Property booking and allotment date vs registration stamp value for s.56(2)(vii)(b) addition; tax addition deleted.
The dominant issue was whether an addition under s.56(2)(vii)(b) could be made by comparing the purchase consideration with the stamp-duty valuation as on the year of registration, despite an earlier allotment. The Tribunal held that where the assessee booked the property earlier, received an allotment letter in that year, and paid consideration through banking channels, the relevant stamp-duty/ready-reckoner value is that prevailing on the allotment date. On facts, the ready-reckoner value in the allotment year was lower than the actual consideration, rendering any differential computation impermissible. Accordingly, the addition made for the assessee's 50% share was deleted and the appeal was allowed.
1. ISSUES PRESENTED AND CONSIDERED
(i) Whether, for the purposes of applying section 56(2)(vii)(b) in respect of purchase of an immovable property, the relevant stamp-duty/ready-reckoner value should be taken as on the date of allotment (booking/allotment letter) or as on the date of registration of the sale agreement, where consideration (or part thereof) was paid through banking channels before registration.
(ii) Whether any addition under section 56(2)(vii)(b) could survive in the impugned year when the stamp-duty/ready-reckoner value as on the relevant earlier date (allotment) was lower than the actual purchase consideration, even though the stamp-duty value as on the registration date was higher than the stated consideration.
2. ISSUE-WISE DETAILED ANALYSIS
Issue (i): Relevant date for adopting stamp-duty value (allotment vs registration)
Legal framework (as discussed by the Tribunal): The Tribunal examined the provisos to section 56(2)(vii)(b), which permit adoption of stamp-duty value as on the date of the agreement (where agreement date and registration date differ), with the further condition that consideration, or part thereof, must have been paid by a mode other than cash on or before the date of the agreement.
Interpretation and reasoning: The Tribunal found, on facts, that the flat was booked in an earlier financial year and an allotment letter was issued in that year, and that payments were made through banking channels. On this basis, it held that the stamp-duty/ready-reckoner value is required to be adopted as on the date of allotment (i.e., in the earlier financial year), rather than taking the valuation as on the registration date in the impugned year.
Conclusion: The Tribunal concluded that, in the given facts where allotment occurred earlier and consideration was paid through banking channels, the stamp-duty valuation relevant for section 56(2)(vii)(b) was the value as on the date of allotment (earlier year), not the value as on the date of registration.
Issue (ii): Sustainability of addition under section 56(2)(vii)(b) in the impugned year
Interpretation and reasoning: After adopting the stamp-duty/ready-reckoner value as on the allotment year, the Tribunal noted that the ready-reckoner value for that earlier year was lower than the actual purchase consideration paid by the assessee. Since section 56(2)(vii)(b) is attracted only where the stamp-duty value exceeds the consideration (beyond the statutory threshold), the Tribunal held that no addition could be made when the consideration was higher than the relevant stamp-duty/ready-reckoner value. Consequently, the addition computed in the impugned year by comparing registration-year stamp-duty value with stated consideration was held to be unsustainable.
Conclusion: The Tribunal set aside the appellate order and quashed the addition made (including the amount allocated to the assessee's joint ownership share), holding that the addition under section 56(2)(vii)(b) did not arise on the correct adoption of stamp-duty/ready-reckoner value as on the allotment date.
TaxTMI 
AI Drafter ✕
TaxTMI 
