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2021 (1) TMI 42 - AT - Income TaxAddition made u/s.56(2)(vii) - difference in value between the value adopted by the stamp duty authority on the date of registration of the flat (i.e in F.Y. 2013.14) and the actual consideration paid by the assessee - Assessee pleaded that the addition was made by the ld. AO for want of sufficient documentary evidences from the side of the builder - assessee pleaded that since the provision to purchase the flats being flat Nos.1101 1102 were made way back in the year 2007-08 respectively for which advance payment was indeed made by the assessee by way of booking advance which is also supported by a stamp receipt from the side of the builder together with letter of allotment given by the builder to the assessee - HELD THAT - As decided in the case of Bajrang Lal Naredi 2020 (1) TMI 1359 - ITAT RANCHI find merit in such plea advanced on behalf of the assessee. It is not in dispute that purchase transactions of immovable property were carried out in FY 2011-12 for which full consideration was also parted with the seller. Mere registration at later date would not cover a transaction already executed in the earlier years and substantial obligations have already been discharged and a substantive right has accrued to the assessee therefrom. The pre-amended provisions will thus apply and therefore the Revenue is debarred to cover the transactions where inadequacy in purchase consideration is alleged. We thus find merit in the issue raised on behalf of the assessee. The order of the CIT(A) is accordingly set aside and the AO is directed to delete the additions made under s. 56(2)(vii)(b) of the Act and restore the position claimed by the assessee. No hesitation to hold that provisions of Section 56(2)(vii)(b) of the Act could not be made applicable in the hands of the assessee for the assessment year under appeal in the peculiar facts and circumstances of the case before us. Accordingly the ground Nos. 1 2 raised by the assessee are allowed.
Issues Involved:
1. Applicability of Section 56(2)(vii)(b) of the Income Tax Act, 1961. 2. Consideration of the date of agreement vs. date of registration for tax purposes. 3. Evaluation of documentary evidence and builder's confirmation. 4. Remand report and additional evidence considerations. 5. Applicability of the proviso to Section 56(2)(vii)(b) retrospectively. 6. Relevance of market value variations and precedents. Issue-wise Detailed Analysis: 1. Applicability of Section 56(2)(vii)(b) of the Income Tax Act, 1961: The primary issue was whether the addition made under Section 56(2)(vii)(b) of the Act was justified. The Assessing Officer (AO) invoked this section to tax the differential sum between the actual consideration paid by the assessee for two flats and the value adopted by the stamp duty authority at the time of registration. The assessee contended that the agreements for purchase were entered into in FY 2007-08, a period when Section 56(2)(vii)(b) was not in the statute. 2. Consideration of the Date of Agreement vs. Date of Registration for Tax Purposes: The assessee argued that the provisions of Section 56(2)(vii)(b) should relate back to the years 2007-08, the time when the agreements were made and initial payments were done, rather than the year of actual registration (FY 2013-14). The Tribunal agreed, noting that the substantive right accrued to the assessee at the time of the agreement, not at the registration. 3. Evaluation of Documentary Evidence and Builder's Confirmation: The AO disregarded the primary contention and documentary evidence provided by the assessee, including stamped receipts and letters from the builder confirming the transactions. The builder confirmed that initial payments were made in FY 2007-08 and that the flats originally booked were later changed. The Tribunal found these documents credible and relevant. 4. Remand Report and Additional Evidence Considerations: During the appeal, the CIT(A) sought a remand report from the AO, who reiterated his stance without addressing the detailed submissions and documentary evidence provided by the assessee. The Tribunal noted that the evidence was not new but was part of the original assessment proceedings and should have been duly considered. 5. Applicability of the Proviso to Section 56(2)(vii)(b) Retrospectively: The assessee argued that the proviso to Section 56(2)(vii)(b), introduced by the Finance Act 2013, should be construed as retrospective. The Tribunal agreed, citing that the date of the agreement and initial payments should be considered, aligning with the proviso's intent. 6. Relevance of Market Value Variations and Precedents: The Tribunal noted a precedent from the Ranchi Tribunal in a similar case where it was held that the pre-amended provisions of Section 56(2)(vii)(b) would apply if the agreement and payments were made before the amended law came into force. The Tribunal also considered the minor variation between the market value and actual consideration, which was less than 10%, supporting the assessee's case. Conclusion: The Tribunal held that the provisions of Section 56(2)(vii)(b) could not be applied to the assessee for the assessment year under appeal. The appeal was allowed, and the addition made by the AO was deleted. The Tribunal's decision was based on the timing of the agreement and payments, the credibility of documentary evidence, and relevant precedents. The other grounds raised by the assessee were rendered infructuous or general in nature and did not require specific adjudication.
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