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2023 (1) TMI 1253 - AT - Income TaxAddition u/s 56(2)(x) - stamp duty value was more than the value of consideration shown in the conveyance deed - HELD THAT - Respective allotment letters issued to the assessee should be considered as Agreement to sell for the purposes of sec.56(2)(x) - Since the assessee has paid the parts of consideration as per the terms and conditions of allotment through banking channels prior to the execution of Sale agreement we are of the view that the provisos to sec.56(2)(x) shall apply to the facts of the present case. Accordingly the stamp duty valuation as on the date of respective Allotment letters should be considered for the purposes of sec.56(2)(x) of the Act. Hence the AO was not justified in considering the stamp duty valuation as on the date of execution of agreement to sell. Details of stamp duty value as on the date of respective allotment letters was not brought on record. Since we have held that the stamp duty valuation as on the date of respective allotment letters should be considered for the purpose of sec.56(2)(x) of the Act it is imperative on the part of the assessee to show that the actual consideration was equal or less than the stamp duty valuation as on 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. Appeal of the assessee is allowed as above.
Issues Involved:
1. Applicability of Section 56(2)(x) of the Income Tax Act. 2. Determination of the relevant date for stamp duty valuation. 3. Consideration of allotment letters as "agreement to sell." Issue-wise Detailed Analysis: 1. Applicability of Section 56(2)(x) of the Income Tax Act: The core issue revolves around the addition made by the Assessing Officer (AO) under Section 56(2)(x) of the Income Tax Act, which pertains to the taxability of income from other sources. Specifically, the AO added the differential amount between the stamp duty value and the actual transaction amount of the properties purchased by the assessee. The AO based this addition on the premise that the stamp duty value on the date of the agreement to sell should be considered, as per the provisions of Section 56(2)(x). 2. Determination of the Relevant Date for Stamp Duty Valuation: The assessee argued that the stamp duty value on the date of the allotment letter should be considered instead of the date of the agreement to sell. The assessee cited the first and second provisos to Section 56(2)(x), which allow for the stamp duty value on the date of the agreement to be taken into account if the consideration or part thereof was paid by specified modes before the date of the agreement. The AO, however, did not accept this argument and relied on a previous Tribunal decision (Sujauddian Kasimsab Sayyed vs. ITO) to justify the addition based on the stamp duty value on the date of the agreement to sell. 3. Consideration of Allotment Letters as "Agreement to Sell": The Tribunal had to decide whether the allotment letters could be considered as "agreement to sell" within the meaning of the provisos to Section 56(2)(x). The assessee argued that the allotment letters should be treated as the date of the agreement, given that part payments were made as per the terms of these letters. The Tribunal referred to a coordinate bench decision in the case of Mr. Sajjanraj Mehta vs. ITO, which supported the view that the date of the allotment letter could be considered as the date of the agreement for the purposes of Section 56(2)(x). Tribunal's Decision: The Tribunal agreed with the assessee's argument and held that the respective allotment letters should be considered as "agreement to sell" for the purposes of Section 56(2)(x). The Tribunal noted that the assessee had made part payments through banking channels prior to the execution of the sale agreement, fulfilling the conditions of the provisos to Section 56(2)(x). Consequently, the stamp duty valuation as on the date of the allotment letters should be considered, not the date of the agreement to sell. Further Directions: The Tribunal observed that the details of the stamp duty value as on the date of the allotment letters were not on record. Therefore, the case was remanded back to the AO for the limited purpose of comparing the actual sale consideration with the stamp duty valuation as on the date of the allotment letters. The AO was directed to take an appropriate decision in accordance with the law after providing the assessee with an adequate opportunity of being heard. Conclusion: The appeal of the assessee was allowed, with the Tribunal directing the AO to reassess the stamp duty valuation based on the date of the allotment letters and to take appropriate action accordingly. Pronouncement: The judgment was pronounced in the open court on 31.1.2023.
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