Agreement fixing consideration permits earlier stamp duty valuation where banking payments occurred before registration, outcome remitted for valuation.

Whether an allotment letter can constitute an agreement fixing consideration for the provisos to section 56(2)(x)(b) was examined: the legal principle applied permits use of an earlier agreement date for stamp duty valuation where the consideration (or part) was paid by non-cash banking modes on or before that earlier date. Factual findings showed an allotment letter dated 03/05/2011, a payment schedule and banking payments prior to registration on 28/06/2017; accordingly the allotment letter was treated as fixing consideration, the addition based on 28/06/2017 valuation was deleted, and the matter was remitted to determine stamp duty value as on 03/05/2011 after hearing.

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Issues: (i) Whether the allotment letter dated 03/05/2011 can be treated as an agreement fixing the amount of consideration for the purposes of the provisos to section 56(2)(x)(b) of the Income-tax Act, 1961 and, if so, whether stamp duty value as on the date of allotment (03/05/2011) should be applied instead of the stamp duty value on the date of registration (28/06/2017).

Analysis: The statutory scheme of section 56(2)(x)(b) of the Income-tax Act, 1961 allows the stamp duty value on the date of an earlier agreement to be taken where the date of agreement fixing consideration and the date of registration differ, subject to the condition that the consideration or part thereof was paid by non-cash banking modes on or before the date of the agreement. Factual findings on record show an allotment letter dated 03/05/2011 identifying the flat, a payment schedule and banking payments (three cheques) aggregating the consideration prior to the agreement for sale registered on 28/06/2017. Coordinate bench decisions hold that an allotment letter may constitute an agreement fixing consideration for the purpose of the provisos to section 56(2)(x)(b) where payments were made as required. Where the stamp duty value as on the allotment date was not on record, the correct procedural course is to remit the matter to the Assessing Officer for comparing the recorded transaction value with the stamp duty valuation as on the date of the allotment, after affording opportunity of hearing.

Conclusion: The allotment letter dated 03/05/2011 is to be treated as an agreement fixing the amount of consideration for the purposes of the provisos to section 56(2)(x)(b) of the Income-tax Act, 1961; the provisos apply because the assessee paid the consideration by banking channels prior to that date; the addition made by the Assessing Officer based on stamp duty value on 28/06/2017 is deleted and the issue is restored to the Assessing Officer to determine stamp duty valuation as on 03/05/2011 after affording the assessee a reasonable opportunity of being heard.

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