Property purchase under allotment letter: s.56(2)(vii)(b) addition must use stamp value on agreement date, not later.

The dominant issue was whether an addition under s. 56(2)(vii)(b) could be made in the relevant assessment year based on the stamp valuation authority's value as on a later date. The ITAT held that where an agreement was executed, an allotment letter was issued, and consideration was paid through banking channels, the applicable stamp duty valuation is the value as on the date of allotment/agreement (FY 2012-13), not the later year. As the registered valuer's report supported the declared consideration and no discrepancy was found, the impugned addition for the difference between consideration and stamp value was unsustainable; the addition was quashed and the matter remitted to the AO to recompute using FY 2012-13 stamp valuation.

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1. ISSUES PRESENTED AND CONSIDERED

1) Whether, for addition under section 56(2)(vii)(b) in respect of purchase of immovable property for consideration lower than stamp duty value, the relevant stamp duty value should be taken as on the date of the agreement/allotment (and not the date of registration/valuation adopted in the impugned year) when part consideration was paid through banking channels on or before such agreement/allotment.

2) Whether the differential addition sustained on the basis of stamp duty value of the impugned year could be maintained when the valuation report and material on record supported the stated purchase consideration and warranted applying the proviso to section 56(2)(vii)(b) with reference to the agreement/allotment year.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Correct date for adopting stamp duty value under the proviso to section 56(2)(vii)(b)

Legal framework (as discussed by the Court): The Court examined the proviso to section 56(2)(vii)(b), which permits adoption of stamp duty value "as on the date of the agreement" where the agreement date and registration date are not the same, subject to the condition (in the further proviso) that consideration or part thereof has been paid by a mode other than cash on or before the date of such agreement.

Interpretation and reasoning: The Court found that the assessee had an agreement evidenced by an allotment letter issued by the promoter, and part consideration had been paid through banking channels. On these facts, the conditions of the proviso were satisfied, and therefore the stamp duty valuation was required to be considered with reference to the date of allotment/agreement falling in the earlier financial year (F.Y. 2012-13), rather than the stamp duty valuation adopted as on 30/03/2017 for the impugned year.

Conclusions: The Court held that stamp duty value for section 56(2)(vii)(b) purposes should be taken as on the agreement/allotment date (F.Y. 2012-13) in the present facts, and not as on the date considered by the revenue authorities in the impugned year.

Issue 2: Sustainability of the differential addition in the impugned year and consequential directions

Legal framework (as applied): The addition had been made by treating the difference between declared consideration and stamp duty value as income under section 56(2)(vii)(b). The Court applied the proviso mechanism to determine the correct stamp duty value reference date.

Interpretation and reasoning: The Court noted that, upon perusal of the valuation report on record, the property valuation by a registered valuer matched the declared purchase consideration of Rs. 1,10,00,000/-, and thus there was "no discrepancy" in the purchase value declared by the assessee. Since the stamp duty valuation had to be aligned to the agreement/allotment year under the proviso, the differential addition computed by comparing consideration with the stamp duty value adopted in the impugned year could not be sustained. The Court therefore rejected sustaining the addition based on the impugned year's stamp duty value and required recomputation with reference to the agreement year's stamp duty valuation.

Conclusions: The Court quashed the addition of Rs. 59,87,000/- as made/sustained in the impugned assessment year. It set aside the appellate order to that extent and remitted the matter to the assessing authority with a direction to adopt stamp duty valuation as per the financial year of the agreement (F.Y. 2012-13) and recompute accordingly, after granting reasonable opportunity of hearing.

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