TaxTMI 
TaxTMI 
2026 (7) TMI 1233
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....total income of Rs. 1,51,23,480/-. The return was processed under section 143(1)(a) of the Act on 06.04.2021. The case was selected for limited scrutiny for verification of the issue as to whether the purchase value of an immovable property was lower than the value adopted by the stamp valuation authority, attracting the provisions of section 56(2) or any other relevant provision of the Act. Accordingly, notice under section 143(2) was issued, followed by notices under section 142(1) along with questionnaires. 3. The controversy relates to the acquisition of a residential flat from Suraj Estate Developers Private Limited, hereinafter referred to as "the Developer". The assessee stated before the Assessing Officer that, in the year 2001, M/s Admyre Advertising Agency had booked one flat in the then proposed building known as "Ocean Star-1", situated on Final Plot No. 1199 of TPS IV, Mahim Division, Kashinath Dhuru Road, Dadar, Mumbai. 4. At the time of the original booking, the property comprised a three-bedroom flat admeasuring 1,550 sq. ft. of carpet area, together with one car parking space in the stilt portion. The agreed consideration was Rs. 70,25,000/-, calculated at th....
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....n acquired pursuant to the original allotment and the Memorandum of Understanding dated 25.06.2003, which had been revised on 07.05.2009, much before the enactment of the provision relied upon by the Assessing Officer. The assessee contended that the earlier allotment letter and Memorandum of Understanding constituted a complete agreement between the parties. In support of its contention, the assessee relied upon the decision of the Jaipur Bench of the Tribunal in the case of Naina Saraf v. PCIT-2, Jaipur. 9. The Assessing Officer rejected the contention of the assessee. The Assessing Officer held that the decision in the case of Naina Saraf v. PCIT-2, Jaipur was distinguishable because, in that case, the allotment letter had been issued only once and the final deed had been executed on its basis. In the present case, according to the Assessing Officer, the allotment had been revised several times and the registered deed had ultimately been executed on the basis of the allotment letters dated 17.06.2019 and 09.07.2019. 10. The Assessing Officer further observed that the earlier allotment letters could not be taken into consideration because the building plan had been revised ....
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....ppeal before the learned CIT(A) on 07.10.2022. Before the learned CIT(A), the assessee reiterated that the original booking had taken place in the financial year 2001-02, whereas the modification concerning the change in the floor and the corresponding revision of consideration had taken place in the financial year 2009-10. The execution and registration of the final agreement during the year under consideration were stated to be subsequent formalities and not the originating point of the transaction. 15. The assessee contended that, for the purpose of comparing the actual consideration with the stamp duty value under section 56(2)(x), the relevant date ought to be the date of the original allotment or, at the latest, the date of the revised allotment dated 07.05.2009. It was contended that the stamp duty value prevailing on the much later date of registration could not be adopted. 16. The assessee also relied upon CBDT Circular No. 471 dated 15.10.1986 and contended that an allotment letter issued by a developer, upon payment of the first instalment, creates enforceable rights in favour of the allottee and constitutes an agreement to sell for the purpose of the provisos to s....
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....ax [2024] 169 taxmann.com 76 (Mumbai-Trib.), wherein it was held as under: "First of all, when builder gives an allotment letter with terms and conditions and all the rights and the value of purchase is agreed upon which was accepted by the assessee and acted upon then it is clearly covered under aforesaid proviso to section 56(2)(x) of the Act." 21. The further relevant finding reproduced in the appellate order reads: "Therefore, based on the above discussions and the decisions relied by the Ld.AR on this issue, we are of the opinion that, the value as on date of allotment has to be treated as stamp duty value for the purpose of aforesaid provision of section 56(2)(x) of the Act." 22. Following the aforesaid decisions, the learned CIT(A) held that the allotment letters issued to the assessee were required to be regarded as agreements to sell for the purposes of section 56(2)(x). Since parts of the consideration had been paid through banking channels prior to the execution of the registered agreement, the learned CIT(A) held that the provisos to section 56(2)(x) were applicable. The stamp duty valuation as on the dates of the respective allotment letters was....
