TaxTMI 
TaxTMI 
2025 (10) TMI 872
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....ed by the first proviso to section 56(2)(vii)(b) of the Act and that on application of the said proviso, the transaction value of the flat was more than the value as specified in the said section. Accordingly there is no justification for the addition u/s. 56(2)(vii)(b) of the Act. 3. Without any prejudice whatsoever to the above grounds, the DRP has failed to appreciate that the 'consideration' as specified in section 56(2)(vii)(b) is not confined to monetary consideration. On the facts of the case, the appreciation of the value of the old flat forgone by the appellant is also part of the consideration and accordingly there is no reason to invoke the provisions of section 56(2)(vii)(b) in the case of the appellant. 4. The appellant respectfully submits that the impugned addition is not justified on the facts of her case. The appellant, therefore, prays that the addition of Rs. 28,93,400/-may please be deleted or any other relief as deemed fit may please be allowed." 2. Briefly the facts of the case are that basis information available with the Assessing officer, the proceedings u/s. 148 of the Act were initiated and notice u/s. 148 of the Act was issue....
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....e is in appeal before us. 4. During the course of hearing, the Ld.AR submitted that the assessee is a Non-resident Indian. The assessee and her husband had purchased an under construction residential flat being Flat No. 1005 in Tower-9 in a project by the developer - Flagship Infrastructure Pvt. Ltd. The flat was purchased vide agreement registered on 03-01-2009 and the relevant details are as under: i. Area 128.48 Sq. Mtrs ii. Consideration-67,30,680/- iii. Rate Per Sq. Mtrs. - Rs. 52,387/- iv. Stamp Duty valuation at the time of purchase Rs. 57,25,325/- v. As such the transaction value was more than the Stamp Duty value at the relevant point of time. Therefore there is no implication u/s. 56(2)(vii)(b) of the Act. 5. It was submitted that the assessee had made payments for purchase of flat from time to time- payment starting from 29-12-2008 to 17-07-2013 (details of the payments made are given on Page No. 63 of the paper book and Receipts for all the payments made are filed at Page Nos. 51 to 59 of the paper book). 6. It was submitted that the flat so constructed was not as per the specifications as agreed and hence, there was....
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....ed that the assessee's case is covered by the first proviso to section 56(2)(vii)(b) of the Act. In so far as the area of 128.48 Sq. Meters is concerned, the agreement fixing the consideration was entered into on 03-01-2009. Payments were made by cheque starting from 29-12-2008. Therefore, the second proviso has not been violated. Transaction value in the year 2009 was Rs. 67,30,680/- as compared to the Stamp Duty value of Rs. 57,25,335/- and submitted that these figures are available in Index II of the original agreement filed at Page No. 62 of paper book. 10. It was further submitted that as per the assessee, the total area of 177.54 Sq. Meters and the consideration can be bifurcated as under: i. The original area of 128.48 Sq. Meters Rs. 67,30,680/- (Rate per Sq. Meter 52,386/-) Stamp Duty value was Rs. 57,25,335/- (Rate per Sq. Meter Rs. 44,562/-) ii. The incremental area of 49.06 Sq. Meter - Transaction value Rs. 39,69,320 [Rs. 1,07,00,000/- minus Rs. 67,30,680] Rate per Sq. Meter of incremental area comes to Rs. 80,907/- The Stamp Duty value in the year 2014 for the entire flat of 177.54 Sq. Meter was Rs. 1,35,93,400/-. This works out to Rs. 76,565/- p....
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....from acquiring the 128.48 Sq Meters at the original price is a valuable consideration. The appreciation forgone can be worked out at Rs. 31,06,389/-i.e. 128.48 Sq. Meters @ Rs. 24,178 [76,565 (SDV per sq. meter in 2014)-52,387 (SDV per Sq. Meter in 2009)]. As such the total consideration for the appellant is Rs. 1,38,06,389/- (Monetary Rs. 1,07,00,000+ Appreciation forgone Rs. 31,06,389). This amount is higher than the Stamp Duty value of the entire 177.54 Sq. Meter i.e. Rs. 1,35,93,400/- and, therefore, the provisions of section 56(2)(vii)(b) cannot be applied. 15. In support of his contentions, the Ld.AR drawn our reference to the decision of the Co-ordinate Bench of the Tribunal in the case of Anil Dattaram Pitale v. ITΟ (TA No. 465/Mum/2025), wherein the Co-ordinate Bench of the Tribunal has held as under: "4. We heard the parties and perused the record. The facts discussed above would show that the assessee got a new flat in the redeveloped property in lieu of old flat. Hence, it is a case of extinguishment of old flat and in lieu thereof, the assessee has got new flat as per the agreement entered with the developer for redevelopment of the society. Thus it....
