2024 (9) TMI 1333 - AT - Income Tax

Addition u/s 56(2)(x) - difference in Fair Market Value of the property as per Stamp Duty Valuation Authority - HELD THAT - When on the date of agreement amount of consideration is fixed for the transfer of immovable property and the date of registration is not the same then the Stamp duty Value on the date of agreement is to be taken. The section further provides that the value as on date of agreement can be taken only when the amount of consideration in the agreement has been paid by way of account payee cheque or by the electronic clearing system through a bank account on or before the date of agreement transfer of such immovable property. Thus the aforesaid provisos carve out exception by taking the stamp duty value as on the date of agreement when the payments have been made through banking channels. AO has stated that allotment letter is not a registered agreement therefore the value of the property has to be taken as on the date of sale registration. First of all when builder gives an allotment letter with terms and conditions and all the rights and the value of purchase is agreed upon and assessee has acted upon by accepting the terms and conditions and starts making the agreed payment then it is clearly covered under aforesaid proviso to section 56(2)(x). The assessee has agreed to purchase in the year 2012 in terms of allotment letter and also made the payments before the sale was registered. Therefore the value as on date of allotment has to be treated as stamp duty value for the purpose of aforesaid provision of section 56(2)(x) of the Act and since at that time payment made was more than the stamp duty value therefore no addition can be made. Appeal of the Revenue is dismissed.

Summary

Issues:
1. Addition of Rs. 1,88,75,500 under Section 56(2)(x) for difference in purchase consideration.
2. Consideration of Section 269AB for registration of certain transactions.
3. TDS deduction discrepancy.

Analysis:
1. The revenue appealed against an order passed by NFAC Delhi regarding the assessment year 2020-21, questioning the deletion of an addition of Rs. 1,88,75,500 under Section 56(2)(x) by the CIT(A). The AO added this amount to the assessee's income due to a difference in purchase consideration for a property transaction. The AO concluded that the sale agreement was executed in FY 2019-20, justifying the addition. However, the CIT(A) disagreed, highlighting that the agreement was made in FY 2012-13, and the stamp duty value on the date of agreement should be considered. The CIT(A) emphasized the adherence to terms, conditions, and payment schedules, leading to the deletion of the addition.

2. The AO also raised a concern regarding the non-registration of the agreement or document for allotment from the competent authority as required by Section 269AB. The CIT(A) countered this argument by emphasizing the validity of the allotment letter issued by the builder, which encapsulated all essential details and payment schedules, constituting a binding agreement. The CIT(A) upheld that the provisions of Section 269AB were not applicable in this case, as the agreement was entered into before the specified date.

3. Another issue revolved around the TDS deduction discrepancy, where the AO noted a shortfall in TDS amount and questioned the timing of TDS deductions. The CIT(A) clarified that the applicable TDS was deducted on payments made after 01-06-2013, in line with the provisions. The CIT(A) further supported the assessee's stance by referencing relevant judicial decisions that favored the appellant's position. The CIT(A) concluded that the additions made by the AO were unwarranted and deleted the same.

In summary, the judgment revolved around the correct application of tax provisions concerning the purchase consideration, registration requirements, and TDS deductions in a property transaction. The CIT(A) upheld the assessee's contentions, emphasizing the validity of the agreement terms and adherence to legal requirements, resulting in the dismissal of the revenue's appeal.