is to be read as it is and nothing needs to be added or taken away from the provision of the Statute. Therefore, after analyzing the facts of the case and examining the document issued by the developer, stated as letter of allotment, it is required to be concluded as it is only the letter of allotment that cannot be considered as agreement for sale. In the light of the foregoing discussion and the facts, under the given factual matrix, I am of the considered opinion that the letter of allotment dated 14/07/2014 could not be considered as the date of execution of agreement by any stretch of imagination. Therefore, the AO is right in disregarding the claim of letter of allotment as agreement for sale and making addition of Rs.58,36,00,000/-. Accordingly, the grounds raised are dismissed. Ground No. 2: On the facts and in the circumstances of the case, the Ld. AO has grossly erred in initiating penalty proceedings u/s 270A of the Income Tax Act, 1961. The ground raised is considered and found that there cannot be an appeal against the initiation of penalty proceedings u/s 270A. Therefore the ground raised is dismissed. Ground No. 3: The appellant craves the right to add, delete or amend any of the grounds of appeal either before or at the time of hearing of appeal. This is a general ground raised that does not require adjudication.

6. In the result, the appeal of the appellant is treated as dismissed.”

5. Feeling dissatisfied, the assessee has preferred this appeal on the grounds as reiterated here in above para 2. To support the various grounds so raised the ld. AR appearing on behalf of the assessee has placed their written submission which is extracted in below;

“May it please your honours,

Under instructions from the assessee and in elaboration to the grounds of appeal already taken, following submission is made for your kind and sympathetic consideration. Brief facts pertaining to the grounds of appeal are that assessee is an individual and engaged in the business of Sale of Gold, Diamond and other stones studded Jewellery in the name of M/s Agarwal & Co., 1307 Kedia Bhawan Gopal Ji Ka Rasta, Jaipur. Apart from this, assessee has earned income from House property, Capital Gain and other sources during the year under consideration. Return of Income for the year under appeal was filed by assessee on 13.02.2021, declaring total income of Rs.1,19,33,590/- (APB 1). Case of assessee was selected for Limited scrutiny under CASS for examination of “Purchase value of property less than the value as per stamp authority (u/s 56(2) or any other relevant section (Business ITR)”. Basically, during the year under consideration, registration of sale deed of a flat purchased by assessee bearing no. 4602, 46th Floor, Ruparel Areana, jarbai Wadia Road Parel, Mumbai took place. This property was booked by the assessee in FY 2014-15 and assessee made part payment in FY 2014-15 itself through banking channels. During the course of assessment proceedings, ld.AO issued show cause notice seeking explanation as to why not the excess of stamp duty value of property on 06.05.2019 (i.e. date of registration) i.e. 2,28,76,000/- over purchase consideration, i.e. 1,70,40,000/- (in F.Y. 2014-15) be added to total income of assessee in accordance with section 56(2). In this regard, vide letters dated 14.03.2022 (APB 8-10), 25.08.2022 (APB 11-16) and 17.09.2022 (APB 24-25), it was clarified by assessee that as per the provisions of section 56(2), 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 section and in the present case, DLC value as on the date of booking agreement was at par with the purchases consideration agreed upon. Also, complete details of payments made by assessee were furnished alongwith letter of Allotment cum agreement fixing the terms of payment of consideration and other terms and conditions of sale. Assessee also furnished chart showing details of payments (APB 32), made to builder which duly matches with details of payments as per sale deed (APB 52). Ld.AO though did not point out any discrepancy in the details furnished by the assessee, however proceeded to make addition equivalent to 58,36,000/- (i.e.Rs.2,28,76,000/- less Rs.1,70,40,000/-) under the head “Income from other sources” by invoking the provisions of section 56(2)(x) of the Income Tax Act, solely for the reason that assessee had produced “Letter of Allotment” and not “Agreement” for purchase of property prior to the date of registered sale deed. Aggrieved of the addition so made by ld.AO, assessee preferred appeal before ld. CIT(A), who confirmed the addition made by ld.AO, thus present appeal has been filed by assessee against the order so passed by ld. CIT(A). It would not be out of place to mention here that ld.AO in assessment order has stated that matter was referred to Technical Unit for Valuation, however the data

