2025 (2) TMI 1425 - AT - Income Tax

Stamp duty valuation in property transfers: use allotment date, not registration date, for section 56(2)(x) comparison; matter remanded.

First and second provisos to section 56(2)(x) apply to the valuation dispute, so stamp duty value must be measured as of the allotment letter date rather ... Addition made u/s 56(2)(x) - difference between stamp duty value and actual sale consideration - assessee herein was having 1/3rd share in the properties - property was purchased by the grand parents of the assessee in the year 1995 AND was booked in the year 1995 by paying part consideration by way of cheque. HELD THAT:- As per the facts of the present case, we are of the view that the first &second proviso to section 56(2)(x) of the Act shall apply. As decided in Parth Dashrath Gandhi [2023 (1) TMI 1253 - ITAT MUMBAI] the allotment letter can be taken as agreement for sale. We also notice that the above said decision has been followed by another case of Pinki Chetan Shah [2024 (2) TMI 1501 - ITAT MUMBAI] Thus, we are of the view that the AO was not right in taking into consideration of the stamp duty value of SRO as on the date of registration of the sale deed. CIT(A) was also not justified in confirming the addition so made by the AO. AO is required to compare the sale consideration of the properties with the Stamp duty value of SRO as on the date of allotment letter. Since the relevant facts are not available on record, we feel it appropriate to restore this issue to the file of the AO for comparing the sale consideration with the stamp duty value of SRO as on the date of allotment letter and to take appropriate action in accordance with section 56(2)(x) of the Act, after affording adequate opportunity of being heard to the assessee. Assessee appeal allowed for statistical purposes. Issues: Whether the addition made under Section 56(2)(x) of the Income-tax Act, 1961 by computing the excess of stamp duty value over consideration as on the date of registration is sustainable where the property was booked earlier and part consideration was paid by cheque on the allotment date.Analysis: Section 56(2)(x) (including its first and second provisos) requires that where the date of agreement fixing consideration and the date of registration differ, the stamp duty value as on the date of the agreement may be taken for computing any excess, provided part of the consideration was paid by account payee cheque/bank draft/electronic mode on or before the date of the agreement. The facts show an allotment letter dated 1995 and payment of Rs.7,00,000 by cheque in 1995, satisfying the condition in the second proviso. Coordinate-bench decisions treating allotment letters/similar payment evidence as constituting agreement for sale were applied to determine that the provisos to Section 56(2)(x) are attracted and that stamp duty value as on the allotment/agreement date must be compared with consideration for the purpose of Section 56(2)(x). The Tribunal found that the AO erred in using stamp duty value as at registration date and that the matter requires fresh comparison by the AO with stamp duty value as on the allotment date after affording the assessee opportunity of hearing.Conclusion: The first and second provisos to Section 56(2)(x) of the Income-tax Act, 1961 apply; the AO cannot take stamp duty value as on registration date where an earlier allotment/agreement date with part payment by account payee cheque exists. The matter is remitted to the AO to determine excess (if any) by comparing consideration with stamp duty value as on the allotment/agreement date, after giving the assessee an opportunity of being heard. The decision is therefore in favour of the assessee.