Retrospective tolerance band relief under stamp duty valuation law deleted the deemed addition for a minor price difference.

A curative amendment enlarging the tolerance band for minor differences between declared consideration and stamp duty valuation was treated as retrospective and applied to section 56(2)(vii)(b). The Tribunal held that where the difference between purchase price and stamp duty value was within the enhanced 10% tolerance limit, the deeming addition could not be sustained. The same principle was followed to exclude the anti-avoidance addition in respect of immovable property, because the amendment was viewed as removing unintended hardship. On that basis, the addition sustained by the first appellate authority was deleted in favour of the assessee.

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Issues: Whether the benefit of the enhanced 10% tolerance band in relation to stamp duty valuation applies retrospectively so as to restrict the addition made under section 56(2)(vii)(b) of the Income-tax Act, 1961 where the difference between the declared consideration and the stamp duty value is below 10%.

Analysis: The addition arose from the difference between the purchase consideration and the stamp duty valuation of immovable property. The Tribunal followed its earlier co-ordinate bench decisions holding that the amendment introducing the tolerance band is curative in nature and relates back to the date when the anti-avoidance provision was inserted. Since the difference in the present case was 9.91%, it fell within the permissible tolerance limit. The same principle was held applicable to section 56(2)(vii)(b), with the result that the deeming addition based on stamp duty value could not be sustained.

Conclusion: The retrospective benefit of the 10% tolerance band was applied, and the addition sustained by the first appellate authority was directed to be deleted, in favour of the assessee.

Ratio Decidendi: A curative amendment introducing or enlarging a tolerance band for minor variations between declared consideration and stamp duty valuation applies retrospectively where it removes unintended hardship in an anti-avoidance provision.

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