10 Narain Lal Agrawal vs. DCIT could not be uploaded due to technical glitch and valuation report could not be received prior to completion of assessment. In fact, valuation report has been passed on 09.11.2023 (APB 107), i.e. after CIT(A) order was passed. According to valuation report, property has been valued at Rs.1,86,56,000/- by Departmental Valuation Officer. As Valuation report was received only after order was passed by ld.CIT(A) (order dated 19.10.2023), the issue has come up for consideration before Hon’ble bench for the first time. It is submitted that as valuation report is a departmental record and assessee has not challenged the valuation, the same does not constitute additional evidence. Moreover, as stated above, since ld. Valuation Officer has computed the Fair Market Value of property at Rs.1,86,56,000/- as against Rs.2,28,76,000/- (adopted by ld.AO for making addition), it is thus submitted that addition to the tune of Rs.42,20,000/- (i.e. Rs.2,28,76,000- 1,86,56,000/-) deserves to be deleted outrightly. It is further submitted that after considering the Fair Market Value as per Valuation Report, difference in the value of property as taken by assessee and as computed by ld. Valuation Officer comes to Rs.16,16,000/-, which is merely 8.66% of Fair Market Value computed in Valuation Report. At this juncture, kind attention of the hon’ble bench is invited to sub clause (b)(B)(ii) of clause (x) of section 56(2), as amended by Finance Act 2020, w.e.f. Finance Act 2021, which reads as under: Income from other sources 56.(1)….. (2) In particular, and without prejudice to the generality of the provisions of sub section (1), the following incomes, shall be chargeable to income tax under the head “Income from other sources”. Namely:- ……………. ……………. “[(x) where any person receives, in any previous year, from any person or persons on or after the 1st day of April, 2017,- (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,- (A) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; (B) for a consideration, the stamp duty value of such property as exceeds such consideration, if the amount of such excess is more than the higher of the following amounts, namely;- (i) the amount of fifty thousand rupees; and (ii) the amount equal to [ten] percent of the consideration:] It is submitted that though prior to amendment by Finance Act 2020, the deviation of 5% was permissible, however the increase in such limit to 10% being curative in nature, such amended rate is applicable retrospectively. In this regard, reliance is placed on: Hon’ble Madras High Court decision in the case of CIT vs Vummudi Amarendran in T.C.A.No.329 of 2020, delivered wit reference to amendment in section 50C. Gist of the decision is as under:

11 Narain Lal Agrawal vs. DCIT S. 50C : Capital gains-Full value of consideration-Stamp valuation Amendment with effect from 1-4-2017-Statutory amendment is made to remove an undue hardship-Amendment retrospective. [S. 45] The assessee entered into an agreement for sale on August 4, 2012 agreeing to sell a property for a total sale consideration of Rs. 19 crores and in terms of the conditions contained therein, the assessee received a sum of Rs.6 crores as advance consideration by cheque payment from the purchaser. The Assessing Officer found that on the date of execution and registration of the sale deed, i. e., on May 2, 2013, the guideline value of the property as fixed by the State Government was Rs. 27 crores. By adopting the full value of consideration at Rs. 27 crores he recomputed the capital gains. Appeal was allowed by the CIT (A) and was affirmed by the Tribunal. Appeal of the revenue is dismissed. (AY.2014- 15) Hon’ble Calcutta bench of ITAT in the case of Sandeep Kumar Poddar vs ITO [2023] 151 taxmann.com 18 (Kolkata- Trib.) has held as under: Section 56 of the Income-tax Act, 1961 - Income from other sources - Chargeable as (Immovable property - Tolerance band) - Assessment year 2018- 19 - During year, assessee purchased a property and paid consideration which was 5.93 per cent less than stamp duty valuation - Difference between two was added to income of assessee as income from other sources under section 56(2)(x), by Assessing Officer since it did not fall within tolerance band of 5 per cent as available under said section - Whether amendment in section 56(2)(x) pertaining to increase in tolerance band for variation between stamp duty valuation and actual consideration from 5 per cent to 10 per cent by Finance Act, 2020 is clarificatory/curative in nature having retrospective effect - Held, yes - Whether, therefore, since difference in instant case was less than 10 per cent, no addition could be made in respect of difference between stamp duty valuation and actual consideration during relevant year - Held, yes [Para 7] [In favour of assessee] While deciding the above case, Hon’ble bench relied upon the decision of Hon’ble Mumbai bench of ITAT in the case of M/s Maria Fernandes Cheryl v. ITO (International Taxation) [2021] 123 taxmann.com 252/187 ITD 738 (Mum. - Trib.) , wherein the issue has been discussed in detail. Relevant extracts of decision are as under: Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for computation of full value consideration (Safe harbour) - Assessment year 2011- 12 - Whether amendment in scheme of section 50C(1), by inserting third proviso thereto and by enhancing tolerance band for variations between stated sale consideration vis-à-vis stamp duty valuation from 5 per cent to 10 per cent are curative in nature, and, therefore, these provisions, even though stated to be prospective, must be held to relate back to date when related statutory provisions of section 50C were made effective, i.e. 1-4-2003 - Held, yes [Paras 7, 8 and 9 ] [In favour of assessee] In view of above, it is submitted that legislature itself provides that variation of upto 10% in the stamp duty value of property vis a vis actual consideration is permissible, whereas in the instant case difference is 8.66%, i.e. below 10%, it is 12 Narain Lal Agrawal vs. DCIT therefore requested that actual purchase consideration, i.e. Rs.1,70,40,000/- may please be adopted and addition made by ld.AO and confirmed by ld.CIT(A) by invoking provisions of section 56(2)(x) deserves to be deleted. Without prejudice to above, groundwise submission is made as under: Grounds of Appeal

No. 1 to 1.4: In all these grounds of appeal, assessee has challenged the action of ld. CIT(A) in confirming the action of ld.AO in making addition of Rs.58,36,000/- u/s 56(2) of the Income Tax Act, which are interconnected, and therefore are being canvassed together for the sake of convenience. Facts pertaining to these grounds of appeal, as stated above are that basically ld.AO and ld. CIT(A) did not accept the Allotment letter as agreement fixing the amount of consideration due to its nomenclature, and therefore the stamp duty value on the date of registration, (which took place in the year under consideration) was considered for giving effect to section 56(2)(x). At this juncture, proviso to section 56(2)(x) are reproduced for ready reference: Income from other sources.

