Assessee wins Section 56(2)(vii) dispute over joint property purchase stamp duty valuation date

ITAT Mumbai ruled in favor of assessee regarding addition under Section 56(2)(vii) for joint property purchase. CIT(A) had denied benefit of Section 56(2)(vii)(b) stating Letter of Allotment was not registered sale deed. ITAT held that where agreement date and registration date differ, stamp duty value on agreement date applies if consideration paid by non-cash mode before agreement date. Following precedents in similar cases, ITAT directed AO to consider stamp duty value on allotment date rather than registration date. Court found CIT(A)'s reasoning regarding payment by co-owner irrelevant since property was jointly owned. Appeal partly allowed.

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Issues involved:
The judgment involves the interpretation of Section 56(2)(vii)(b) of the Income Tax Act, 1961 regarding the addition made by the Assessing Officer (AO) in the case of the appellant. The issues include the consideration of stamp duty value, date of agreement for transfer of immovable property, and payments made before registration.

Summary:

Issue 1: Addition under Section 56(2)(vii)(b)
The appellant filed an appeal against the order passed by the Commissioner of Income Tax (Appeals) confirming the addition made by the AO under Section 56(2)(vii)(b) amounting to Rs. 24,33,350. The AO applied the provision as the stamp duty value exceeded the agreement value of the property.

Issue 2: Date of Agreement vs. Date of Registration
The appellant argued that the date of agreement, 16.12.2010, should be considered for Section 56(2)(vii)(b) instead of the date of registration, 29.12.2014. The appellant contended that payments made before registration should be considered, irrespective of the co-owner making the payment.

Issue 3: Interpretation of Proviso to Section 56(2)(vii)(b)
The Tribunal analyzed the proviso to Section 56(2)(vii)(b) which allows the stamp duty value on the date of agreement to be considered if a part of the consideration has been paid by any mode other than cash before the agreement date. The Tribunal referred to previous decisions to support the interpretation.

Decision:
The Tribunal directed the AO to consider the stamp duty value on the date of allotment, 16.10.2010, for Section 56(2)(vii)(b) and not the date of registration. It was emphasized that in joint ownership, it is irrelevant which co-owner made payments before registration. The grounds of appeal were partly allowed, and the appellant's appeal was partly allowed.

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