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2025 (4) TMI 265 - AT - Income TaxAddition u/s 56(2)(x) - income from other sources on account of alleged difference between value as per stamp duty rate and consideration paid by assessee as per registered purchase deed - HELD THAT - In the case of the assessee it has already made part payment vide RTGS dated 08.02.2011 through banking channel as discussed in this order. Apart of this even it is settled issue as per the various decisions of ITAT Mumbai that Stamp Duty Valuation as on date of allotment letter should be considered for purposes of section 56(2)(vii)(b) of the Act. We consider that the respective allotment letters issued to the assessee should be considered as Agreement to sell for the purpose of section 56(2)(x) of the Act. Since the assessee has paid the parts of consideration as per the terms and conditions of allotment through banking channels prior to the execution of sale agreement therefore we consider that proviso to section 56(2)(x) should apply to the facts of the present case. Therefore as per the proviso to section 56(2)(x) as discussed the date of agreement in the case of the assessee will be taken to 18.03.2011 and not 26.04.2016 since it is clearly demonstrated from the relevant supporting material that allotment of the new flat has been made to the assessee in continuation of the replacing of the earlier allotment which was changed because of the unavoidable circumstances of change in the Development Control Regulation. Therefore we consider that decision of CIT(A) in sustaining the addition made by the assessing officer is not justified. Accordingly the ground of appeal of the assessee is allowed.
ISSUES PRESENTED and CONSIDERED
The primary legal issue considered was whether the addition of Rs. 93,46,548/- to the assessee's income under Section 56(2)(x) of the Income Tax Act, 1961, was justified. This addition was based on the difference between the stamp duty value of a property and the consideration paid by the assessee. The core question was whether the date of agreement for the property's purchase should be considered as the date of the original allotment in 2011 or the date of the subsequent allotment in 2016, which impacted the applicable stamp duty value. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents Section 56(2)(x) of the Income Tax Act, 1961, addresses the taxation of income from other sources, including the receipt of immovable property for inadequate consideration. The provision stipulates that if the stamp duty value of a property exceeds the consideration paid by a significant margin, the difference is taxable as income. The First Proviso to this section allows for the stamp duty value on the date of agreement to be considered if payment was made by specified banking modes before the agreement date. Court's Interpretation and Reasoning The Tribunal interpreted the First Proviso to Section 56(2)(x) to mean that the date of agreement should be considered as the date when the initial allotment was made, given that part of the payment was made through banking channels prior to this date. The Tribunal emphasized that the change in the Development Control Regulation led to the reassignment of a different flat, but this did not alter the continuity of the original agreement. Key Evidence and Findings The assessee provided evidence of the original allotment letter dated 18.03.2011 and payment of Rs. 25,00,000/- made via RTGS on 08.02.2011. The subsequent allotment letter dated 26.04.2016 was also presented, explaining the reassignment due to regulatory changes. The Tribunal found that the assessing officer did not challenge the authenticity of these documents or the circumstances leading to the reassignment. Application of Law to Facts The Tribunal applied the First Proviso to Section 56(2)(x), accepting the original allotment date as the date of agreement. This application was based on the evidence of payment made before the agreement and the continuity of the transaction despite the change in flat number due to regulatory amendments. Treatment of Competing Arguments The Tribunal considered the arguments of the assessing officer, who relied on the stamp duty value as of the date of the sale agreement in 2017. However, the Tribunal found the assessee's arguments and evidence more persuasive, particularly given the regulatory changes and the established continuity of the transaction from 2011. Conclusions The Tribunal concluded that the addition of Rs. 93,46,548/- to the assessee's income was not justified, as the original agreement date should be considered for determining the applicable stamp duty value under Section 56(2)(x). SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning The Tribunal held that "the respective allotment letters issued to the assessee should be considered as 'Agreement to sell' for the purpose of section 56(2)(x) of the Act." This interpretation was pivotal in determining the applicable date for the stamp duty value. Core Principles Established The Tribunal established that when part payment is made through banking channels before the agreement date, and there is continuity in the transaction despite changes in property details due to external factors like regulatory amendments, the original agreement date should be considered under Section 56(2)(x). Final Determinations on Each Issue The Tribunal allowed the appeal, setting aside the addition made by the assessing officer and confirmed by the Commissioner of Income-tax (Appeals). The decision underscored the significance of the original agreement date and the continuity of the transaction in determining the applicable stamp duty value for taxation purposes.
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