Bona fide GST-linked property price adjustment within safe harbour does not trigger section 56(2)(x) addition.

A bona fide reduction in property consideration made to pass on GST-related tax benefit, where the variation remained within the applicable safe harbour, did not attract section 56(2)(x) of the Income-tax Act, 1961. The Tribunal treated the apparent difference between the agreement value and the stamp duty value as an inadequate-consideration issue only where the transfer is not supported by a genuine commercial explanation, and held that a 1.5% variation in these facts did not justify the addition. Delay in filing the appeal was also condoned on the basis of sufficient cause, as the assessee had awaited disposal of a rectification petition.

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Issues: (i) Whether the delay of 40 days in filing the appeal before the Tribunal deserved condonation; (ii) whether the addition made under section 56(2)(x) on account of difference between the agreement value and the stamp duty value was sustainable.

Issue (i): Whether the delay of 40 days in filing the appeal before the Tribunal deserved condonation.

Analysis: The explanation for delay was that the assessee awaited disposal of a rectification petition and the revenue did not place anything to show absence of bona fide or any contrary intention. The Tribunal applied the principle that matters should ordinarily be decided on merits where sufficient cause is shown.

Conclusion: The delay was condoned in favour of the assessee.

Issue (ii): Whether the addition made under section 56(2)(x) on account of difference between the agreement value and the stamp duty value was sustainable.

Analysis: The Tribunal noted that the property was booked earlier, the price was reduced after the GST regime change to pass on the tax benefit, and the apparent variation was only about 1.5%, which was within the applicable safe harbour. The provision was held to target transfer of property for inadequate consideration or without consideration, not a bona fide GST-linked price adjustment.

Conclusion: The addition under section 56(2)(x) was held to be unsustainable and was deleted in favour of the assessee.

Final Conclusion: The assessee succeeded on the substantive tax issue, and the appeal was allowed after condonation of delay.

Ratio Decidendi: A bona fide reduction in property consideration attributable to GST-related price adjustment, where the variation remains within the applicable safe harbour, does not attract section 56(2)(x) of the Income-tax Act, 1961.

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