Stamp Value Less than Agreement Value: ITAT Deletes Addition u/s 56(2)(vii)(b) of Income Tax Act [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has deleted the additions made under Section 56(2)(vii)(b) of the Income Tax Act 1961 holding that the stamp value was less than the agreement value.

The Appellant, Shilpa Gautam, was a non-resident individual and did not file return of income for the Assessment Year 2016-17. Based upon the information received by the Assessing Officer that the Appellant has purchased an immovable property, reassessment proceeding was initiated.

The Appellant submitted that the immovable property was booked on 05.06.2012 and booking amount was paid by way of a cheque, dated 01.06.2012. Thereafter, the Appellant had also made part-payments. Therefore, Proviso to Section 56(2)(vii)(b) of the Income Tax Act would be attracted.

Since the agreement value was more than stamp duty value as on 05.06.2012, no income could be brought to tax as per the provisions of Section 56(2)(vii)(b) of the Income Tax Act. However, the Assessing Officer made additions under Section 56(2)(vii)(b) of the Income Tax Act.

 Rajesh Athwale, on behalf of the assessee submitted that Section 56(2)(vii)(b) of the Income Tax Act was introduced to protect assessees from hardship arising from adopting the date of the agreement as the relevant date for determining stamp duty for the purposes of this Section.

The Section 56(2)(vii)(b) of the Income Tax Act provided that in cases where an appellant had entered into agreement fixing the amount of consideration for the transfer of immovable property and the amount of consideration referred therein had been paid by a mode other than cash, on or before the date of the agreement for the transfer of such immovable property, the stamp value on the date of such agreement and not the registration of document shall be considered as the relevant date for determining stamp duty value for comparison with agreement value for the purposes of Section 56(2)(vii)(b) of the Income Tax Act.

He further submitted that the appellant had at the time of booking of the immovable property agreed upon the consideration for purchase of the aforesaid immovable property and had made a payment by way of cheque, and the provisions contained in Provisos to this Section would be attracted.

Soumendu Kumar Dash, on behalf of the revenue submitted that there was no agreement between the parties as on the date of booking of the immovable property as the appellant had failed to pay the entire booking amount. Further, the actual payments by the appellant were not as per the Schedule of Payments specified in the Agreement for Sale.

The two-member Bench of Prashant Maharishi (Accountant Member) Rahul Chaudhary (Judicial Member) allowed the appeal and deleted the addition made under Section 56(2)(vii)(b) holding that as the stamp value as was less than the agreement value.

To Read the full text of the Order CLICK HERE

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