2020 (11) TMI 817 - AT - Income Tax

Income from other sources u/s 56(2)(vii)(b)(ii) - difference between the market value and purchase consideration on the date of registration of sale - HELD THAT - In the instant case the Proviso to sub clause (b) of section 56(2)(vii) of the Act gets attracted and the Stamp Duty value as on the date of booking the flat wherein the consideration was mutually agreed between the parties was fixed shall be taken for the purpose of sub clause (b). The assessee has also filed a report from the registered valuer, according to which the stamp duty value of the flat in August, 2012 has been determined at ₹ 98,68,000/. We find merit in the contentions raised by the assessee.The provision of Section 56(2)(vii)(b) of the Act does not envisage transfer of ownership for determination of stamp duty value. The determination of stamp duty value hinges on the date of agreement fixing the amount of consideration for transfer of immovable property. In the present case, the date is August 2, 2012. i.e. the date of booking the flat. At the time of booking flat the total amount of consideration was fixed between the parties. The date of transfer of title in immovable property has no significance under the provisions of Section 56(2)(vii)(b). - Appeal of assessee allowed.

Summary

Issues:
Interpretation of provisions of section 56(2)(vii)(b)(ii) of the Income-tax Act, 1961 for making an addition to the taxable income based on the stamp duty value of a property.

Analysis:
1. Facts and Contentions: The appellant had booked a residential flat in a housing project during the financial year 2012-13, making partial payments. The appellant contended that the consideration for the flat was mutually agreed upon in August 2012 when the flat was booked, supported by documents such as the allotment letter and payment schedule. The appellant argued that the stamp duty valuation at the time of booking was relevant for determining the taxable value.

2. Department's Argument: The Department representative argued that the ownership of the flat was transferred during the financial year 2013-14 relevant to the Assessment Year 2014-15 upon execution of the registered sale agreement. It was contended that merely making advance payments did not confer ownership rights, and the market value at the time of transfer should be considered.

3. Legal Analysis: The main issue revolved around the application of section 56(2)(vii)(b)(ii) of the Act, which deals with the stamp duty value of immovable property for tax purposes. The Tribunal examined the relevant provisions of the Act and noted that the proviso to sub-clause (b) specifies that the stamp duty value on the date of the agreement fixing the consideration should be considered. In this case, the agreement on the consideration was reached in August 2012, when the flat was booked, as evidenced by documents. The Tribunal emphasized that the date of transfer of ownership was not relevant for determining the stamp duty value under the Act.

4. Decision: The Tribunal found merit in the appellant's contentions, setting aside the impugned order and allowing the appeal. The Tribunal held that the stamp duty value as on the date of booking the flat, when the consideration was mutually agreed upon, should be considered for tax assessment purposes. The date of transfer of ownership was deemed insignificant under the provisions of section 56(2)(vii)(b) of the Act.

In conclusion, the Tribunal's decision clarified the application of tax provisions regarding the stamp duty value of immovable property, emphasizing that the date of agreement fixing the consideration is crucial for tax assessment, rather than the date of transfer of ownership.