Section 56(2)(x) valuation turns on the final registered agreement, not an earlier allotment letter, where no contrary evidence exists.
Under section 56(2)(x), an earlier allotment letter and part payment did not displace the final registered agreement, because the assessee accepted the operative consideration in the later instrument and failed to prove that the earlier arrangement survived independently. The Tribunal therefore rejected the plea to use 2010 as the valuation date or to extend the first and second provisos on that basis. It also held that the transaction did not belong to the earlier assessment year, as the document was presented for registration only in 2019 and the surrounding record did not support relation back. The 2019 DVO valuation was upheld because no effective contrary valuation evidence was produced.
Issues: (i) Whether the addition under section 56(2)(x) of the Income-tax Act, 1961 could be restricted by treating the allotment letter and part payment in 2010 as the relevant date for valuation and by extending the benefit of the first and second provisos; (ii) whether the transaction could be regarded as having been completed in the earlier assessment year on the basis of the execution date shown in the agreement and the principle that registration relates back to execution; (iii) whether the valuation as on 2010, rather than the valuation as on 2019, had to be adopted for computing the difference in stamp duty value.
Issue (i): Whether the addition under section 56(2)(x) of the Income-tax Act, 1961 could be restricted by treating the allotment letter and part payment in 2010 as the relevant date for valuation and by extending the benefit of the first and second provisos.
Analysis: The assessee relied on the allotment letter, part payment, and the alleged earlier understanding with the developer to contend that the relevant consideration should be traced back to 2010. The final agreement to sell, however, recorded a higher consideration which the assessee accepted, and no convincing basis was shown to treat the earlier arrangement as controlling after execution and registration of the final instrument. The claimed earlier contractual rate was therefore treated as merged in the final agreement, and the factual foundation for invoking the provisos was not established.
Conclusion: The contention was rejected and the addition was not disturbed on that basis.
Issue (ii): Whether the transaction could be regarded as having been completed in the earlier assessment year on the basis of the execution date shown in the agreement and the principle that registration relates back to execution.
Analysis: The agreement mentioned an execution date in February 2019, but the stamp paper was used and the document was presented for registration only on 23.04.2019. No supporting material was produced to show that the purchase transaction had been completed in all respects in the earlier year, and the surrounding record, including the return and property disclosures, did not support the plea that the transaction belonged to the prior assessment year. On the facts, the plea based on relation back under the Registration Act was not accepted.
Conclusion: The transaction was held not to pertain to the earlier assessment year.
Issue (iii): Whether the valuation as on 2010, rather than the valuation as on 2019, had to be adopted for computing the difference in stamp duty value.
Analysis: The Departmental Valuation Officer's report for the 2019 valuation was accepted. The assessee did not produce an alternative registered valuer's report or any effective objection to the valuation adopted by the Departmental Valuation Officer. The Tribunal also noticed inconsistencies in the property description and area between the allotment letter, the final agreement, and the valuation material, which weakened the case for substituting a 2010 valuation.
Conclusion: The 2019 valuation was upheld and the request to adopt the 2010 valuation was rejected.
Final Conclusion: The addition sustained under section 56(2)(x) remained justified on the facts, and the appeal failed.
Ratio Decidendi: Where the assessee accepts the final registered agreement containing the operative consideration, an earlier allotment letter cannot displace the final transaction date or valuation basis unless the earlier arrangement is proved to survive independently and is supported by reliable evidence.
TaxTMI 
AI Drafter ✕
TaxTMI 
