2025 (7) TMI 1096 - AT - Income Tax

Stamp duty value for property addition under section 56(2)(vii)(b) determined by agreement date when part payment made before registration

The ITAT Chennai ruled in favor of the assessee regarding addition under section 56(2)(vii)(b) of the Income Tax Act. The AO had adopted stamp duty value ... Addition u/s 56(2)(vii)(b) - AO adopting the stamp duty value as on the date of registration - HELD THAT:- In the present case, the assessee has made part payment before the date of the agreement through account payee cheque. This issue has been considered in the case of Shyamkumar Madhavdas Chugh [2024 (1) TMI 424 - ITAT DELHI] wherein it was held that if the agreement fixing the consideration is prior to the date of registration and part payment has been made through banking channels before the agreement date, then the stamp duty value as on the agreement date must be taken for the purpose of section 56(2)(vii)(b). We are of the considered opinion that the AO was not justified in adopting the stamp duty value as on the date of registration. We accordingly restore the matter to the file of the AO with a direction to verify the stamp duty value as on 20.10.2011 and compute the addition, if any, u/s 56(2)(vii)(b) of the Act, in accordance with law. In view of the above, the appeal filed by the assessee is allowed for statistical purposes only. ISSUES: Whether the market value for the purpose of Section 56(2)(vii)(b) of the Income-tax Act, 1961 should be taken as on the date of registration of the sale deed or the date of the agreement fixing the sale consideration.Whether part payment made through banking channels prior to the date of agreement affects the valuation date under Section 56(2)(vii)(b). RULINGS / HOLDINGS: The market value for the purpose of Section 56(2)(vii)(b) must be considered as on the date of the agreement fixing the amount of consideration when the date of agreement and date of registration are not the same, provided part of the consideration has been paid by banking channels before the agreement date.The Assessing Officer was not justified in adopting the stamp duty value as on the date of registration; instead, the stamp duty value as on the date of the agreement should be verified and applied for computing addition under Section 56(2)(vii)(b). RATIONALE: The Court applied the proviso to Section 56(2)(vii)(b) of the Income-tax Act, 1961, which states that where the date of the agreement fixing the amount of consideration and the date of registration are different, the stamp duty value on the date of the agreement may be taken if part payment was made through banking channels before the agreement date.The decision relied on precedent from ITAT Delhi Bench, which held that payment by cheque before the agreement date mandates valuation based on the stamp duty value as on the agreement date, not the registration date.No dissent or doctrinal shift was indicated; the ruling affirmed established interpretation of the statutory proviso.