The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the sale consideration stated in the sale deed pursuant to the public auction is to be accepted as the fair market value for the purposes of stamp duty.
The assessee is a firm with three partners. During the year under consideration, the assessee purchased a property in the auction from Jai Hind Co-operative Bank Ltd for Rs.3,53,70,000. Whereas, the fair market value as per the records of the municipal authority was Rs.5,84,99,000.
The assessee was asked to show cause as to why the amount of Rs. 2,31,29,000 being the difference in the fair market value of Rs.5,84,99,000 and the consideration of Rs.3,53,70,000 be not considered as income from other sources under Section 56(2)(x) of the Income Tax Act, 1961.
The assessee submitted that the property was purchased from the aforesaid bank after duly participating in the e-tender, as the aforesaid bank went into liquidation. It was further submitted that the bidding and auction were administered by the Commissioner of Co-operation and Registrar, Maharashtra State, Pune.
Therefore, the true fair market value of the property was Rs.3,53,70,000 only and the stamp duty value is unduly high as it has not considered the actual condition and various factors affecting the property.
In the case of Krishi Utpanna Bazar Samittee v/s DCIT, in ITA No. 2043/PN/2012, after considering the aforesaid circular issued by the Government of Maharashtra held that the consideration stated in the sale deed pursuant to the public auction is to be accepted as the fair market value.
The Two-member bench comprising of G.S. Pannu (President) and Sandeep Singh Karhail (Judicial member) held that the consideration paid by the assessee, being the higher/successful bidder, of the e-tender floated by the aforesaid bank is the fair market value of the property in the facts and circumstances of the present case.
Thus, there was no infirmity in the impugned order passed by the Commissioner of Income Tax (Appeal) [CIT(A)], and accordingly, the same was upheld. Therefore, the appeal by the Revenue was dismissed.
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