2024 (10) TMI 245 - AT - Income Tax

Addition on account of investment in House property u/s 56(2)(x) - AO observed that on the date of registration of property, the value determined by the Stamp Valuation Authority for the purpose of levy of stamp duty - AO added the difference sum as property purchased by the assessee for inadequate consideration by applying provisions of section 56(2)(x) - HELD THAT - The assessment was completed by the AO on 21.09.2022 as it was getting time barred by 30.09.2022. AO even made an observation that since the report of DVO was not received before the completion of assessment, he has proceeded to make an addition of ₹ 80,08,700/- and the order would be subjected to rectification u/s 155(15) of the Act after the receipt of report. It is not in dispute that the DVO report was received by the AO on 17.11.2022 i.e. after completion of assessment proceedings, wherein, the subject mentioned property was valued at Rs. 62,04,000/-. DVO s report was even ignored by the CIT(A). We find that the value determined by the ld DVO was for Rs. 60,57,000/-, the difference between the assessee s consideration and the DVO value works out to less than 10% of actual consideration. Hence, as per the provisions of Section 56(2)(x) the value declared by the assessee falls within the tolerance range of 10% of the consideration and hence, there is absolutely no basis for the addition made u/s 56(2)(x) of the Act. Hence, the addition is hereby deleted. Appeal of the assessee is allowed.

Summary

The appeal in ITA No.901/Del/2024 for AY 2020-21 was against the order of assessment passed u/s 143(3) r.w.s. 144B of the Income-tax Act, 1961. The only issue was the addition of Rs. 80,08,700 on account of investment in House property u/s 56(2)(x) of the Act. The assessee, a Private Limited company, purchased agricultural land for Rs. 60,57,000 and the Stamp Valuation Authority valued it at Rs. 1,48,06,000. The DVO valued the property at Rs. 62,04,000. The Tribunal found no basis for the addition as the declared value fell within the 10% tolerance range. The addition was deleted, and the appeal was allowed.