Tribunal rules in favor of assessee in property dispute under Income Tax Act.

The Tribunal ruled in favor of the assessee in a property transaction dispute involving the application of section 56(2)(vii)(b) of the Income Tax Act. Although the provision was deemed applicable to the transaction executed in 2015, the Tribunal considered the provisos attached to the section. As the stamp value in 2008 was lower than the actual consideration and part payment was made through banking channels, the main part of the provision did not apply. Consequently, the addition made by the Assessing Officer was deleted, and the appeal was allowed.

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Issues:
Interpretation of section 56(2)(vii)(b) - Applicability of provisions to a property transaction involving a purchase deed executed in 2015 but with an agreement made in 2008.

Analysis:

Issue 1: Interpretation of section 56(2)(vii)(b)
The case involved a property transaction where the assessee purchased a plot of land with TDR/FSI rights, leading to a dispute over the application of section 56(2)(vii)(b) of the Income Tax Act. The Assessing Officer (AO) invoked this provision to add the difference between the stamp value and the actual purchase consideration as income. The contention was whether this provision, inserted by the Finance Act, 2013, could be applied retroactively to a transaction where the agreement was made in 2008 but the sale deed was executed in 2015. The Tribunal held that since the sale deed was executed in 2015 when the provision was in force, it was applicable to the transaction.

Issue 2: Application of Provisos to section 56(2)(vii)(b)
The assessee argued that if the provision was to be applied, it should consider the two provisos attached to it. The first proviso allowed the stamp duty value on the date of the agreement to be considered if the agreement and registration dates differed. The second proviso required that consideration, or part thereof, be received through banking channels at the time of agreement. The Tribunal accepted this argument, noting that the agreement fixing the consideration was made in 2008, and a part payment was made through banking channels. Therefore, the stamp value on the date of the agreement in 2008 should be applied, not the stamp value in 2015. As the stamp value in 2008 was lower than the actual consideration, the main part of section 56(2)(vii)(b) did not apply, leading to the deletion of the addition made by the AO.

In conclusion, the Tribunal allowed the appeal, holding that the provisions of section 56(2)(vii)(b) were applicable to the transaction, but the application should consider the provisos attached to the section. The stamp value on the date of the agreement in 2008 was to be used, resulting in the deletion of the addition made by the AO.

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