TaxTMI 
TaxTMI 
2026 (10) TMI 259
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....erred in making and the Learned CIT(A) erred in confirming the adjustment of Rs. 33,10,000/- as income from other sources under Section 56(2)(vii)(b). 3. On the facts and circumstances of the case and in law, the Learned AO erred in making and the Learned CIT(A) erred in confirming the addition being the difference between the amount paid by the Assessee and the treating the stamp duty valuation of the property as fair market value 4. On the facts and circumstances of the case and in law, the Learned AO erred in making and the Learned CIT(A) erred in not giving the effect to the first proviso to Section 56 (2) (vii) (b) of the Income Tax Act 1961. The Learned AO should have considered stamp duty valuation on the date of first booking of flat and payment made by the assessee in the Financial Year 1986-87. The Purchase of Flat and Payment was made by the Assessee in the Financial Year 1986-87. However the same was not registered due to certain dispute between the builder and the concerned parties which was finally registered in the Financial Year 2016-17 relevant to Assessment Year 2017-18, the Assessment Year under appeal. 5. The Learned Assessing Officer ....
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....2.05.2023 wherein he attached the letter issued by the R.S. Desai Builder and Developers dated 24.04.1990 (AO- page 4) and 06.06.1990 (AO-page 5) indicating that assessee had purchased a Flat No.5 in Wing A on second floor of the building, namely Desai Villa, and said builder had no objection for obtaining loan by the assessee and lien of the bank on the said property. Further the assessee also filed a letter of possession dated 1/10/1998 (AO-page-6) issued by Builder RS Desai that Flat no. A-3 I Desai villa was ready for possession and the builder requested the assessee to take possession of said flat against full and final payment. The letter reads that the builder informed the assessee that after 1/10/1998, responsibility of paying municipal taxes was on the assessee. The assessee also filed a copy of allotment letter undated(AO-page 7), wherein the Flat Number was mentioned as Flat No.4 on the second floor was allotted to the assessee by the builder R.S. Desai Builder and Developer. 2.3 The Assessing Officer, however, found discrepancies in the particulars of the flat appearing in some of the documents and was of the view that the 2016 agreement constituted an independent an....
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..../- and the stamp duty value is Rs. 1,30,75,000/-, hence there is a difference of Rs. 33,10,000/- in both the values which is required to be added as per the provisions of section 56(2)(vii)(b) of the I.T.Act, 1961 which is as under: 56 Income from other sources. (2) In particular, and without prejudice to the generality of the provisions of sub-section (1), the following incomes, shall be chargeable to income-tax under the head "Income from other sources, namely (vii) where an individual or a Hindu undivided family receives, in any previous year, from any or after the 1st day of October, 2009 but before the 1st day of April, person or persons 2017- (a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; (b) any immovable property.- (1) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property: (il) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as excee....
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.... Rs. 1,30,75,000/-. The difference of Rs. 33,10,000/- has been brought to tax by the AO under section 56(2)(vii) (b) of the Act. 4.3 The principal contention of the appellant is that she had originally booked a flat in the year 1988 with the erstwhile builder for Rs. 2,42,000/- and that the new developer honoured the earlier commitment and adjusted the old payment while executing the fresh agreement in 2016. It has been argued that the transaction is a continuation of the earlier booking and therefore the provisions of section 56(2)(vii)(b) should not apply. 4.4 On perusal of the material on record, it is observed that the agreement dated 05.10.2016 executed with M/s Dev Land and Housing Pvt. Ltd. is an independent and fresh agreement for Flat No. 504 and it merely mentions that the appellant had entered into an agreement for purchase of Flat No. A-5 in the same building with Mr. Sitaram S Desai for a lumpsum consideration of Rs, 2,42,000/- vide agreement entered into and executed in 1988. However, on perusal of the agreement filed by the appellant it is seen that the said agreement is dated 31/12/1991 and as per the agreement the first payment of Rs. 36,300/- was....
