TaxTMI 
TaxTMI 
2026 (2) TMI 1038
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....action of the Ld. AO in considering the market value of the flat on the date of registration i.e. 28.06.2017 instead of the market value on the date of allotment i.e. 03.05.2011, thereby disregarding the fact that the true date of allotment was evidenced by the duly executed allotment letter issued by the developer. The Ld. CIT(A) erred in construing the language of this document narrowly, failing to appreciate its substantive legal effect and instead placing undue emphasis on its form. b) On the facts and under the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the Ld. AO in applying the provisions of section 56(2)(x) and making an addition of Rs. 1,14,87,300, while ignoring the proviso to section 56(2)(x) which is applicable in the case of the appellant. The entire consideration of Rs. 2,87,96,200 was paid by the appellant prior to the allotment in 2011 through account payee cheque, as required. c) On the facts and under the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the Ld. AO in making an addition of Rs. 1,14,87,300 on account of the difference in market value of the property a....
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....efore us. 6. We have considered the submissions of both sides and perused the material available on record. In the present case, the assessee purchased immovable property, namely Flat No. 601, Wing-B, Rustomjee Seasons, MIG Group 4, Gandhinagar, Bandra East, Mumbai-400051, from M/s Rustomjee Constructions Private Ltd for a total consideration of INR 2,87,96,200. Since on the date of registration of the agreement for sale, i.e. on 28/06/2017, the stamp duty value/market value of the property was determined at INR 4,02,83,500 by the Joint Sub-Registrar, the AO made an addition of INR 1,14,87,300 under section 56(2)(x)(b)(B) of the Act, being the difference between the stamp duty value and purchase consideration. On the other hand, as per the assessee, the property was booked on 03/05/2011, and an allotment letter was also issued to the assessee by M/s Rustomjee Constructions Private Ltd., on 03/05/2011. Therefore, as per the assessee, in view of the provisions of the first proviso to section 56(2)(x)(b) of the Act, the stamp duty value on the date of the allotment letters, i.e., 03/05/2011, should be taken into consideration for the purpose of section 56(2)(x) of the Act. 7. Be....
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....ount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be considered for the purpose of section 56(2)(x)(b) of the Act. The second proviso to section 56(2)(x)(b) of the Act imposes a condition on the applicability of the first proviso and provides that the provisions of the first proviso shall only be applicable where the amount of consideration, or part thereof, was paid by the assessee by a mode other than cash before the date of the agreement. 9. From the perusal of the letter of allotment dated 03/05/2011, forming part of the paper book from pages 1-7, we find that on 26/02/2011, the assessee booked a residential flat in "Rustomjee Seasons". Further, it is evident from the record that pursuant to the aforesaid booking, the assessee made a total payment of INR 2,87,96,200 from 28/02/2011 to 31/03/2011, vide 3 cheques issued from her bank account maintained with Citibank, Mumbai. The builder, i.e., M/s Rustomjee Constructions Private Ltd, has duly acknowledged receipt of payment in the allotment letter. It is also pertinent to note that even the residential unit, i.e. Fla....
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....O, reported in [2023] 152 taxmann.com 56 (Mumbai -Trib.), held that the allotment letter can be considered as an agreement to sell. The relevant findings of the Coordinate Bench, in the aforementioned decision, are reproduced as follows: - "11. ...... According to the AO and Ld.CIT(A), the allotment letter is not in the nature of the agreement for sale. However, we find that the Tribunal in the case of Parth Dashrath Gandhi v. Addl./Dy./Asstt. CIT [IT Appeal No. 1990 (Mum.) of 2022, dated 31-1-2023 held that "the allotment letter should be considered as agreement for sale." The relevant finding of the Tribunal (supra) is reproduced as under: - 6. 'We heard the parties and perused the record. We notice that the AO has considered the stamp duty value as on the date of registration of the agreement to sell for the purpose of determining the applicability of sec.56(2)(x) of the Act. However, the facts that the assessee had been allotted both the properties by way of allotment letters and further, the assessee has also paid instalments as per that letter are not disputed. Hence, the question that arises is whether the allotment letter can be considered as "agreemen....
