Allotment letter can count as an agreement for valuation relief, but factual verification of statutory conditions remains essential.

An allotment letter that fixes the property, consideration and payment terms may qualify as an "agreement" for the first and second provisos to section 56(2)(vii)(b), if it creates enforceable rights and the non-cash payment condition is met. The Tribunal found the narrow view that only a registered agreement could attract the provisos to be incorrect. However, it held that the key factual conditions had not been properly verified, including whether the allotment letter specified the consideration, whether payment was made through banking channels on or before the relevant date, and whether stamp duty value could be adopted with reference to the allotment date. The matter was restored for limited verification and recomputation if necessary.

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Issues: Whether an allotment letter fixing the property, consideration and payment terms can constitute an agreement for the purpose of the first and second provisos to section 56(2)(vii)(b) of the Income-tax Act, 1961, and whether the matter required verification of the factual conditions before the addition could be sustained.

Analysis: The assessee had relied on an allotment letter dated 12.11.2014 and evidence of part payment through banking channels to claim that the stamp duty value as on the allotment date should govern the valuation under section 56(2)(vii)(b). The Assessing Officer and the first appellate authority had proceeded on the footing that only a registered agreement could attract the provisos. The Tribunal held that this approach was too narrow. It noted that several coordinate bench decisions had recognised that an allotment letter embodying the essential terms of the transaction and creating enforceable rights and obligations may satisfy the expression "agreement" in the provisos, provided the statutory condition regarding non-cash payment on or before the agreement date is fulfilled. At the same time, the Tribunal observed that the relevant factual elements had not been properly verified, including whether the allotment letter fixed the consideration, whether the banking-channel payment condition was met, and whether the stamp duty value as on the allotment date could be adopted on that basis.

Conclusion: The matter was restored to the Assessing Officer for limited verification of the statutory conditions and recomputation, if necessary; the assessee succeeded to that extent.

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