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 as on the date of registration for computing the addition. However, the tribunal found that since the assessee made part payment before the agreement date through account payee cheque, the stamp duty value should be taken as on the agreement date rather than registration date. Following the precedent in Shyamkumar Madhavdas Chugh case, the tribunal held that when an agreement fixes consideration prior to registration and part payment is made through banking channels before the agreement date, the stamp duty value on the agreement date must be considered. The matter was remanded to the AO to verify stamp duty value as on the agreement date and recompute any addition accordingly. The appeal was allowed for statistical purposes.

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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.

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