56. (1) …………….. (2) In particular, and without prejudice to the generality of the provisions of sub- section (1), the following incomes, shall be chargeable to income-tax under the head "Income from other sources", namely :— (i) ……………. (ia) ………… (ib)……….. ic) ------- -------- (x) ------

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; Your honours would appreciate that legislature has used the words “agreement fixing the amount of consideration”, which means there has to be a written understanding between the parties (mentioning all the terms and conditions), on which they agree to act upon. Further, a provision has to be always interpreted keeping in mind the purpose for which it was introduced by statue. It is a well known fact that after abolition of erstwhile Gift Tax, provisions for taxing the monetary gifts made without consideration to person who are not relatives, were introduced in the form of clause (v) to section 56(2) vide Finance

13 Narain Lal Agrawal vs. DCIT No.(2) Act. 2004 and regarding the same, Hon’ble Finance Minister in budget speech stated that: "Hon’ble Members are aware that I abolished the gift tax in 1997. That decision remains, but a loophole requires to be plugged to prevent money laundering. Accordingly, purported gifts from unrelated persons, above the threshold limit of Rs.25,000 will now be taxed as income. Gifts received from blood relations, lineal ascendants and lineal descendants, and gifts received on certain occasion like marriage will continue to be totally exempt.........." Thus, the legislative intention behind introducing such provision was to prevent money laundering. Subsequently on similar lines, clause (vi) and (vii) (gifts in kind) were introduced, which were applicable to Individual and HUF only and thereafter clause (x) was introduced to expand the scope of provisions even to cover assesses other individuals and HUFs. Hon’ble Mumbai ITAT in the case of Chandrakant H. Shah v. ITO[2009] 28 SOT 315 (Mum.), explained the objects of section 56(2)(v) as under: “11.4....From the perusal of the Hon'ble Finance Minister's speech,… it is apparent that this provision has been brought on statute to fill up the vacuum created by abolition of the Gifttax Act, 1958, in 1997…. there was a practice of bogus foreign gifts, which started with the Government offering immunity for such gifts as part of Disclosure Schemes, however, the said practice of bogus gifts continued even after the Amnesty Scheme expired. It is also true that in the present materialistic society only relatives are likely to make real gifts out of natural love and affection though in the exceptional cases friends and distinct [sic: distant] relatives can also make gifts. It is also true that money laundering, generally, may take place more by way of gifts than by any other means like loans because the person adopting such means, may legally be forced to actually repay the same, if the lender proceeds to do so no person would like to adopt such risky medium unless both entities are very closely related and controlled by same group. The Finance Minister has also emphasized on the fact of a loophole existing due to abolition of the Gift-tax Act, 1958, and, thereafter, words 'money laundering’ have been used in his speech, hence, the intention is only to prevent money laundering by way of bogus gifts. The Hon'ble Finance Minister has made this intention clear by referring to the Gift tax Act, 1958, and by adding exception for gift received from relatives on the occasion of marriage etc. It is also noteworthy that like gift tax, the basic exemption limit has also been prescribed in the section and various exceptions provided in section 56(2)(v) of the Act which were also existing in the like fashion in the erstwhile Gift-tax Act, 1958, and this fact also leads to a conclusion that only bogus gifts are also brought to tax under this provision.... Thus, in view of above discussion, we are of the view that this provision applies to the transactions where undisclosed/unaccounted Income of a person is brought in his hand by way of purported gifts.” It is submitted that in the instant case, party from whom assessee has purchased the property is completely unrelated and entire payment has been made through banking channels and there is no question of any unaccounted income being

