TaxTMI 
TaxTMI 
2021 (1) TMI 42
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....We find that assessee is a non-resident individual deriving income from house property, capital gains and other sources. The return of income for the A.Y.2014-15 was filed by the assessee on 02/03/2015 declaring total income of Rs. 12,13,800/-. We find that the ld. AO had observed that the assessee had entered into agreements for purchase of two flats viz., 702 & 703 vide agreements dated 28/02/2014 and 07/03/2014 for consideration of Rs. 80 lakhs and Rs. 42,99,600/- respectively, the value of which adopted by the stamp duty authority was Rs. 177,27,800/- and Rs. 129,39,500/- respectively. Accordingly, the ld. AO raised a query as to why the provisions of Section 56(2)(vii)(b) of the Act be not invoked in the hands of the assessee for taxing the differential sums thereon. 3.1. We find that the assessee had replied that the agreement for purchase of flats was entered in F.Y.2007-08 for which the properties were registered in A.Y.2014-15. It was also submitted by the assessee that during the F.Y.2007-08 relevant to A.Y.2008-09, the provisions of Section 56(2)(vii)(b) were not in the statute and hence, no addition could be made for the year under appeal applying such provision as th....
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....formation on your record". 3.3. The ld. AO observed that the aforesaid reply from M/s. Perfect Construction did not fulfil the requirements of his notice in full as the builder had not produced original receipts of payment made for purchase of flat with sufficient documentary evidences. Accordingly, the ld. AO proceeded to make the addition u/s.56(2)(vii)(b) in respect of difference in value between the value adopted by the stamp duty authority on the date of registration of the flat (i.e in F.Y. 2013.14) and the actual consideration paid by the assessee. 4. Before the ld. CIT(A), the assessee pleaded that the addition was made by the ld. AO for want of sufficient documentary evidences from the side of the builder. However, the assessee also pleaded that the builder's authorised representative had filed letter dated 28/12/2016 and 29/12/2016 before the ld. AO wherein the copy of allotment letter issued to the assessee by the builder for flat No.1101 dated 20/03/2008 and 1102 dated 12/03/2007 was enclosed. In the said letter, it was also mentioned that in the year 2012 assessee requested the builder to change the flat Nos. 702 & 703 in lieu of 1102 and 1101. Accordingly, a new all....
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....s retrospective in operation, even if the provisions of Section 56(2)(vii)(b) are made applicable in the instant case. The assessee also drew the attention of the ld. CIT(A) to the letter of the builder's authorised representative dated 28/12/2016 filed before the ld. AO, specifying the market value of the properties for flat Nos. 702 & 703 were at Rs. 44,67,090/- and Rs. 85,39,230/- respectively to drive home the point that said value is excess by Rs. 1,67,490/- (Rs. 44,67,090 - Rs. 42,99,600) and Rs. 5,39,230/- (Rs. 85,39,230 - Rs. 80,00,000/-) for flat No. 702 and flat No.703 respectively. It was also pleaded before the ld. CIT(A) that the said difference between market value of the property and the actual consideration is very minuscule working out to average 5% variation thereon. The assessee also placed reliance on the Co-ordinate Bench decision in the case of John Flower (India) Pvt. Ltd., vs. DCIT in ITA No.7545/Mum/2014 dated 25/01/2017 for A.Y.2010-11 wherein it was held that if the variation between the value adopted by the stamp valuation authority and value declared by the assessee is less than 10%, then no addition could be made in terms of Section 50C of the Act. 4.....
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....on with the builder had been carried out by the ld. AO at the fag end of the assessment proceedings and because of that, the reply furnished by the builder in response to summons could not be considered by the ld. AO as the assessment was getting time barred by 31/12/2016 and that the very same contents of the letters, several annexures were sought to be verified by the ld. AO in the remand proceedings at his behest. The same will not tantamount to filing of additional evidences by the assessee in terms of Rule 46A of the rules and that the remand report was sought from the ld. AO only for better appreciation of the facts in the interest of justice. The ld. CIT(A) also observed that no mistake should be attributed to the assessee in this regard. On going through the remand report of the ld. AO, the ld. CIT(A) proceeded to examine the issue on his own as the same being a legal issue and ultimately held as under:- (a) The assessee had booked the flats way back in F.Y.2007-08 relevant to A.Y.2008-09 itself for which initial payments were also made which are duly supported by allotment letters given by the builder to the assessee. (b) The ld. AO had lost sight of proviso to Section....
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....nt appeal, the applicability of Section 56(2)(vii)(b) of the Act as amended by Finance Act, 2013 and applicable to AY 2014-15 in question. On a perusal of pre-amended provisions of Section 56(2)(vii)(b) of the Act, we gather that where an individual or HUF receives from any person any immovable property without consideration, the provisions of pre- amended Section 56(2)(vii)(b) of the Act would apply. The aforesaid provisions was however substituted by Finance Act, 2013 and made applicable to AY 2014-15 onwards. As per the amended provisions, the scope of substituted provision was expanded to cover purchase of immovable property for inadequate consideration as well. It is alleged on behalf of the Revenue that the amended provision will apply in view of the fact that registration has been carried out during the FY 2013-14 concerning AY 2014-15 where the amended law came into force. The assessee, on the other hand, seeks to claim that his case would be covered by pre-amended provision in view of the fact that agreement for purchase of the property was entered into with the prospective seller in FY 2011-12 relevant to AY 2012-13 at which time the new law did not come into play. It w....