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 than the sale deed registration date. The tribunal accepted that an allotment letter can constitute an agreement for sale and held the Assessing Officer erred by using SRO stamp duty at registration; the Commissioner (Appeals) was also unjustified in confirming the addition. The matter is restored to the AO to compare sale consideration with SRO stamp duty value as on the allotment letter date and proceed under section 56(2)(x) after hearing the assessee.

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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.

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