2023 (8) TMI 27 - AT - Income Tax

Addition u/s 56(2)(vii)(b)(ii) - higher valuation of land by Sub-Registrar - reckoning of stamp duty valuation - reverse calculation for arriving at the stamp duty valuation by applying stamp duty rate @ 4.9% - AR submitted that the provisions of Section 56(2)(vii)(b)(ii) inserted by Finance Act 2013-14 and was given assent by the Parliament on 10.05.2013 whereas registration formalities of the property were completed on or before 10.05.2013 and AO as well as the CIT(A) was not right in making reverse calculation for arriving at the stamp duty valuation by applying stamp duty rate @ 4.9% as the provisions of Section 50C does not empower AO to work out stamp duty valuation by making reverse calculation - HELD THAT - The registered banakhat agreement with M/s. Durga Ricol Industries Pvt. Ltd. dated 24.09.2010 and the order passed by the Deputy Collector, Dholka and Mamlatdar, Sanand dated 24.02.2011 and 17.02.2011 clearly set out the position of the assessee and its co-owners in respect of the Survey No. 139, 140, 141 and 142. Clearance from GIIC and PF Department entry also highlights that the agreement for purchase of property in question was actually entered into with the seller on 10.06.2010 and the stamp duty value has to be reckoned from the date of agreement for purchase of property and not from the date of registration as provided in the law. The submission of AR appears to be justifiable and in fact the Revenue, in one of the co-owners case i.e. Shri Ashok Natvarlal Patel (CIT(A) s order dated 14.03.2019) has taken a view that the stamp duty valuation of the property mentioned hereinabove prevailing on 23.06.2010 should be adopted. Thus, the Assessing Officer as well as CIT(A) was not correct in making the addition. Thus, Ground Nos. 1 to 3 are allowed.

Summary

Issues involved:
The judgment involves appeals filed by different assessee(s) against orders of the Commissioner of Income-tax (Appeals) for Assessment Year 2014-15, concerning addition made under Section 56(2)(vii)(b)(ii) of the Income Tax Act, 1961.

Issue 1: Addition under Section 56(2)(vii)(b)(ii)
The Assessing Officer made an addition of Rs. 1,63,776/- under Section 56(2)(vii)(b)(ii) of the Act, based on an agreement for sale of land. The assessee contended that the stamp duty valuation should have been reckoned from the date of agreement for purchase of property, not from the date of registration, as per the law. The AR argued that the documents produced during assessment proceedings were not validly considered, leading to the addition.

Issue 2: Reverse Calculation for Stamp Duty Valuation
The AR argued that the provisions of Section 56(2)(vii)(b)(ii) inserted by Finance Act 2013-14 were not correctly applied, as the registration formalities of the property were completed before the assent date. It was contended that the Assessing Officer's reverse calculation for stamp duty valuation was not empowered by Section 50C, and the valuation should have been based on Stamp Duty Authority's assessment.

Issue 3: Co-ownership and Property Transactions
The Tribunal examined various documents including Banakhat, Re-conveyance Deed, Declaration, and Cancellation Deed, to determine the ownership and transactions related to Survey No. 139 to 142. It was observed that despite a separate transaction for Survey No. 140/1, 140/2, and 140/3, the deal was finalized with the assessee and co-owners. The Tribunal found that the stamp duty valuation should have been based on the agreement date, not registration date, as per the law.

Conclusion:
The Tribunal allowed the appeals, finding that the Assessing Officer and CIT(A) erred in making the addition under Section 56(2)(vii)(b)(ii) without considering the valid documents and proper valuation dates. The additional ground was deemed academic and not adjudicated upon. All appeals of the assessee(s) were allowed based on the discrepancies in valuation and property transactions.

*Order pronounced in the open Court on 05/07/2023 at Ahmedabad.*