2023 (8) TMI 80 - AT - Income Tax

Addition u/s 56(2)(x) - difference in stamp duty value and the consideration paid by the assessee as the highest bidder - assessee is a firm with three partners and purchased a property in the auction - CIT(A) deleted the addition - HELD THAT - We find that the coordinate bench of the Tribunal in Krishi Utpanna Bazar Samittee 2014 (3) TMI 1114 - ITAT PUNE after considering the aforesaid circular issued by the Government of Maharashtra held that the consideration stated in the sale deed pursuant to the public auction is to be accepted as the fair market value. Thus the consideration paid by the assessee, being the higher/successful bidder, of the e-tender floated by the aforesaid bank is the fair market value of the property in the facts and circumstances of the present case. Thus, we find no infirmity in the impugned order passed by the learned CIT(A), and accordingly, the same is upheld. Decided in favour of assessee.

Summary

Issues involved:
The appeal filed by the Revenue challenges the impugned order dated 20/02/2023, passed under section 250 of the Income Tax Act, 1961 by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, for the assessment year 2020-21.

Issue 1:
The Revenue disputes the deletion of addition under section 56(2)(x) of the Act due to the difference in stamp duty value and the consideration paid by the assessee as the highest bidder. The assessee purchased a property in an auction from a bank, and the fair market value differed from the consideration paid.

The assessee argued that the property was purchased after participating in an e-tender due to the bank's liquidation. The Assessing Officer disagreed and added the difference in fair market value and consideration to the assessee's income under section 56(2)(x) of the Act.

Issue 2:
The learned CIT(A) allowed the appeal based on a circular issued by the Government of Maharashtra and judicial pronouncements, including a Supreme Court case. The circular stated that the highest price in a sale auction should be considered as the fair market value for stamp duty purposes.

The coordinate bench of the Tribunal also held that the consideration paid in a public auction should be accepted as the fair market value, not the value determined by the stamp valuation authority. The Revenue's argument regarding stamp duty paid at a higher value was dismissed.

Conclusion:
The Tribunal upheld the CIT(A)'s decision, stating that the consideration paid by the assessee in the auction was the fair market value. The grounds raised by the Revenue were dismissed, and the appeal was ultimately dismissed on 27/07/2023.