2023 (12) TMI 579 - AT - Income Tax

Addition u/s 56(2)(vii) - Joint property purchased - value determined by the Stamp Duty Authority was more than the agreement value of the property - CIT(A) denying the benefit of Section 56(2)(vii) (b) by stating that Letter of Allotment is not a registered sale deed and thus cannot be considered as date of agreement - assessee has purchased immovable property as a co-owner jointly with her husband - assessee explained that as per the proviso to section 56(2)(vii)where date of agreement fixing amount of consideration for the transfer of immovable property and the date of registration are not the same, the Stamp Duty value on date of agreement may be taken for the purpose of this clause provided that the amount of consideration has been paid by any mode other than cash on or before the date of agreement for the transfer of such immovable property. HELD THAT - As per proviso to section 56(2)(vii)(b) where the date of agreement fixing amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of agreement may be taken for the purpose of the aforesaid provision, provided on or before a part of the consideration has been paid by any mode other than cash. As perused the decision of POONAM RAMESH SAHAJWANI 2020 (11) TMI 817 - ITAT MUMBAI on the similar facts the value of the flat was determined on the date of booking of flat after taking into consideration the payment made by the assessee through banking channel before the registration of the flat as laid down in the proviso to section 56(2)(vii)(b) of the Act. Also case of Sanjay Dattatraya Dapodikar 2019 (9) TMI 487 - ITAT PUNE wherein held that where date of agreement for fixing amount of consideration for purchase of a plot of land and date of registration of sale deed were different but assessee, prior to date of agreement, had paid a part of consideration by cheque, provisos to section 56(2)(vii)(b) being fulfilled, stamp value as on date of agreement should be applied for purpose of said section. We direct the AO that the stamp duty value on the date of allotment in the case of the assessee on 16.10.2010 be taken for the purpose of Section 56(2)(vii)(b) of the Act and not stamp value as on the date of registration of sale deed . No merit in the findings of the Ld. CIT(A) that before the registration of the flat only other co-owner i.e. Ajay Kumar Singh husband of the assessee has made payment. Since, it is joint property owned by assessee and her husband and its immaterial who had made payment before the date of registration of the property. Therefore the grounds of appeals of the assessee are partly allowed.

Summary

Issues involved:
The judgment involves the interpretation of Section 56(2)(vii)(b) of the Income Tax Act, 1961 regarding the addition made by the Assessing Officer (AO) in the case of the appellant. The issues include the consideration of stamp duty value, date of agreement for transfer of immovable property, and payments made before registration.

Summary:

Issue 1: Addition under Section 56(2)(vii)(b)
The appellant filed an appeal against the order passed by the Commissioner of Income Tax (Appeals) confirming the addition made by the AO under Section 56(2)(vii)(b) amounting to Rs. 24,33,350. The AO applied the provision as the stamp duty value exceeded the agreement value of the property.

Issue 2: Date of Agreement vs. Date of Registration
The appellant argued that the date of agreement, 16.12.2010, should be considered for Section 56(2)(vii)(b) instead of the date of registration, 29.12.2014. The appellant contended that payments made before registration should be considered, irrespective of the co-owner making the payment.

Issue 3: Interpretation of Proviso to Section 56(2)(vii)(b)
The Tribunal analyzed the proviso to Section 56(2)(vii)(b) which allows the stamp duty value on the date of agreement to be considered if a part of the consideration has been paid by any mode other than cash before the agreement date. The Tribunal referred to previous decisions to support the interpretation.

Decision:
The Tribunal directed the AO to consider the stamp duty value on the date of allotment, 16.10.2010, for Section 56(2)(vii)(b) and not the date of registration. It was emphasized that in joint ownership, it is irrelevant which co-owner made payments before registration. The grounds of appeal were partly allowed, and the appellant's appeal was partly allowed.