14 Narain Lal Agrawal vs. DCIT brough back in the form of gift, therefore addition made by ld.AO solely on the premise that allotment letter is not agreement is not correct. Further, ld. CIT (A) has not accepted the “allotment letter” as “agreement to sell” within the terms of proviso to section 56(2) (x) for the reason that as per such allotment letter, parties were required to enter into agreement to sell subsequently. In this regard, it is submitted that such reference of agreement to be entered into later on, is nothing but final Sale deed thus the letter of allotment constitutes the Booking agreement as envisaged is Section 56(2). It is further submitted that registration of an instrument is not mandatory but is done to make it enforceable, after Full consideration is paid and as a general practice such instrument is in the format of agreement (and for this reason only, letter of allotment talks about preparation of agreement to sell subsequently before registration), however it in no way reduces the importance of allotment letter, which is first written understanding between the parties and records all the terms of sale, is duly signed and is issued only after payment of part of the sale consideration through banking channels and thus is at par with “agreement fixing the amount of consideration” as mentioned in proviso to section 56(2)(x) In the instant case, agreement for booking/allotment of this property was made on 14.07.2014, i.e. in FY 2014-15 (APB 26-33), for a sum of Rs. 1,70,40,000.00 and out of which, amount of Rs. 30,00,000/- was paid in FY 2014-15 itself. From perusal of agreement cum allotment letter (APB 26-33), it is evident that the purchase consideration was fixed at Rs. 1,70,40,000/- in 2014 itself, and payment made through banking channels was also duly acknowledged by the seller and it is only the registry which has been executed in May 2019 after making all due payments to the seller and as such adjustment as per the provision of section 56(2)(x) of the IT Act, 1961 is not correct. Since, in the present case, both the parties have acted upon in accordance with terms mentioned in letter of allotment, it satisfies all the conditions as that of an “agreement fixing the amount of consideration” for the reason that it:- 1. contains the detail of property to be sold alongwith its complete address which is Flat No. 4602, 46th Floor, Ruparel Areana, jarbai Wadia Road Parel, Mumbai. 2. contains the total sale consideration of the property mentioned in the allotment. 3. contains the details of Car parking facility to be provided to the buyer by the seller alongwith the flat purchased. 4. specifically talks about the payment of stamp duty and registration charges at the time of registration and further provides that the same will be borne by the buyer i.e. assessee. 5. contains the terms of payment to be made by the buyer on different stages of completion of the building. 6. is duly signed and executed. 8. describes other conditions also which are written in the agreement. It is further submitted that the seller has confirmed the receipt of an amount of Rs. 50,84,046/- from buyer on various dates starting from 01.07.2014 to April, 2015 vide Agreement cum allotment letter (APB 32).

15 Narain Lal Agrawal vs. DCIT It would not be out of place to mention here that the assessee has purchased the flat situated in a building on 46th floor in Mumbai wherein the builder /seller i.e. Shree Sukhakarta Developers Pvt. Ltd. is situated at Marathon Futurex, 1002, B Wing, N.M. Joshi Marg, Lower Parel, Mumbai-400013 [e-mail: info@ruparel.in] and it is a common practice prevailing in Maharashtra, of issuing allotment letter which contains all the precise details and contains all the conditions with reference to the property to be sold and the allotment letter so issued is duly accepted as good as Agreement to sell. Further in section 56(2) there is no specific format of the agreement fixing the amount of sale consideration, thus any document through which both the parties bind themselves for performing an act subject to certain terms and conditions, constitutes the character of agreement more particularly when based on such document final registration of sale deed takes place, where both the parties have again ratified the receipt/payment of sale consideration as per the schedule given in such allotment letter. In the circumstances, it is submitted that the letter of allotment cum agreement, being a properly executed document, containing the details of payments to be done, its timings and it is requested that the letter of allotment cum agreement so executed deserves to be accepted. In support of such contention, reliance is placed on following case laws: Radha Kishan Kungwani vs ITO ITA No.1106/JP/2018 decision dated 19.08.2020 (Relevant extracts reproduced)(APB 53 to 64) “7. We have considered rival submissions as well as relevant material on record............... ……………………….otherwise not disputed by the A.O. We further note that even in the final agreement which is registered on 16/09/2014, the payment schedule is given which is as per the various stages of completion of project, therefore, the parties at the time of booking, agreed for the payment as it is part of the agreement registered on 16/09/2014. All these facts and undisputed part payment made by the assessee through cheques on 10/10/2010 and 14/10/2010 clearly established that at the time of booking, there was an agreement between the parties regarding the purchase and sale of the flat in question and payment of the purchase consideration as per the agreed schedule between the parties. Thus, even if there is no separate agreement between the parties in writing but the agreement which is registered itself shows that the terms and conditions as contained in the said agreement were agreed between the parties at the time of booking of the flat. Hence, in our considered opinion that there was an agreement between the parties regarding purchase and sale of flat in question at the time of booking of the said flat and part payment made by the assessee on 10/10/2010 through cheque and there is subsequent payment on 14/10/2010 through cheque. Thus, the booking of the flat and part payment by the assessee constitute agreement between the parties as the terms and conditions which are reduced in writing in the agreement registered on 16/09/2014 relates to the performance of both the parties right from the beginning i.e. date of booking of the flat. The provisions of Section 56(2)(vii) of the Act reads as under: …………………… 16 Narain Lal Agrawal vs. DCIT ………………….. Therefore, if there is an agreement between the parties, fixing the amount of consideration for transfer of immovable property prior to the date of registration and the purchaser has made the payment of consideration or part thereof before the date of that registered agreement for transfer by any mode other than cash then the value as determined for the stamp duty will be taken on the date of such earlier agreement. In the case in hand, all these facts are duly acknowledged by the parties in the registered agreement that earlier there was a booking of flat and the assessee paid part payment of consideration. Hence, the proviso first and second to Section 56(2)(vii) of the Act would be applicable in the case and the stamp duty valuation or the fair market value of the immovable property shall be considered as on the date of booking and payment made by the assessee towards booking of the flat. Accordingly, the orders of the authorities below are set aside and the matter is remanded to the record of the A.O. to apply the stamp duty valuation as on 10/10/2010 when the assessee booked the flat and made the part payment of consideration and consequently, if any difference being the stamp duty valuation is higher than the purchase consideration paid by the assessee, the same would be added to the income of the assessee under the provisions of Section 56(2)(vii)(b) of the Act.” Mr. Sajjanraj Mehta vs. ITO ITA No. 56/Mum/2021 decision dated 05.09.2022 (Relevant extracts reproduced)(APB 65 to 75) 10. We have gone through the order of the A.O, Ld. CIT(A) and various submissions of assessee dated 06-10-2021. Vide pg no-23 to 27 of paper-book we have observed the payment made by the assessee to the developer on 17- 10-2011 amounting to Rs 14 lacs vide cheque no 906740, Bank of Maharashtra to enter into an agreement cum acknowledgement of payment made and other terms and conditions about the property. This agreement between assessee and developer clearly confirms the amount of consideration along with other terms and conditions relating to levy of stamp duty, service tax and other charges to be paid by the assessee.

