2020 (10) TMI 842 - HC - Income Tax

Revision u/s 263 - differences between actual sale consideration paid and market value fixed by the Registering Authority - proposal of the PCIT to invoke Section 56(2)(vii) - HELD THAT - Commissioner has not dealt with the aspects with regard to the argument that 'transfer' within the meaning of Section 2(47)(v) had taken place as there has been part performance of the Contract of Sale. Commissioner interfered with the Assessment Order and directed the AO to assess differential amount of ₹ 24,00,000/-. On appeal before the Tribunal, the Tribunal in our considered view took a correct decision by examining the factual aspects in its entirety and also noted the legal position as to the effect of guideline value fixed by the Government. The settled legal position is that the guideline value has been fixed by the Government for the purpose of computing the Stamp Duty payable on an instrument and the guideline value would not reflect the market value of the property. In support thereof, several decision has been referred. As pointed out, the Tribunal has rightly noted the legal position and considering the entire facts found that the additions made by the PCIT and the order passed under Section 263 of the Act is unsustainable. - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of guideline value for Stamp Duty assessment.
2. Application of Section 56(2)(vii)(b) of the Income Tax Act.
3. Consideration of revised guideline value for assessment year.

Interpretation of Guideline Value for Stamp Duty Assessment:
The appellant challenged the additions made by the Assessing Officer (AO) as directed by the Principal Commissioner of Income Tax (PCIT) under Section 263. The dispute revolved around the guideline value prescribed by the Tamil Nadu Government and its applicability to the assessment year 2014-15. The appellant argued that the guideline value, which came into effect from June 2017, should not be retroactively applied to the present assessment year. The High Court noted that the guideline value is used for Stamp Duty purposes and does not necessarily reflect the market value of the property. The Tribunal correctly determined that the additions made by the PCIT were unsustainable, considering the legal position and factual aspects.

Application of Section 56(2)(vii)(b) of the Income Tax Act:
The appellant contended that the Tribunal failed to consider the provisions of Section 56(2)(vii)(b) of the Income Tax Act, which pertains to taxing the difference in value adopted by the Stamp Valuation authority compared to the actual consideration paid by the assessee under the head "Income from Other Sources." However, the Tribunal found that this provision did not apply in the appellant's case as a significant portion of the sale consideration had already been paid, and the appellant could not withdraw from the transaction. The High Court upheld the Tribunal's decision in this regard.

Consideration of Revised Guideline Value for Assessment Year:
The PCIT invoked Section 263 of the Act based on the differences between the actual sale consideration paid by the assessee and the market value fixed by the Registering Authority. The PCIT directed the Assessing Officer to assess the differential amount as income chargeable under "Income from Other Sources." The appellant argued that the PCIT did not address the aspect of "transfer" under Section 2(47)(v) concerning part performance of the Contract of Sale. However, the Tribunal correctly analyzed the factual aspects and legal position regarding the guideline value set by the Government. The High Court concurred with the Tribunal's decision, emphasizing that there were no substantial questions of law for consideration in the appeal, leading to the dismissal of the Tax Case Appeal without costs.