2024 (11) TMI 637 - AT - Income Tax

Addition u/s. 56(2)(x) - income from other sources on account of difference in the stamp duty value received on sale of immovable property - HELD THAT -CIT(A), held that as the date of agreement to sell is 09.01.2012 and the allotment letter has also been furnished to the assessee on 24.02.2012, where the assessee has also paid the full and final consideration to the developer/builder, which fact was also not disputed by the AO, the impugned addition made by the ld. A.O. on the difference in the stamp duty value, was deleted on the ground that the proviso to section 56(2)(x)(b)(B) provides that where on the date of agreement the consideration has been fixed for transfer of immovable property and when the date of agreement and date of registration are not the same, then the stamp duty value as on the date of agreement may be taken for the purpose of determination of the stamp duty value. It is also not the case of the Revenue that the assessee has not paid the consideration or failed to establish the payment for the said property at the time of agreement to sell . Though the AR has extensively argued that it is the case of transfer of lease hold rights for which section 50C of the Act cannot be invoked, there is no specific finding on the same by the lower authorities nor was it raised as a ground of appeal. In the absence of the same, and on perusal of the relevant documentary evidence furnished by the assessee, we find no infirmity in the order of the ld. CIT(A) in deleting the impugned addition made by the ld. A.O. Ground no. 1 raised by the Revenue is hereby dismissed. Addition as income from other sources u/s. 56(x) on account of difference in the stamp duty value - The assessee had placed reliance on R. C. Cooper vs. Union of India 1970 (2) TMI 130 - SUPREME COURT and the decision of Premier Automobiles 2003 (4) TMI 43 - BOMBAY HIGH COURT which has held that the sale of the entire undertaking as a going concern will be a slum sale and not acquisition of individual assets. The assessee has also relied on the decision of jurisdictional co-ordinate bench in the case of DCIT vs. Sumit Securities Ltd. 2012 (3) TMI 176 - ITAT MUMBAI wherein it was held that in a slum sale, the value of individual assets should not be considered for determining the value of consideration for such transfer. The ld. CIT(A) after duly considering the submission of the assessee has deleted the impugned addition that section 56(2)(x) will not be applicable to the said transaction. Upon perusal of the factual aspects and considering the documentary evidence relied upon by the assessee, we find no infirmity in the other of the ld. CIT(A) in deleting the impugned addition made by the ld. A.O. Ground no. 2 raised by the Revenue is hereby dismissed.

Issues:
1. Challenge to deletion of addition made by the Assessing Officer under section 56(2)(x) of the Income Tax Act.
2. Challenge to deletion of addition under section 56(2)(x) of the Act related to difference in stamp duty value.
3. Interpretation of the nature of property transactions and applicability of relevant tax provisions.
4. Determination of income from other sources based on stamp duty value differences.
5. Consideration of slum sale transaction as a going concern.

Analysis:
1. The appeal was filed by the Revenue challenging the deletion of additions made by the Assessing Officer under section 56(2)(x) of the Income Tax Act. The additions pertained to the difference in stamp duty values received on the sale of immovable property. The Assessing Officer had made additions totaling Rs. 3,31,64,304 under section 56(2)(x) of the Act. The Commissioner of Income Tax (Appeals) allowed the appeal of the assessee, leading to the Revenue's challenge.

2. The assessee, engaged in the business of readymade garments, was involved in property transactions that were scrutinized by the tax authorities. The Assessing Officer determined the total income at Rs. 3,79,95,084, including the additions related to stamp duty value differences. The Commissioner of Income Tax (Appeals) subsequently deleted these additions, prompting the Revenue's appeal.

3. The key contention revolved around the nature of property transactions and the applicability of tax provisions. The Revenue argued that the assessee failed to comply with section 56(2)(x) of the Act. However, the assessee's representative presented detailed arguments supported by documentary evidence to establish the nature of the transactions and the legality of the stamp duty payments.

4. The Tribunal analyzed the property transactions in detail, including agreements, allotment letters, and payment of stamp duty. The Tribunal noted that the assessee acquired rights to the property through legal agreements and upheld the Commissioner's decision to delete the additions made by the Assessing Officer. The Tribunal also referenced relevant legal precedents to support its decision.

5. Another aspect of the case involved the consideration of a slum sale transaction as a going concern. The assessee had acquired an export-oriented unit with its assets and liabilities, and the Revenue had added the difference in stamp duty value as income from other sources. However, the Commissioner, after considering the submissions and legal precedents, deleted this addition. The Tribunal upheld this decision, finding no infirmity in the Commissioner's order.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the Commissioner's decision to delete the additions made by the Assessing Officer. The Tribunal's detailed analysis of the property transactions, legal provisions, and precedents formed the basis for its decision.

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