The Income Tax Appellate Tribunal ( ITAT ), Mumbai Bench held that as per the provisions of Section 56(2)(vii)(b) of the Income Tax Act, 1961 if the date of agreement fixing the consideration and date of registration are not in same, the stamp duty value may be taken as on the date of agreement fixing the consideration, instead of that on the date of registration.
During the financial year 2010-11 assessee, Rajni D. Sainihad booked property at a total consideration of Rs.2.60 crores. Developer issued allotment letter. The assesseehad made initial payment of Rs. 10.00 lakhs at the time of allotment. Thereafter, instalments were paid on behalf of the assessee to the developer by the parents of the assessee through various cheques.
The payments were made directly by the parents of the assessee to the developer. Gift deeds to that effect were also made by the parents of the assessee. The entire payment for purchase of property was concluded till Financial Year 2011-12. A registered sale deed was executed. During the course of scrutiny assessment proceedings for Assessment Year 2014-15, AO disbelieved the submissions of assessee and the gift deeds executed by parents of the assessee.
Thus, the Assessing Officer made addition of Rs.5.31 crores under Section 56(2)(vii)(b) of the Income Tax Act, 1961 being the difference between the Stamp Duty valuation as on the date of registration less the actual consideration paid. Aggrieved by the addition, the assessee filed appeal before the CIT(A). CIT(A) after examining the facts and documents on record deleted the addition.
A Bench consisting of G S Pannu, President and Vikas Ashwathy, Judicial Member observed that “In the instant case, on the date of allotment the building was under construction and even on the date of registration of sale deed the assessee had not taken possession of the immovable property. The assessee had acquired right in the ownership of flat at the time of issuance of allotment letter. Therefore, in the facts of the case stamp duty value as on the date of allotment of flat is relevant.”
“Further, in terms of proviso to the section, payment of consideration has been made by the appellant before the date of the agreement. In view of the above, the provision of the Section 56(2)(vii)(b) is not applicable to the appellant. The A.O. is directed to delete the addition of Rs.5,13,25,000” the Tribunal said.
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