The Mumbai bench, Income Tax Appellate Tribunal ( ITAT ) held that no addition should be made under section 56(2)(x)(b)(B)(ii) of the Income Tax Act when Difference between the purchase value and fair market value is less than 5%.
The Assessee Glory Shipmanagement Private Limited case was selected for scrutiny after filing the return of income. During the assessment proceedings, the Assessing Officer noted that the Appellant had purchased an immovable property for a consideration of INR 41,00,000/- whereas the stamp duty valuation of the aforesaid property was INR 66,64,200/-.
Accordingly , a reference was made to the District Valuation Officer ( DVO ) under Section 55A of the Act. As per the report of the DVO, the fair market value of the aforesaid immovable property as on 30/06/2017 was INR 44,86,000/-. Thus, there was a difference of INR 3,86,000/- in the consideration paid by the Appellant for acquisition of the immovable property and the fair market value determined by the DVO.
Therefore, the Assessing Officer invoked provisions contained in Section 56(2)(x)(b) of the Act to make an addition of INR 3,86,000/- in the hands of the Assessee.
Aggrieved by the order assesee filed an appeal before the CIT(A). The CIT(A) dismissed the appeal filed by the assessee . Thereafter the assessee filed an appeal before the tribunal.
During the adjudication the counsel for assessee argued that the rate of 5% in Section 56(2)(x)(b)(B)(ii) of the Act was increased to 10% with effect from 01/04/2021 and was, therefore, it was not applicable to assessee’s Assessment Year 2018-19
Dr. Kishor Dhule, Department representatives supported the order of lower authorities.
After analyzing the submission of both parties, the bench comprising Narender Kumar Choudhry, ( Judicial Member ) & I Amarjit Singh, ( Accountant Member ) held that the benefit of tolerance band of 10% shall be available to the Assessee for the Assessment Year 2018-19.
Therefore no addition should be made under Section 56(2)(x)(b)(B)(ii) of the Income Tax Act when Difference between the purchase value and fair market value less than 5%
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