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.... duty value as on the date of registration is Rs. 1,30,75,000/-. The provisions of section 56(2)(vii)(b) are clearly attracted where an individual purchases immovable property for a consideration which is less than the stamp duty value by an amount exceeding the prescribed threshold. 4.6 The appellant has relied upon the second proviso to section 56(2) (vii) (b) relating to cases where consideration or part thereof has been paid by non-cash modes on or before the date of agreement. However, in the present case, the relevant agreement for transfer is dated 05.10.2016 and no evidence has been brought on record to show that any part of the consideration under this agreement was paid prior to the date of agreement in the manner contemplated under the proviso so as to warrant adoption of stamp duty value as on an earlier date. The payments allegedly made in 1988 or thereafter were in relation to a separate and incomplete project and cannot automatically be treated as consideration under the 2016 agreement in the absence of specific contractual linkage duly evidenced in the registered document. 4.7 The legislative intent behind section 56(2)(vii)(b) is to tax the benefi....
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.... of the alleged payment made to the erstwhile developer against the consideration payable to the new developer. The learned DR also submitted that the assessee has not brought the fact on the record properly. He submitted that the old builder had already constructed flats, and a society was formed, and entire possession of the land along with flats was handed over to the society, and thereafter, it is the society which entered into redevelopment of said plot of land with the new builder, M/s Dev Land & Housing Private Limited and the assessee has merely purchased a flat from the new builder, whereas a reference has been made to the booking of flat by the assessee with the old builder in the agreement. The Assessee in the registered agreement dated 06.10.2016 has given undertaking that he would not take any legal action against the old builder for the booking of the flat but the old developer is not party to this agreement. This undertaking might have been written in the agreement by the assessee for convenience of assessee and which is not a evidence that old agreement has continued while entering into deed dated 06.10.2016. The ld Dr submitted that therefore, assessee is not entit....
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.... is placed on paper book page 116 to 156. The said agreement has mentioned the entire background of the development of flats by old builder and then formation of the society and handing over the entire right to the building by the old builder to society and thereafter the new developer entered into redevelopment of the said property. The agreement of 2016 clearly brought on record that new developer entered into agreement for redevelopment of society and not entered into any agreement with old developer. The letter of possession available on AO page -6 clearly indicates that the assessee was given flat by the old developer, though possibly the assessee might not have accepted and went into dispute with him. The sub-clause (j) of agreement of 2016, it is mentioned that developer agreed to provide a new Flat No.504 on 7th floor for a total consideration of Rs. 97,65,000/- in lieu of the said booked flat and towards the full and final settlement of liability, dues and entitlement under the said agreement to the purchaser on the terms and conditions herein after. The relevant clause of the agreement is reproduced as under: WHEREAS: (A) As per Agreements dated 28th Jun....
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....e) purchasers in the said Building came together and formed the Society namely "New Desai Villa Co-operative Housing Society Ltd.", duly registered under the provisions of the Maharashtra Co-operative Societies Act, 1960, bearing Registration No. Mum/W.K.W/HSG/(TC)/14308/2008-09 having its registered office at New Desai Villa, Jay Bhavani Mata Road, Amboli, Andheri (West), Mumbai - 400 058, hereinafter known and referred to as the said "SOCIETY". (E) By Deed of Conveyance dated 10th June, 2014 duly registered with the Sub Registrar of Assurances at Mumbai under Serial No. BDR17/6283/2014 on 11th August, 2014 (hereinafter referred to as the said "DEED") made and executed by and between Mr. Ramakant Sitaram Desai (therein referred to as the "Promoter"), herein known as the said Desai, of the One Part and New Desai Villa Co-operative Housing Society Ltd., (therein referred to as the "Purchasers") herein known as the Society, of the Other Part. The said Promoter under the said Deed sold, transferred and conveyed unto the Purchasers, the said Property viz. a Plot of land admeasuring about 1680.10 Square Meters or equivalent to 18084.60 Square Feet lying and being and situa....
