ITAT Rules Stamp Duty Value to Be Considered at Allotment Date under Section 56(2)(x)

ITAT Rules Stamp Duty Value to Be Considered at Allotment Date under Section 56(2)(x)

The ITAT Mumbai held in favour of Purvi Nihal Shah (appellant/assessee). The CIT(A)’s order is quashed, and the case is remanded to the concerned tax authorities (AO) for fresh verification, holding that under Section 56(2)(x), stamp duty value on the date of allotment applies when part payment was made earlier.

During the processing of the assessee’s return, the Assessing Officer (AO) found that the assessee had purchased an immovable property worth Rs 9,900,536 during the year under consideration, i.e., Assessment Year 2018-19, while the stamp duty authority valued it at Rs 11,141,000. The difference between the same was treated as the assessee’s taxable income under the head of “Income from Other Sources” and an addition of the entire difference, i.e., Rs 12.40 lakh under Section 56(2)(x) of the Act.

The aggrieved assessee approached the lower appellate authority, i.e., the Commissioner of Income Tax (Appeals) [CIT(A)]. However, the impugned addition was sustained. Thereafter, the assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT), Mumbai, challenging the CIT(A)’s order of upholding the impugned addition. The assessee argued that the property was actually allotted much earlier during the Financial Year 2010-11, and substantial payments were made using banking channels at that period. Additional evidence, including valuation reports, ready reckoner rates, etc., was furnished by the assessee that reflected that the earlier valuation was lower than the purchase price. The assessee claimed that the stamp duty value on the date of allotment, not registration, should be considered.

The assessee’s counsel had submitted that “the assessee had filed an application for admission of Additional Evidence under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, comprising the valuation report of the subject property duly certified by Shri C. V. Salvi, enclosed at pages 10 to 23 of the Additional Paper Book (APB). A copy of the certified Ready Reckoner valuation of the said property is also enclosed at page 24 of the APB.”

Further, “the assessee had purchased the property for a consideration lower than the stamp duty valuation. It was submitted that the property was acquired from M/s. Mishal Construction Pvt. Ltd. pursuant to an allotment dated 08.03.2011, against an advance payment of Rs.7,00,000/-. A copy of the allotment letter is placed at pages 44 to 46 of the APB.”

The Tribunal accepted the additional evidence and observed that under Section 56(2)(x), where part payment is made before the agreement, the stamp duty value of the date of allotment must be taken. Since the earlier valuation supported the assessee’s claim, the Tribunal held that the lower authorities had incorrectly relied on the registration-date value.

Accordingly, the tribunal set aside the order of the CIT(A) and restored the matter to the Assessing Officer (AO) for fresh verification of the valuation reports and relevant records. The AO has been directed to re-examine the issue and pass a fresh and reasoned order after granting the assessee a fair opportunity of hearing. Hence, the appeal was allowed for statistical purposes.