Valuation under section 56(2)(x): cancelled allotment gives way to later registered agreement; disputed stamp value needs DVO verification.

Where an original allotment is cancelled and replaced by a fresh allotment culminating in a later registered agreement, the later transaction date governs valuation under section 56(2)(x), so the 2012 stamp duty value could not be adopted for the 2017 transaction. However, once the assessee specifically disputed the stamp duty valuation and filed a valuation report, the matter required reference to the Departmental Valuation Officer before computing any addition. The note therefore records that the earlier valuation-date plea failed, while the DVO-verification point was restored for fresh computation after hearing the assessee.

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Issues: (i) Whether, for the purpose of section 56(2)(x) of the Income-tax Act, 1961, the stamp duty valuation as on the date of the original allotment in 2012 could be adopted where the original allotment was cancelled and a fresh allotment culminated in a registered agreement in 2017. (ii) Whether, after the assessee disputed the stamp duty valuation and furnished a valuation report, the matter ought to have been referred to the Departmental Valuation Officer before computing the addition.

Issue (i): Whether, for the purpose of section 56(2)(x) of the Income-tax Act, 1961, the stamp duty valuation as on the date of the original allotment in 2012 could be adopted where the original allotment was cancelled and a fresh allotment culminated in a registered agreement in 2017.

Analysis: The original allotment dated 17.04.2012 stood cancelled and the rights arising therefrom were extinguished. A fresh allotment of a different flat was thereafter made on 06.05.2016, followed by the registered agreement dated 14.08.2017. The subsequent transaction was therefore not a mere continuation of the earlier allotment. The assessee's reliance on the earlier date of allotment for valuation was not accepted.

Conclusion: The plea to adopt the 2012 valuation was rejected and the Revenue's view was upheld.

Issue (ii): Whether, after the assessee disputed the stamp duty valuation and furnished a valuation report, the matter ought to have been referred to the Departmental Valuation Officer before computing the addition.

Analysis: Once the stamp valuation was specifically disputed and a valuation report was placed on record, a reference to the Departmental Valuation Officer was warranted before finalising the taxable difference. The matter was therefore required to be restored for limited verification and recomputation after giving the assessee an opportunity of hearing.

Conclusion: The issue was remanded to the Assessing Officer for DVO verification and fresh computation.

Final Conclusion: The appeal failed on the claim for adoption of the earlier valuation date, but succeeded on the limited question of DVO reference, leading to a partial relief with restoration of that issue for fresh adjudication.

Ratio Decidendi: Where an original allotment is cancelled and replaced by a fresh allotment culminating in a later registered agreement, the later transaction date governs valuation for section 56(2)(x); however, if the stamp valuation is specifically disputed with supporting material, a DVO reference should be made before determining the addition.

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