2026 (1) TMI 413 - AT - Income Tax

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 ... Addition u/s 56(2)(vii)(b) - assessee purchased the said flat with joint ownership but during the impugned assessment year the stamp duty valuation of the property was more - difference amount was treated as the contravention of section 56(2) - assessee adopted the stamp-duty/ ready-reckoner value applicable in F.Y. 2016-17 - Considering the 50% share of the assessee, half of the amount was added back with the total income of the assessee HELD THAT:- In the present case, the assessee entered into an agreement for purchase of the property, pursuant to which an allotment letter was duly issued by the promoter. The consideration was paid through proper banking channels. Accordingly, the stamp-duty valuation of the property is required to be adopted as on the date of allotment, i.e., Financial Year 2016-17. On perusal of the ready-reckoner value applicable for F.Y. 2016-17, it is observed that the stamp-duty valuation of the property was Rs. 4,19,98,028/-, whereas the actual purchase consideration paid by the assessee was Rs. 4,50,00,000/-, which is significantly higher than the ready-reckoner value. Consequently, the addition being 50% representing the difference between the stated consideration and the stamp-duty valuation, is unsustainable in the impugned assessment year. As undisputed fact that the assessee purchased the flat jointly with her husband for a total consideration of Rs. 4,50,00,000/-. The stamp-duty valuation of the property in the year of registration was Rs. 4,55,55,939/-. However, the documentary evidence placed on record clearly establishes that the assessee had booked the flat during F.Y. 2016-17 and the allotment letter was duly issued during the said financial year. The assessee has rightly adopted the stamp-duty/ ready-reckoner value applicable in F.Y. 2016-17, wherein the valuation of the property was Rs. 4.19 crore, which is lower than the actual cost of acquisition. In view of the provisions of section 56(2)(vii)(b) of the Act, where the consideration has been paid through banking channels and the allotment has taken place in an earlier year, the stamp-duty valuation as on the date of allotment alone is relevant. Therefore, the observations and conclusions drawn by the Ld. AO as well as the Ld. CIT(A) are contrary to the statutory provisions of section 56(2)(vii)(b) of the Act. AR has rightly placed reliance on the decision of Awadhnarayana Bhagwanta Singh [2025 (12) TMI 1423 - ITAT MUMBAI] wherein it was held that the stamp-duty valuation as on the date of allotment is to be adopted. Also see Manjulaben Himmatlal Jain [2024 (11) TMI 688 - ITAT MUMBAI] Assessee appeal 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.