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....t she has paid the additional amount of Rs. 39,69,320/- for additional area of 49.06 Sq. Mtrs and the effective rate comes out to Rs. 80,907/-. viii. However, the stamp duty differential value of Rs. 1,35,93,400/- and Rs. 67,30,380/- should be attributable to the additional area for the purposes of Sec. 56(2)(vii)(b) of the Act and therefore, the rate comes to Rs. 1,39,890/- PSM (Rs.68,63,020/-). ix. Therefore, the rate of Rs. 58,983/- PSM (Rs. 1,39,890- Rs. 80,907) should be adopted to compute the deemed income u/s 56(2)(vii)(b) of the Act and the same comes to Rs. 28,93,705/-. x. Hence the, assessee's argument, that the rate paid for purchasing additional area is more than the stamp duty rate, fails. xi. Alternatively, the differential rate of Rs. 16,341/- PSM (Rs. 76,722 - Rs. 60,431) should be applied for charging deemed income of Rs. 8,01,690 to tax u/s 56(2)(vii)(b) of the Act which is attributable to additional area. 19. In light of the above, the Ld. DR submitted that the action of the AO and confirming action of the DRP in making addition of Rs. 28,93,400/- is valid, in the eyes of law. Alternatively, addition to the extent of Rs.....
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.... for 177.54 Sq. Meters - Rs. 1,07,0000 * Actual Consideration per Sq. Meter Rs. 60,431/- (Rs. 1,07,00,000/177.54) - * arithmetical error-correct division Rs. 60,268/- * Difference per Sq. Ft.-Rs. 16,341/-(76,772-60,431) * Difference applied on incremental 49.06 Sq. Meter * Addition computed Rs. 8,01,690/- (16,341 X 49.06) 21. In connection with the above working, it was submitted that this working completely ignores the basic fundamental point that original area of 128.48 Sq. Meters is covered by the first proviso to section 56(2)(vii)(b). The total consideration of Rs. 1,07,00,000/- needs to be bifurcated in two parts as under: (a) Rs. 67,30,680/- for original area of 128.48 Sq. Meters and (b) Incremental consideration of Rs. 39,69,320/- for incremental area of 49.06 Sq. Meters. 22. It was submitted that once the incremental consideration of Rs. 39,69,320/- is considered in relation to incremental area of 49.06 Meters, the consideration per Sq. Meter comes to Rs. 80,907/-per Sq. Meter. This amount is higher than the SDV per Sq. Meter of Rs. 76,565/- per Sq. Meter and hence, section 56(2)(vii)(b) does not apply. ....
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....e what was paid earlier. Therefore, to the extent of area of original Flat measuring 128.48 sq. meters and original consideration which was adjusted against the consideration for the new flat, there was an agreement between the assessee and the builder and to that extent, the benefit of the proviso to section 56(2)(vii)(b) be provided to the assessee and as far as the incremental area of 49.06 sq.meters is concerned, the transaction value was higher than stamp duty value, and thus the provisions of section 56(2)(vii)(b) cannot be applied. 27. We have given a carefully consideration to the contention so advanced by the ld AR on behalf of the assessee and are of the considered view that the same cannot be accepted. The provisions of section 56(2)(vii)(b) and the proviso thereto are qua a particular transaction of immovable property which has been entered into by the assessee. The essence of the said provisions is to factor in the time gap between the date of entering into an agreement for purchase of immovable property and the date when the final registration of the said property is done in favour of the assessee and stamp duty value determined thereon. And it has been provided th....