Section 56(2)(x) valuation relief for earlier allotment and banking-channel part payment in property purchase

Addition under section 56(2)(x) for alleged undervaluation of immovable property was held unjustified because the property had been allotted earlier, the consideration was fixed in the allotment letter, and part payment had been made through banking channels before registration. The Tribunal applied the CBDT clarification that, where the agreement date and registration date differ and part consideration is paid by bank on or before the agreement date, the stamp duty value on the agreement date may be adopted. As the declared consideration was supported by the earlier allotment and matched the co-owner's accepted treatment, the proviso was held applicable and the addition deleted.

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Issues: Whether the addition made under section 56(2)(x) of the Income-tax Act, 1961, on account of difference between the stamp duty value and the declared consideration for purchase of immovable property was justified, and whether the assessee was entitled to the benefit of the proviso where the consideration had been fixed earlier and part-payment had been made through banking channels.

Analysis: The property was allotted in 2009, the allotment letter fixed the consideration, and part of the consideration had already been paid by cheque before registration in 2017. The stamp duty value on the date of allotment was lower than the actual agreed consideration, and the declared consideration was itself higher than the ready reckoner value prevailing at that time. The Tribunal also noted the CBDT circular clarifying that where the agreement date and registration date differ, the stamp duty value on the agreement date may be adopted if part payment was made through banking channels on or before that date. The identical transaction in the co-owner's case had been accepted in scrutiny assessment.

Conclusion: The addition under section 56(2)(x) was not justified and the assessee was entitled to the benefit of the proviso. The appeal was allowed.

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