Stamp duty value for Section 56(2)(X) calculation determined by agreement date not registration date when payment made through banking channels

ITAT Kolkata allowed the appeal regarding assessment under Section 56(2)(X). The assessee purchased immovable property with sale consideration settled on 30th December 2016, with full payment made through banking channel on the same date. The tribunal held that since the agreement date preceded registration and payment was made through proper banking channels, the stamp duty value/circle rate applicable on the agreement date (30th December 2016) should be considered for computing income under Section 56(2)(X), not the registration date. The AO was directed to recalculate using the circle rate applicable on the agreement date.

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Issues Involved:

1. Application of Section 56(2)(x) of the Income Tax Act, 1961.
2. Validity of the orders passed by the CIT(A) and AO.
3. Charging of interest under Sections 234A and 234B of the Act.
4. Consideration of stamp duty value as per the date of agreement under Section 56(2)(x).

Issue-wise Detailed Analysis:

1. Application of Section 56(2)(x) of the Income Tax Act, 1961:

The primary issue in this appeal was whether the provisions of Section 56(2)(x) should apply to the purchase of immovable property in the assessment year 2017-18 or 2018-19. The assessee argued that the transfer of property was completed on the date of the agreement for sale, which was executed on December 30, 2016, and not when the sale deed was registered on March 28, 2018. The Tribunal examined the agreement and concluded that it was merely an "agreement for sale" and not a "sale deed." The Tribunal noted that the transfer of property was contingent upon future actions, specifically the execution of the sale deed, and thus, the provisions of Section 56(2)(x) were applicable for the assessment year 2018-19 when the sale deed was registered.

2. Validity of the Orders Passed by the CIT(A) and AO:

The assessee contended that the orders passed by the CIT(A) and the AO were unsustainable and should be struck down. However, the Tribunal upheld the decision of the CIT(A) and the AO, confirming the addition of the differential amount into the income of the assessee based on the higher stamp duty value of the property as per Section 56(2)(x). The Tribunal found no merit in the argument that the orders were unsustainable, given that the registration of the sale deed was the decisive factor for the transfer of property.

3. Charging of Interest under Sections 234A and 234B of the Act:

The assessee challenged the imposition of interest under Sections 234A and 234B. The Tribunal did not provide a detailed discussion on this issue, as it was primarily focused on the application of Section 56(2)(x). The Tribunal's decision to uphold the orders of the CIT(A) and AO implicitly affirmed the charging of interest under these sections.

4. Consideration of Stamp Duty Value as per the Date of Agreement under Section 56(2)(x):

The assessee raised an additional ground regarding the consideration of stamp duty value as per the date of the agreement. The Tribunal acknowledged this argument, citing the provisions of Section 56(2)(x) and its first and second provisos, which allow for the consideration of stamp duty value as of the date of the agreement if the consideration was paid through banking channels. The Tribunal directed the AO to calculate the amount based on the circle rate applicable on December 30, 2016, the date of the agreement, provided the payment was made through banking channels. This direction was given to ensure that the correct stamp duty value is used for computing the income under Section 56(2)(x).

Conclusion:

The appeal was partly allowed, with the Tribunal directing the AO to reassess the addition under Section 56(2)(x) using the stamp duty value as of the date of the agreement, contingent upon verification of payment through banking channels. The Tribunal confirmed the applicability of Section 56(2)(x) for the assessment year 2018-19 and upheld the orders of the CIT(A) and AO regarding the addition of the differential amount.

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