TaxTMI 
TaxTMI 
2026 (7) TMI 294
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....14 does not constitute an 'agreement' for the purposes of the first proviso to Section 56(2)(vii)(b) of the Act, thereby ignoring: 2.1. That the Allotment Letter dated 12.11.2014 contained all terms and conditions of purchase, including unconditional allotment of Unit No. 110, fixed consideration of Rs. 48,00,000/-, payment schedule, and all material obligations of both parties, thereby constituting a binding and enforceable agreement to sell as per The Indian Contract Act, 1872; 2.2. That substantive rights and obligations in the property accrued to the appellant from 12.11.2014 onwards, as evidenced by payments made, possession taken, and conduct of parties treating the allotment as final and binding; 2.3. That the requirement of registration under Section 17 of the Registration Act, 1908 is for the purpose of admissibility in evidence and does not affect the validity of the agreement inter se the parties its enforceability through specific performance; 2.4. That the first proviso to Section 56(2)(vii)(b) uses the term 'agreement' and not 'registered agreement', and Parliament's intention was to protect bona fide pur....
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....th all essential terms constitute valid 'agreements' for the purposes of Section 56(2)(vii)(b), including: * Ashutosh Jha (HUF) v. ITO for A.Y. 2014-15 in ITA No. 188/Ran/19 (Kolkata Tribunal); * ITO v. Rajni D. Saini for A.Y. 2014-15 in ITA No. 7120/Mum/2018; * Sajjanraj Mehta v. ITO for A.Y. 2014-15 in ITA No. 56/Mum/2021; * Siraj Ahmed Jamalbhai Bora v. ITO for A.Y. 2014-15 in ITA No. 1886/Mum/2019; * Sonal Ashish Soni v. ITO for A.Y. 2016-17 in ITA No. 2855/Mum/2022; * Sulochana Saijan Modi v. ITO for A.Y. 2018-19 in ITA No. 557/Mum/2023; * Vijay Kumar Bagaria v. ITO for A.Y. 2014-15 in ITA No. 433/Kol/2021; * T. Babu Reddy v. ITO for A.Y. 2012-13 in ITA No. 1028/Hyd/2016; * Poonam Ramesh Sahajwani v. ITO for A.Y. 2014-15 in ITA No. 2252/Mum/2019; * Radha Kishan Kungwani v. ITO (185 ITD 433); * Parth Dashrath Gandhi v. ACIT for A.Y. 2018-19 in ITA No. 1990/Mum/2022; * Rameshchandra Chhabildas Jhaveri v. ITO in ITA No. 3520/MUM/2025; * Manjulaben Himmatlal Jain v. ITO (ITAT Jaipur). * PCIT vs Vembu Vaidyanathan (2020) 429 ITR 371 (Bombay High Cour....
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....n agreement and assessee was required to entered into a registered agreement. Accordingly, he rejected the contention of the assessee observing as under:- 7. The above Bold part clearly directs that the purchaser has to make a registered agreement and has to make payment at the same time where he wants to take benefit of the valuation of the property. Hence, as per section 56(2)(vii)(b) of the Act, the assessee had not entered into any registered agreement in the year 2014, hence no benefit of earlier valuation can be provided to the assessee. Further assessee has also did not challenged the stamp duty valuation before the Sub-Registrar or any other court at the time of registration of the property, therefore he cannot challenge the stamp duty value of the property before the I.T. Authorities. As such the adoption of value of the property as per the valuation report of the valuer is not acceptable. 8. From the above discussion and information available with the department, it is established that assessee has purchased immovable property with consideration of Rs. 48,00,000/- whereas the market value as per stamp duty authority is Rs. 75,84,000/-. Therefore, provisi....
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....ell under section 17 of the Registration Act, 1908, or that it was invoked contemporaneously before the stamp authority to claim a lower valuation at registration. A private valuation report obtained post-facto from Ambike Associates, valuing the property at 60,84,000 "as on" 12.11.2014, has also not been adjudicated or accepted under any stamp law provision. 11. The assessee voluntarily offered 12,84,000 to tax (60,84,000 minus 48,00,000) in his return filed u/s 148, implicitly conceding undervaluation but seeking to cap the fair value at his valuer's figure rather than the statutorily finalized stamp value of 75,84,000. The Assessing Officer rightly observed that neither proviso applies, as there is no "agreement" in the statutory sense prior to registration, no proof of its enforceability under registration law, and no contemporaneous alignment of the claimed 2014 value with stamp authorities, rendering the full differential of 27,84,000 taxable, with 15,00,000 added over the assessee's offer. 12. The Hon'ble Bombay High Court in Pradeep Kumar Har Saran Lal v. Assessing Officer 334 ITR 298 (Bom) has clarified that the benefit of provisos to section ....
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....nitiation of penalty u/s 274 r.w.s. 270A is premature, as such proceedings are distinct and the assessment order merely records prima facie satisfaction. No view is expressed thereon, preserving all parties' rights. The addition of 15,00,000 u/s 56(2)(vii) (b) stands confirmed, with total income at 31,80,020." 5. We have heard the rival submissions, perused the orders of the authorities below and carefully examined the material placed on record. The short controversy requiring adjudication is whether, for the purpose of determining the applicability of section 56(2)(vii)(b) of the Act, the stamp duty value as on the date of the allotment letter issued in the year 2014 is liable to be adopted or whether the stamp duty value prevailing on the date of execution and registration of the conveyance deed in the previous year relevant to the assessment year under consideration is required to be taken into account. 5.1 The facts are not in dispute that the impugned property was allotted to the assessee by an allotment letter dated 12.11.2014, pursuant to which part of the consideration was admittedly paid through banking channels. The registered conveyance deed, however, came to b....
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....ng allotment by builders and developers, would defeat the very object sought to be achieved by the Legislature. 5.5 At the same time, the benefit of the provisos is conditional and cannot be extended in the absence of factual verification regarding compliance with the statutory requirements. Though the assessee has placed reliance upon the allotment letter, the payment made through banking channels and the valuation report indicating the fair market value as on the date of allotment, the authorities below have not undertaken any examination of these documents in the light of the settled legal position. Consequently, the factual foundation necessary for determining the applicability of the provisos has remained unverified. 5.6 In these circumstances, while we accept, as a matter of law, that an allotment letter satisfying the essential attributes of an agreement may constitute an "agreement" within the meaning of the provisos to section 56(2)(vii)(b), the factual conditions prescribed therein require verification by the Assessing Officer. The Assessing Officer shall, therefore, examine whether the allotment letter fixed the consideration for transfer of the property, whether p....