11. The finding of the A.O vide pg no-4, para-2.6 wherein he observed that assessee has deposited Rs 14 lacs with the developer to year mark the said premises for Rs 70 lacs. Even if for the time being it is assumed that this agreement is merely a letter of intent, still amount mentioned in this so called letter of intent can’t be changed by either of the party .At the max the parties involved may opt for exit from the transaction but amount of consideration can’t be changed. This transaction of the assessee has to be analysed in commercial parlance, without finalisation of consideration nobody will deposit 20% of the final consideration. The vitality of the agreement further found force from the behaviour of the assessee as confirmed by the A.O also that assessee paid further Rs 34.5 lacs till financial year 2012-13. Assessee also paid Rs 1,00,285/- as VAT, Rs 1,35,187/- as service tax, Rs 5,02,000/- as stamp duty and Rs 30,000/- as registration charges.

12. The chronology of the events confirms that the finding of the A.O treating the agreement of the assessee as letter of intent is not correct. In this matter treating the said agreement as letter of intent shows an over thinking and hyper technical interpretation at the end of the A.O. assessees case clearly falls in the 17 Narain Lal Agrawal vs. DCIT proviso to Section 56(2)(vii)(b). For sake of clarity we are reproducing herein below the relevant portion of proviso “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”.

13. We further relied on following judicial pronouncement of coordinated benches of ITAT, Hon’ble High Court and Apex Court as under: ……………….. ………………...

15. Keeping in view the facts of the case, chronology of events and respectfully following the pronouncements of the co-ordinated benches of ITAT, we delete the addition made by A.O and confirms that assessee is entitled to the benefits of proviso to Section 56(2)(vii)(b).” Sanjay Dattatraya Dapodikar v/s ITO Ward - 6(2), Pune ITA No. 1747/PN/2018 dtd. 30/04/2019(Pune) (Trib)(APB 76 to 83) Where date of agreement for fixing amount of consideration for purchase of a plot of land and date of registration of sale deed were different but assessee, prior to date of agreement, had paid a part of consideration by cheque, provisos to section 56(2)(vii)(b) being fulfilled, stamp value as on date of agreement should be applied for purpose of said section. Ashutosh Jhavs. ITO Ward-2(5), Ranchi ITA No. 188/Ranchi/2019 dtd. 30/04/2021, [190 ITD 450 (Kolkata - Trib.).](APB 84 to 89) Where assessee purchased a property and made part payment of sale consideration by cheque on very next day of execution of purchase agreement and registry was done after a year, since such part payment made by cheque on very next day of execution of agreement was towards fulfilment of terms of purchase contract itself and there was no mala fide or false claim on part of assessee, no addition could be made on account of difference between amount of sale consideration for property shown in purchase agreement and stamp duty value of said property on date of registry by invoking section 56(2)(vii)(b). In view of above, it is submitted that Allotment letter cum agreement in the instant case is at par with “agreement fixing the amount of consideration” within the terms of proviso to section 56(2)(x) of the Income Tax Act and addition made by ld.AO and confirmed by ld. CIT(A) deserves to be deleted.”

6. To support the contention so raised in the written submission reliance was placed on the following evidence / records / decisions :

PAGE S.No PARTICULARS NOS.

Copy of Acknowledgement of Return of Income and Computation of total income for 1-7 1. A.Y. 2020-21

Copy of reply dated 17.09.2022 filed before ld.AO against the above show cause 24-25 5. notice.

