The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) has held that the stamp duty valuation as on the date of allotment letters could be considered to impose Income Tax under Section 56(2)(X) of the Income Tax Act 1961.
The Assessing Officer (AO) found that the assessee, Parth Dashrath Gandhi, had purchased two properties during the year under consideration, whose stamp duty value was more than the value of consideration shown in the conveyance deed.
In respect of first property, the assessee submitted that he had booked the flat in 2016, vide allotment letter dated 25.01.2016 for a sum which was later reduced due to variation in the rate of VAT. The agreement was later executed and registered on 8.12.2017.
In respect of second property, the assessee submitted that he had booked the flat in 2011, vide allotment letter dated 28th December, 2011 for a sum which was subsequently increased due to size. The agreement was later executed on 30.11.2017 and registered on 08.12.2017.
Section 56(2)(x) deals with provisions relating to taxability of Money or property received without consideration.
Aarti Visanji, on behalf of theassessee submitted that as per the first and second proviso to Section 56(2)(x) of the Act, the stamp duty value on the date of agreement should be taken for the purpose of sec. 56(2)(x).
He further placed reliance on the decision rendered by the coordinate bench in the case of Mr. Sajjanraj Mehta vs. ITO wherein it was held that the date of allotment letter could be taken as date of agreement of sale for the purposes of sec.56(2)(x) of the Act.
B. Bagchi on behalf of the revenue submitted decision relied upon the co-ordinate bench decision on Sujauddian Kasim sab
The Division Bench of B.R. Baskaran (Accountant Member) and Pavan Kumar Gadale (Judicial Member) allowed the appeal relying upon Sajjanraj Mehta vs. ITO and observed that,
“We hold that the respective allotment letters issued to the assessee should be considered as “Agreement to sell” for the purposes of sec.56(2)(x) of the Act. Since the assessee has paid the parts of consideration as per the terms and conditions of allotment through banking channels prior to the execution of Sale agreement, we are of the view that the provisions to sec.56(2)(x) shall 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”
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