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....requirement that the amount of consideration for the transfer of immovable property must have been fixed on an anterior date. According to him, the expression used in the proviso is "the date of agreement fixing the amount of consideration for the transfer of immovable property", and therefore, unless the consideration is finally fixed by such agreement, the assessee cannot invoke the benefit of the stamp duty value prevailing on an earlier date. 25. The learned DR submitted that, in the present case, the consideration cannot be said to have been fixed either by the original allotment letter dated 01.11.2001 or by the subsequent Memorandum of Understanding dated 25.06.2003 or the revised allotment letter dated 07.05.2009. He submitted that the allotment was revised from time to time and the final registered document was executed only on the basis of the revised allotment letters dated 17.06.2019 and 09.07.2019. It was contended that the sale consideration, the area of the flat, the flat number and the parking rights were finally determined only in the year 2019 and, therefore, the earlier documents did not constitute an agreement fixing the consideration within the meaning of th....
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....ent assessee. 29. The learned AR accordingly submitted that the learned CIT(A), after considering the facts, the payment schedule, the provisos to section 56(2)(x)(b) and the decisions of the coordinate benches, has rightly directed that the stamp duty value as on the date of the relevant allotment should be considered and not the stamp duty value prevailing on the date of registration. He, therefore, prayed that the order of the learned CIT(A) be upheld and the grounds raised by the Revenue be dismissed. 30. We have heard the rival submissions and perused the orders of the authorities below and the material placed on record. Ground Nos. 1 to 3 raised by the Revenue are interconnected and relate to the deletion of the addition of Rs. 2,38,32,715/- made by the Assessing Officer under section 56(2)(x)(b) of the Act. The limited question for our consideration is whether, on the facts of the present case, the learned CIT(A) was justified in holding that the assessee was entitled to the benefit of the proviso to section 56(2)(x)(b), or whether the Assessing Officer was right in adopting the stamp duty value prevailing on the date of registration of the final agreement. 31. The ....
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....e Assessing Officer has not recorded any finding that the earlier allotment dated 01.11.2001, the MOU dated 25.06.2003 or the revised allotment dated 07.05.2009 was cancelled, rescinded or abandoned. There is also no finding that the payments made by the assessee in the earlier years were refunded by the Developer. 35. The Revenue's argument that the consideration was not fixed proceeds on the assumption that the word "fixed" means fixed once and for all, incapable of any later variation. Such an interpretation would be too narrow and would defeat the object of the proviso in genuine cases where the agreement or allotment precedes the registration by several years. The purpose of the proviso is to mitigate the hardship caused by an increase in stamp duty valuation between the date on which parties commit themselves to the transaction and the date on which the formal conveyance is registered. The statutory safeguard is that the consideration, or part thereof, must have been paid through the prescribed banking mode on or before the relevant date. 36. The learned CIT(A) has recorded that part payments were made by the assessee through banking channels. The payment schedule notic....
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....pposite. The ratio of those decisions, as applied by the learned CIT(A), is that an allotment letter issued by a builder, containing the essential terms of allotment and acted upon by the allottee by making payments through banking channels, can be treated as an agreement to sell for the purpose of the proviso to section 56(2)(x)(b). No contrary binding decision has been brought to our notice by the Revenue. The mere fact that the allotment was revised in the present case does not render the principle inapplicable, because the revisions were part of the same continuing transaction and were not shown to be the result of cancellation of the earlier transaction. 42. We also find merit in the submission of the learned AR that the case of Mrs. Nisha Kshirsagar, concerning an adjacent property stated to have been acquired under materially similar circumstances, was accepted in assessment without making an addition under section 56(2)(x). The learned CIT(A) has noticed this aspect while granting relief. While the principle of res judicata does not strictly apply to income-tax proceedings, consistency in approach is a relevant consideration where the facts are substantially identical an....