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....of Maharashtra to enter into an agreement cum acknowledgement of payment made and other terms and conditions about the property. This agreement between assessee and developer clearly confirms the amount of consideration along with other terms and conditions relating to levy of stamp duty, service tax and other charges to be paid by the assessee. 11. The finding of the A.O vide pg no-4, para-2.6 wherein he observed that assessee has deposited Rs. 14 lacs with the developer to year mark the said premises for Rs. 70 lacs. Even if for the time being it is assumed that this agreement is merely a letter of intent, still amount mentioned in this so called letter of intent can't be changed by either of the party. At the max the parties involved may opt for exit from the transaction but amount of consideration can't be changed. This transaction of the assessee has to be analysed in commercial parlance, without finalisation of consideration nobody will deposit 20% of the final consideration. The vitality of the agreement further found force from the behaviour of the assessee as confirmed by the A.O also that assessee paid further Rs. 34.5 lacs till financial year 2012-13. As....
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....ion (d) Ashutosh Jhavs. ITO Ward-2(5), Ranchi ITA No. 188/Ranchi/2019 dtd.30/04/2021, [190 ITD 450 (Kolkata - Trib.).] Where assessee purchased a property and made part payment of sale consideration by cheque on very next day of execution of purchase agreement and registry was done after a year, since such part payment made by cheque on very next day of execution of agreement was towards fulfilment of terms of purchase contract itself and there was no mala fide or false claim on part of assessee, no addition could be made on account of difference between amount of sale consideration for property shown in purchase agreement and stamp duty value of said property on date of registry by invoking section 56(2)(vii)(b) (e) Dy. CIT-5(3)(1) vs. Deepak Shashi Bhusan Roy ITA No. 3204 &3316/M/2016 dtd. 30/07/2018(Mum.) (Trib.) In order to determine taxability of capital gain arising from sale of property, it is date of allotment of property which is relevant for purpose of computing holding period and not date of registration of conveyance deed (f) Mohd. Ilyas Ansari v. ITO-23(2)(3), Mumbai [ITA No. 6174/M/2017dtd.06/11/2020, 186 ITD 407 (Mumbai - ....
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....the date of issue of respective allotment letters. Accordingly, we are restoring this issue to the file of AO for the limited purpose of comparing the actual sale consideration with the stamp duty valuation as on the date of respective allotment letters. In the limited set aside, the AO shall take appropriate decision in accordance with law after affording adequate opportunity of being heard.' 12. The Ld.CIT(A) has relied on the decision of the Hon'ble Supreme Court in the case of Balbir Singh Maini (supra) but we find that in the said decision, following substantial questions were raised before the Hon'ble High Court:- "(i) Whether the transactions in hand envisage a "transfer" exigible to tax by reference to section 2(47)(v) of the Income-tax Act, 1961 read with section 53-A of the Transfer of Property Act, 1882? (ii) Whether the Income-tax Appellate Tribunal, has ignored rights emanating from the JDA, legal effect of non registration of JDA, its alleged repudiation etc.? (iii) Whether "possession" as envisaged by section 2(47)(v) and section 53-A of the Transfer of Property Act, 1982 was delivered, and if so, its nature and legal e....
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....mount of consideration or part thereof has been paid by any mode other than the cash before the date of agreement for transfer of such immovable property. Therefore, if there is an agreement between the parties, fixing the amount of consideration for transfer of immovable property prior to the date of registration and the purchaser has made the payment of consideration or part thereof before the date of that registered agreement for transfer by any mode other than cash then the value as determined for the stamp duty will be taken on the date of such earlier agreement. In the case in hand, all these facts are duly acknowledged by the parties in the registered agreement that earlier there was a booking of flat and the assessee paid part payment of consideration. Hence, the proviso first and second to section 56(2)(vii) of the Act would be applicable in the case and the stamp duty valuation or the fair market value of the immovable property shall be considered as on the date of booking and payment made by the assessee towards booking of the flat. Accordingly, the orders of the authorities below are set aside and the matter is remanded to the record of the A.O. to apply the stamp duty ....