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2024 (9) TMI 955 - AT - Income TaxAddition u/s 56(2)(x) - difference between the stamp duty value of the property and the sale consideration of the property - holding period of the property or determination of LTCG HELD THAT - No hesitation to hold that for consideration of the holding period of the property or for determination of LTCG, the date of the allotment of property is also paramount and the payment of installments/consideration, delivery of possession and execution of sale deed etc. are infact consequential acts in pursuance to allotment letter and/or originates from the date of allotment letter and therefore the same can be considered for determining the stamp duty value u/s 56(2)(x) as relevant. The difference between the two values is to be assessed in the hands of the Assessee with respect to her share only i.e. 1/3rd of difference between the stamp duty value of the property as on 22.12.2014 and the sale consideration of the property and is to be added under the head Income from other sources . Therefore, in view of the decision of the then Ld. CIT(A) in the case of the Assessee s daughter and the rule of consistency, the case of the Assessee is also liable to be allowed on same footing. Thus, AO is directed to consider the stamp duty value of the property as on 22.12.2014 as Rs. 1,88,00,000/- as valued by the Registered Valuer and the sale consideration of the property as Rs. 1,75,00,000/-as per the provisions of section 56(2)(x) of the Act and add 1/3 of the difference between the two values i.e. Rs. 13,00,000/- (Rs. 188,00,000/- - Rs. 1,75,00,000/-) in the hands of the Assessee under the head Income from other sources , as done by the then CIT(A) in the case of the Assessee s daughter. Consequently, the addition under consideration is modified accordingly. Appeal of the Assessee is partly allowed.
Issues Involved:
1. Consideration of the allotment letter as an agreement fixing the sale price. 2. Applicability of Section 56(2)(x) of the Income Tax Act, 1961. 3. Determination of the date of acquisition for capital gain purposes. 4. Consistency in the treatment of similar cases. Detailed Analysis: 1. Consideration of the Allotment Letter as an Agreement Fixing the Sale Price The Assessee purchased a residential house for Rs. 1,75,00,000 during the assessment year 2020-21. The value of the property as per the Stamp Duty Authority was Rs. 2,76,29,333. The Assessee provided an allotment letter dated 29.01.2011 from M/s. Spark Builders and Infra Project Ltd., showing a total consideration of Rs. 1,75,00,000 and an advance payment of Rs. 10,00,000. The Assessing Officer (AO) did not accept this claim and added Rs. 33,76,444 as the Assessee's share of the difference between the stamp duty value and the consideration paid. The Ld. Commissioner upheld this addition, rejecting the allotment letter as an agreement fixing the sale price, citing that the letter did not constitute a binding agreement. However, the Tribunal found that the allotment letter dated 22.12.2014, along with the bank statement reflecting the advance payment and the sale deed dated 06.11.2019, should be considered for determining the stamp duty value. The Tribunal referenced the case of PCIT-3 Vs. Vembo Vaidyanathan (2019) 261 taxman 376 (Bom.), where the court upheld the acquisition of property from the date of the allotment letter. 2. Applicability of Section 56(2)(x) of the Income Tax Act, 1961 The Ld. Commissioner noted that the difference between the stamp duty value and the sale consideration was more than 5%, making Section 56(2)(x) applicable. The Tribunal, however, emphasized that the date of the allotment letter should be considered for stamp duty valuation under this section. The Tribunal cited various judgments, including Ms. Madhu Kaul Vs. CIT, Chandigarh, where it was held that the allotment letter conferred a right to hold the property, making subsequent actions like payment of installments and delivery of possession consequential. 3. Determination of the Date of Acquisition for Capital Gain Purposes The Tribunal highlighted that the date of the allotment letter should be considered for determining the holding period of the property and for the valuation of stamp duty under Section 56(2)(x). This was supported by the Hon'ble Punjab & Haryana High Court in Ms. Madhu Kaul Vs. CIT, where it was determined that the allotment letter conferred a right to the property, and subsequent actions were consequential. 4. Consistency in the Treatment of Similar Cases The Tribunal noted that a similar case involving the Assessee's daughter, Ms. Sanika Sawant, was decided by the then Ld. CIT(A), who considered the allotment letter as an agreement for fixing the amount and allowed the claim. The Tribunal emphasized the rule of consistency and directed the AO to follow the same approach. The Tribunal directed the AO to consider the stamp duty value as on 22.12.2014 as Rs. 1,88,00,000 and the sale consideration as Rs. 1,75,00,000. The difference of Rs. 13,00,000 should be added under the head "Income from other sources," consistent with the treatment in the case of the Assessee's daughter. Conclusion The appeal of the Assessee was partly allowed. The AO was directed to consider the stamp duty value as on 22.12.2014 and add 1/3 of the difference between the stamp duty value and the sale consideration to the Assessee's income under "Income from other sources." The Tribunal emphasized the importance of consistency and the relevance of the allotment letter in determining the stamp duty value and the date of acquisition.
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