6. Copy of ‘Letter of Allotment’ dated 14.07.2014 26-33

Copy of ICICI Bank statement highlighting payments made to Shree Sukhakarta 34-49 7. Developers Private Limited. Copy of chart showing payments made to Shree Sukhakarta Developers Pvt. Ltd and 50 8. TDS deducted thereon. Copy of confirmation regarding receipt of booking amount issued by Shree 51 9. Sukhakarta Developers Pvt Ltd

10. Copy of relevant extract of sale deed showing payment confirmation 52 Copy of order of Hon’ble ITAT, Jaipur Benches “SMC” in the case of Radha Kishan 53-64 11. Kungwani vs ITO vide decision dated 19.08.2020 Copy of order of Hon’ble ITAT, Mumbai Benches “SMC” in the case of Mr. Sajjanraj 65-75 12. Mehta vs. ITO ITA No. 56/Mum/2021 decision dated 05.09.2022

Copy of order of Hon’ble ITAT, Pune Benches “SMC” in the case of Sanjay Dattatraya 76-83 13. Dapodikar v/s ITO Ward - 6(2), Pune dated 30/04/2019 Copy of order of Hon’ble ITAT, Kolkata Benches “SMC” in the case of Ashutosh Jhavs. 84-89 14. ITO Ward-2(5), Ranchi ITA No. 188/Ranchi/2019 dtd. 30/04/2021

15. Copy of written submission dated on 28.02.2023 before CIT(A) NFAC. 90-97

7. The ld. AR of the assessee in addition to the written submission so filed also argued that the ld. AO did not appreciate the fact that since the assessee has booked the flat on 14.07.2014. The consideration so fixed was at Rs. 1,70,40,000/- and out of which amount of Rs. 50,84,046/- was paid in F. Y. 2014-15 itself. Thus, the addition of difference for an amount of Rs. 58,36,000/- cannot be added. To support this contention the ld. AR of the assessee submitted that value was fixed by an agreement, the assessee has paid the TDS upon payment of flat booking since 27.06.2014 and thereafter the consideration has been paid from time to time as per the details of the payment made available at page 50 of this paper book. In addition the ld. AR of the assessee also drawn our attention to the report of the DVO dated 09.11.2023 wherein the valuation as on 13.03.2019 was made at Rs. 1,86,56,000/-. The difference being less than 10 % no addition can be made as per the amended provision of law. and more particularly advanced the similar contentions as stated in the order of the ld. AO and ld. CIT(A). The ld. DR argued that since the DVO’s report was not available before the ld. AO the matter be remanded back to the ld. AO. The assessee while booking of flat has not paid the consideration and the letter of allotment cannot be considered as purchase of flat the difference is rightly added in the hands of the assessee.

Provision of section 56(2)(x) of the Act (x) where any person receives, in any previous year, from any person or persons on or after the 1st day of April, 2017,— (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,— (A) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; (B) for a consideration, the stamp duty value of such property as exceeds such consideration, if the amount of such excess is more than the higher of the following amounts, namely:— (i) the amount of fifty thousand rupees; and (ii) the amount equal to ten per cent of the consideration: Provided that where the date of 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 agreement may be taken for the purposes of this sub-clause: Provided further that the provisions of the first proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed28, on or before the date of agreement for transfer of such immovable property: Provided also that where the stamp duty value of immovable property is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub-section (15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of this sub-clause as they apply for valuation of capital asset under those sections: 29[Provided also that in case of property being referred to in the second proviso to sub-section (1) of section 43CA, the provisions of sub-item (ii) of item (B) shall have effect as if for the words "ten per cent", the words "twenty per cent" had been substituted;] (c) any property, other than immovable property,—

22 Narain Lal Agrawal vs. DCIT (A) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property; (B) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration: Provided that this clause shall not apply to any sum of money or any property received— (I) from any relative; or (II) on the occasion of the marriage of the individual; or (III) under a will or by way of inheritance; or (IV) in contemplation of death of the payer or donor, as the case may be; or (V) from any local authority as defined in the Explanation to clause (20) of section 10; or (VI) from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or (VII) from or by any trust or institution registered under section 12A or section 12AA or section 12AB; or (VIII) by any fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10; or (IX) by way of transaction not regarded as transfer under clause (i) or clause (iv) or clause (v) or clause (vi) or clause (via) or clause (viaa) or clause (vib) or clause (vic) or clause (vica) or clause (vicb) or clause (vid) or clause (vii) 30[or clause (viiac) or clause (viiad) or clause (viiae) or clause (viiaf)] of section 47; or (X) from an individual by a trust created or established solely for the benefit of relative of the individual; (XI) from such class of persons and subject to such conditions, as may be prescribed31; 32[(XII) by an individual, from any person, in respect of any expenditure actually incurred by him on his medical treatment or treatment of any member of his family, for any illness related to COVID-19 subject to such conditions, as the Central Government may, by notification in the Official Gazette, specify in this behalf; (XIII) by a member of the family of a deceased person,— (A) from the employer of the deceased person; or (B) from any other person or persons to the extent that such sum or aggregate of such sums does not exceed ten lakh rupees,

23 Narain Lal Agrawal vs. DCIT where the cause of death of such person is illness related to COVID-19 and the payment is— (i) received within twelve months from the date of death of such person; and (ii) subject to such other conditions, as the Central Government may, by notification in the Official Gazette, specify in this behalf. Explanation.—For the purposes of clauses (XII) and (XIII) of this proviso, "family", in relation to an individual, shall have the same meaning as assigned to it in Explanation 1 to clause (5) of section 10:] 33[Provided further that clauses (VI) and (VII) of the first proviso shall not apply where any sum of money or any property has been received by any person referred to in sub-section (3) of section 13.] 34[Explanation.—For the purposes of this clause,— (a) the expressions "assessable", "fair market value", "jewellery", "relative" and "stamp duty value" shall have the same meanings as respectively assigned to them in the Explanation to clause (vii); and (b) the expression "property" shall have the same meaning as assigned to it in clause (d) of the Explanation to clause (vii) and shall include virtual digital asset;]