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....oper proposes to construct the new building/s for residential and commercial user a building comprising of Ground plus 2/3 Podium Level/s and 11 or more Upper Floors on the said Plot (hereinafter referred to as the said "PROPOSED BUILDING") to be known as "DLH DREAM TOWER", for which the Developer has got approved and sanctioned from the Municipal Corporation of Greater Mumbai (hereinafter referred to as the said "MCGM") the requisite and necessary building plans for construction of the said Proposed Building for residential and commercial usage and obtained Intimation Of Disapproval bearing No. CHE/WS/1729/K/337 (NEW) dated 9th February, 2016, (hereinafter referred to as the said "IOD") and Commencement Certificate (hereinafter referred to as the said "CC") bearing No. CHE/WS/1729/K/337 (NEW) dated 12.08.2016 for the construction of the said Proposed Building and will obtain further permissions as and when required. Annexed hereto are the copies of the IOD and CC jointly and collectively marked as "ANNEXURE 2"; (J) Pursuant to several deliberations, negotiations and understanding arrived between the Parties hereto, the Developer agreed to provide and allot a New flat no. ....
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....f the Developer to the said Property and after having inspected and verified all documents, plans, sanctions, permissions, approvals, schemes etc. and upon being fully and completely satisfied in all respects thereto, have approached the Developer for settlement of her dispute with the said Desai and entered into this Agreement for Sale for purchase of Flat No. 504 admeasuring 780 Square Feet Built Up Area which is inclusive of 650 Square Feet constructed usable carpet area (which shall be inclusive of all area of balconies and door jambs) on the 7th (Seventh) Floor (the said New Flat) in the said Proposed Building to be known as "DLH DREAM TOWER" for a Sale Consideration in lieu of the said Booked Flat. The said New Flat is as shown delineated in red colour boundary line on the Typical Floor Plan, annexed hereto is a copy of the Typical Floor Plan and marked as ANNEXURE "4" including and along with the benefits of all types of permissible FSI (including fungible FSI or otherwise) and exclusive user of the areas of the Roof/ornamental/aesthetic/architectural and mandatory features appurtenant thereto which is particularly described in the SECOND SCHEDULE OF PROPERTY hereunder ....
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....ser in the Common Areas and Facilities is limited to merely its use and access commonly along with the other owners/occupants in the said Proposed Building or otherwise pertaining only to the said New Flat shall be in proportion of the area of the said New Flat agreed to be sold hereunder to the Total Area of the Common Areas and Facilities to be provided in the said Proposed Building. The nature, extent and location of the Common Areas and Facilities is more particularly described in the SECOND SCHEDULE OF PROPERTY hereunder written. The said Agreement subject to full payment of Sale Consideration. It is agreed by the said Purchaser that on execution of this Agreement, all the complaint/s/case/s/concerns raised/ if anyfiled by her or on behalf of her related to the Booked flat and/or Property shall automatically stand withdrawn/cancelled/revoked/released." 6.3 On perusal of the above terms and conditions, we find no material on record to establish that the assessee was given the benefit of any payment made to M/s R.S. Desai Builders & Developers, particularly when the new developer had acquired the development rights from the society. Whatever dispute might have existed between....
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....ty, that the property was conveyed to the society in 2014, and that the society subsequently entered into a registered development agreement with M/s Dev Land and Housing Pvt. Ltd. for redevelopment of the property 6.6 The proviso requires an agreement fixing the amount of consideration for the transfer which is ultimately registered. The earlier agreement was entered into between the assessee and the erstwhile developer in respect of the originally booked flat. The property transferred to the assessee under the 2016 sale deed, however, is Flat No.504 in the redeveloped building, and the consideration expressly fixed with the new developer is Rs. 97,65,000/-. 6.7 Therefore, the question that arises is whether the earlier agreement can be regarded as the agreement fixing the consideration for the transfer which ultimately took place under the 2016 sale deed. On the facts brought on record, we are unable to answer the question in favour of the assessee. The earlier agreement contemplated Flat No.A-5 in the old building for Rs. 2,42,000/-, whereas the subsequent registered sale deed relates to Flat No.504 in the redeveloped building for a consideration of Rs. 97,65,000/-. The....