Stamp duty valuation under pre-2014 property agreements did not justify the addition on these facts.

Section 56(2)(vii) did not apply to a flat purchase where the agreement was executed before 1 April 2014 and substantial consideration had already been paid through banking channels. The statutory scheme recognised the agreement date, rather than the later registration date, for stamp duty valuation where part of the consideration was paid by non-cash mode on or before that date. On the facts, the payment records supported the assessee's case, the Assessing Officer's cost basis was found incorrect, and the addition could not stand without a proper valuation reference. The addition was therefore deleted.

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Issues: Whether section 56(2)(vii) of the Income-tax Act, 1961 applied to a property transaction where the agreement to purchase was entered into before 01.04.2014, and whether the addition based on stamp duty value could be sustained on the facts.

Analysis: The transaction for purchase of the flat was initiated by an agreement dated 19.06.2012, and substantial payments were made through banking channels before the provision came into force on 01.04.2014. The statutory scheme of section 56(2)(vii) showed that, where the date of agreement and date of registration differ, the stamp duty value on the date of agreement may be relevant if the consideration or part of it has been paid by non-cash mode on or before that date. On the facts, the agreement predated the insertion of the provision, the payments were supported by bank records, and the factual basis adopted by the Assessing Officer for the purchase cost was found to be incorrect. The addition was also treated as one that could not stand without appropriate valuation reference.

Conclusion: Section 56(2)(vii) was held inapplicable to the transaction, and the addition was deleted in favour of the assessee.

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