10. As it is evident from the first proviso that where the date of 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 agreement may be taken for the purposes of this sub-clause:, the law also provide that for this purpose the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed, on or before the date of agreement for transfer of such immovable property. Thus, the case of the assessee falls in this proviso as as per the receipt placed on record. The assessee in his submission submitted that the DLC value as on the date of booking agreement was at par with the purchase consideration agreed upon and there is no scope for any addition in the case of the assessee. But ld. AO and ld. CIT(A) taken the view that the assessee has not produced any agreement to this effect as on the date of booking the same was not considered and the letter of allotment cannot be considered as agreement for purchase of property by any stretch of imagination. On the aspect of the matter we note that an allotment letter is a document issued by a developer to property buyers once an arrangement has been reached between the two parties to work towards a binding contract. It outlines the terms and conditions under which the property is allocated to the buyer, serving as evidence of ownership and payment. Whether it’s a government project or a private developer, the allotment letter provides essential details about the buyer and the property, facilitating a smooth transaction. Whether the allotment letter be considered as an agreement of the purpose of section 56(2)(x) of the Act or not is decided by a co-ordinate bench in the case of Sulochana Saijan Mod Vs. ITO the relevant finding is re produced here in below :

25 Narain Lal Agrawal vs. DCIT 11. Thus, the section prescribe that when the property has been purchased for inadequate consideration, as compared to the stamp duty value, same is liable to be addition for income under the head “income from other sources”. However, under the proviso if prior to registration of the property , the assessee has entered into purchase agreement fixing the amount of consideration and also partly paid the amount of consideration by way of account payee cheque/draft etc, then for the purpose of section 56(2)(x) of the Act, the stamp duty value as on the date of the agreement may be taken for the purpose of the working out deemed sale consideration. In the instant case, the son of the assessee, Shri Ashish Modi has been allotted the concerned flat on 22.11.2010 and the assessee has become co- owner of the said property. The assessee has filed copy of the registered Deed which indicates that a cheque of Rs.2,00,000/- was paid in respect of the allotment of the property on 11.11.2010. The assessee has also filed a copy of bank statement of Shri Ashish Modi from which it is seen that the said payment of Rs.2,00,000/- has been withdrawn from his bank account on 23.11.2010. Thus, as far as the condition of part payment is considered, it is not in dispute. However, Ld.CIT(A) and the AO has disputed the allotment letter. According to the AO and Ld.CIT(A), the allotment letter is not in the nature of the agreement for sale. However, we find that the Tribunal in the case of Parth Dasrath Gandhi vs Addl./Deputy/Asst. CIT order dated 31.01.2023 for AY 2018- 19 held that “the allotment letter should be considered as agreement for sale.” The relevant finding of the Tribunal (supra) is reproduced as under: -

26 Narain Lal Agrawal vs. DCIT 8. With regard to the decision rendered in the case of Sujauddian Kasimsab (supra), the Ld A.R submitted that the said decision has been rendered on the basis of facts prevailing in that case. The assessee, in the above said case, had paid Rs.3.00 lakhs before the date of agreement, but the same was described as “earnest money deposit” in the Agreement, meaning thereby, the assessee did not fulfill the condition prescribed in sec.56(2)(x) of the Act. The Ld A.R further submitted that the Tribunal did not consider the effect of second proviso to sec.56(2)(x) of the Act in the above said case. We agree with the submissions of Ld A.R with regard to the distinguishing features pointed out in the decision rendered by the co- ordinate bench in the case of Sujauddian Kasimsab (supra). Hence, we are of the view that the above said decision could not lend support to the case of the revenue.

9. On the contrary, we are of the view that the decision rendered by another co-ordinate bench in the case of Mr Sajjanraj Mehta (supra) is applicable to the facts of the present case. The decision rendered in the case of Mr Sajjanraj Mehta by the co-ordinate bench is extracted below, for the sake of convenience:- “10. We have gone through the order of the A.O, Ld. CIT(A) and various submissions of assessee dated 06-10-2021. Vide pg no-23 to 27 of paperbook we have observed the payment made by the assessee to the developer on 17-102011 amounting to Rs 14 lacs vide cheque no 906740, Bank of Maharashtra to enter into an agreement cum acknowledgement of payment made and other terms and conditions about the property. This agreement between assessee and developer clearly confirms the amount of consideration along with other terms and conditions relating to levy of stamp duty, service tax and other charges to be paid by the assessee. 11. The finding of the A.O vide pg no-4, para-2.6 wherein he observed that assessee has deposited Rs 14 lacs with the developer to year mark the said premises for Rs 70 lacs. Even if for the time being it is assumed that this agreement is merely a letter of intent, still amount mentioned in this so called letter of intent can’t be changed by either of the party. At the max the parties involved may opt for exit from the transaction but amount of consideration can’t be changed. This transaction of the assessee has to be analysed in commercial parlance, without finalisation of consideration nobody will deposit 20% of the final consideration. The vitality of the agreement further found force from the behaviour of the assessee as confirmed by the A.O also that assessee paid further Rs 34.5 lacs till financial year 2012-13. Assessee also paid Rs 1,00,285/- vs VAT, Rs1,35,187/- as service tax, Rs 5,02,000/- as stamp duty and Rs 30,000/-as registration charges.

