2024 (11) TMI 1370 - AT - Income Tax

Assessment u/s 56(2)(X) - stamp duty value of the property was much higher - purchase of immovable property by the appellant in the previous year relevant to the assessment year 2017- 18 and not in the previous year relevant to assessment year 2018-19 - HELD THAT - Sale consideration was settled on the date of the agreement i.e. 30th December, 2016 and that all the amount was paid on the said date. He therefore, has contended that the collector rate/ circle rate as on the date of execution of the agreement should be taken for the purpose of making any addition u/s 56(vi)(2). Though, this ground has been taken by assessee as an additional ground, however, we find force in the same in view of the provisions of Section 56(2)(X) read with First proviso and Second proviso. As per first and second Proviso to Section 56(2)(X) of the Act, where, the date of agreement, fixing the amount of consideration, is prior to the date of the registration deed and the amount of consideration or part thereto as per the said agreement has been paid by the purchaser though banking channel, then the stamp duty value/ circle date as mentioned on the date of agreement is to be taken for the purpose of Section 56(2)(x). Since, in this case the entire payment of ₹86 lacs was transferred by the assessee through banking channel on 30th December, 2016, therefore, AO is directed to calculate the amount as per the circle rate as applicable on 30th December, 2016. AO shall call upon for information in this regard from the circle officer/ collector and thereafter, apply the said rates for the purpose of computing the income of the assessee while invoking the provisions of Section 56(2)(x).

Issues Involved:

1. Application of Section 56(2)(x) of the Income Tax Act, 1961.
2. Validity of the orders passed by the CIT(A) and AO.
3. Charging of interest under Sections 234A and 234B of the Act.
4. Consideration of stamp duty value as per the date of agreement under Section 56(2)(x).

Issue-wise Detailed Analysis:

1. Application of Section 56(2)(x) of the Income Tax Act, 1961:

The primary issue in this appeal was whether the provisions of Section 56(2)(x) should apply to the purchase of immovable property in the assessment year 2017-18 or 2018-19. The assessee argued that the transfer of property was completed on the date of the agreement for sale, which was executed on December 30, 2016, and not when the sale deed was registered on March 28, 2018. The Tribunal examined the agreement and concluded that it was merely an "agreement for sale" and not a "sale deed." The Tribunal noted that the transfer of property was contingent upon future actions, specifically the execution of the sale deed, and thus, the provisions of Section 56(2)(x) were applicable for the assessment year 2018-19 when the sale deed was registered.

2. Validity of the Orders Passed by the CIT(A) and AO:

The assessee contended that the orders passed by the CIT(A) and the AO were unsustainable and should be struck down. However, the Tribunal upheld the decision of the CIT(A) and the AO, confirming the addition of the differential amount into the income of the assessee based on the higher stamp duty value of the property as per Section 56(2)(x). The Tribunal found no merit in the argument that the orders were unsustainable, given that the registration of the sale deed was the decisive factor for the transfer of property.

3. Charging of Interest under Sections 234A and 234B of the Act:

The assessee challenged the imposition of interest under Sections 234A and 234B. The Tribunal did not provide a detailed discussion on this issue, as it was primarily focused on the application of Section 56(2)(x). The Tribunal's decision to uphold the orders of the CIT(A) and AO implicitly affirmed the charging of interest under these sections.

4. Consideration of Stamp Duty Value as per the Date of Agreement under Section 56(2)(x):

The assessee raised an additional ground regarding the consideration of stamp duty value as per the date of the agreement. The Tribunal acknowledged this argument, citing the provisions of Section 56(2)(x) and its first and second provisos, which allow for the consideration of stamp duty value as of the date of the agreement if the consideration was paid through banking channels. The Tribunal directed the AO to calculate the amount based on the circle rate applicable on December 30, 2016, the date of the agreement, provided the payment was made through banking channels. This direction was given to ensure that the correct stamp duty value is used for computing the income under Section 56(2)(x).

Conclusion:

The appeal was partly allowed, with the Tribunal directing the AO to reassess the addition under Section 56(2)(x) using the stamp duty value as of the date of the agreement, contingent upon verification of payment through banking channels. The Tribunal confirmed the applicability of Section 56(2)(x) for the assessment year 2018-19 and upheld the orders of the CIT(A) and AO regarding the addition of the differential amount.

← Previous Next →