2022 (10) TMI 718 - AT - Income Tax

Addition u/s.56(2)(vii)(b)(ii) - difference between the value fixed by the stamp duty authorities on the sale deed registered and the sale consideration recorded in the sale deed - whether the revised guideline value which is downward revision should be considered for the purpose of valuation of the property for making assessment u/s.56(2)(vii)(b)(ii)? - HELD THAT - For the purpose of making addition u/s.56(2)(vii)(b)(ii) is the stamp duty value of said property in excess of Rs.50,000/- is to be assessed as income from other sources i.e., consideration which is less than the stamp duty value of the property by an amount exceeding Rs.50,000/-. As noted that the stamp duty defined as per Explanation F to section 56(2)(vii) commence a definition of the expression stamp duty value so as to mean the value adopted or assessed or assessable by authority of the Central Government or State Government for the purpose of payment of stamp duty in respect of an immovable property. It means that the true value of the property or the asset and what should have been the consideration i.e., the fair market value of the property is to be considered for the purpose of considering the provisions of section 56(2)(vii)(b)(ii). In the present case, admitted position is that the Government of Tamil Nadu i.e., Inspector General of Registration has reduced the circle rates of the property w.e.f.2017 comparing to the guideline value of 2015, the same is to be considered for adopting the fair market value of the property for the purpose of section 56(2)(vii)(b)(ii) - DVO should consider the subsequent downward revision of guideline value for the purpose of registration of properties i.e., the circle rate and give weightage to the same and then estimate the fair market value of the property. Hence we set aside this narrow issue to the file of the AO who in turn will refer the matter again to the DVO with a specific direction to consider the guideline value i.e., the downward revision made from 2017 of the relevant area and then make estimated fair market value of the property accordingly - the orders of the lower authorities are set aside and the matter is remanded back to the file of the AO with the above direction. Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues:
Appeal against CIT(A)'s order confirming addition u/s.56(2)(vii)(b)(ii) on alleged difference between stamp duty value and sale consideration.

Analysis:
1. The appeal concerns the CIT(A)'s decision upholding the AO's addition of Rs.98.20 lakhs u/s.56(2)(vii)(b)(ii) due to variance between stamp duty value and sale consideration.
2. The assessee purchased three properties, and the stamp duty values exceeded the sale consideration, leading to the addition.
3. The CIT(A) partly accepted the assessee's contentions, increasing the purchase consideration to Rs.1.50 crores but retaining the addition of Rs.98.20 lakhs.
4. The Tribunal noted the total consideration paid by the assessee, discrepancies in valuation, and submissions regarding guideline value revisions.
5. The assessee argued for consideration of revised guideline values for property valuation, emphasizing the need for a fair market value assessment.
6. The Senior DR contended that guideline values at the time of registration should apply.
7. The Tribunal emphasized assessing true property value for section 56(2)(vii)(b)(ii) purposes, considering guideline value revisions for fair market value determination.
8. Consequently, the Tribunal set aside the matter for reassessment by the AO, directing consideration of revised guideline values for fair market value estimation.
9. The Tribunal allowed the appeal for statistical purposes, remanding the case to the AO for further assessment.