27 Narain Lal Agrawal vs. DCIT 12. The chronology of the events confirms that the finding of the A.O treating the agreement of the assessee as letter of intent is not correct. In this matter treating the said agreement as letter of intent shows an over thinking and hyper technical interpretation at the end of the A.O. assessee’s case clearly falls in the proviso to Section 56(2)(vii)(b). For sake of clarity we are reproducing herein below the relevant portion of proviso “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”.

e) Dy. CIT-5(3)(1) vs. Deepak Shashi Bhusan Roy &3316/M/2016 dtd. 30/07/2018(Mum.) (Trib.) In order to determine taxability of capital gain arising from sale of property, it is date of allotment of property which is relevant for purpose of computing holding period and not date of registration of conveyance deed f) Mohd. Ilyas Ansari v. ITO-23(2)(3),Mumbai [ITA No. 6174/M/2017dtd.06/11/2020, 186 ITD 407 (Mumbai - Trib.)]

Where Assessing Officer mechanically applied provisions of section 56(2)to difference between stamp duty value and actual sale consideration paid by assessee and made additions, without making any efforts to find out actual cost of property, additions made by Assessing Officer were to be set aside.”

14. Similar property in the case of assessee’s wife with similar transactions has been accepted by the same A.O without any addition for the same A.Y. Here we would like to rely on the decision of Hon’ble Gauhati HC.

“Gulabrai Hanumanbox. vs. Commissioner of Wealth-tax [198 ITR131 (Gauhati) (HC).]Two different Assessees having similar/identical facts w.r.t valuation of property cannot be assessed with different rates for the same property. Thereby, the order passed by the Assessing officer for co-sharer of property is arbitrary and unjustified in law”

29 Narain Lal Agrawal vs. DCIT apply to the facts of the present case. Accordingly, the stamp duty valuation as on the date of respective Allotment letters should be considered for the purposes of sec.56(2)(x) of the Act. Hence the AO was not justified in considering the stamp duty valuation as on the date of execution of agreement to sell.

12. The Ld.CIT(A) has relied on the decision of the Hon’ble Supreme Court in the case of Balbir Singh Maini (supra) but we find that in the said decision, following substantial questions were raised before the Hon’ble High Court:-

“i) Whether the transactions in hand envisage a “transfer” exigible to tax by reference to Section 2(47)(v) of the Income Tax Act, 1961 read with Section 53-A of the Transfer of Property Act, 1882? ii) iii) iv) v) Whether the Income Tax Appellate Tribunal, has ignored rights emanating from the JDA, legal effect of non registration of JDA, its alleged repudiation etc.? Whether “possession” as envisaged by Section 2(47)(v) and Section 53-A of the Transfer of Property Act, 1982 was delivered, and if so, its nature and legal effect? Whether there was any default on the part of the developers, and if so, its effect on the transactions and on exigibility to tax? Whether amount yet to be received can be taxed on a hypothetical assumption arising from the amount to be received?”

13. The Hon’ble Supreme Court accordingly, adjudicated on the issue of interpretation of the transfer defined u/s 2(47) of the Act and upheld the order of Hon’ble High Court. Therefore, ratio in the case of Balbir Singh Maini (supra) is not applicable over the facts of the instant case.

Being consistent to the view taken based on the detailed finding so recorded herein above case, we hold that the stamp duty valuation as on the date of respective allotment letters should be considered for the purpose of sec.56(2)(x) of the Act.

11. The ld. AR of the assessee alternatively submitted that though the ld. AO referred the matter to TU [ DVO] for valuation of the property the same was not received till the ld. CIT(A) passed the appellate order. The same is received vide letter dated notice dated 09.11.2023 wherein the value of the property was determined at Rs. 1,86,56,000/- as against the actual consideration of Rs. 1,74,40,000/-. The difference if any is less than 10 %, which is also dealt with in the provision of section 56(2)(x) of the Act. Prior to amendment by Finance Act 2020, the deviation of 5 % was permissible, however, the same was increased to 10 % and that increase in limit being curative in nature the amendment applies retrospectively. The Hon’ble Madras High Court in the case of CIT Vs. Vummudi Amarendran held that once a statutory amendment is being made to remove an undue hardship to has to be treated as effective from the date on which the law, containing such an undue hardship or incongruity, was introduced. Thus, considering that aspect of the matter here also since the difference as alleged in the DVO’s report is also having the difference of less then 10 % same is also covered by the proviso to section 56(2)(x) of the Act and even on that account addition cannot be sustained.

In the result the appeal of the assessee is allowed.