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2019 (11) TMI 1231 - AT - Income TaxAddition invoking the provisions of section 56(2)(vii)(b)(ii) - assessee had purchased a flat in housing board colony - HELD THAT - Admittedly, the property has been purchased by the assessee vide sale deed dated 07.01.2016. The Purchase Deed placed at pages 20 to 30 of paper book, clearly shows that the property is in block 156, Jayanth colony, 20th Main road, Anna Nagar scheme, Chennai. The sale deed is not a subject matter of re-valuation of the Sub-Registrar, nor is there any allegation of low stamp duty in respect of the said property by the Sub-Registrar. Guideline value listed shows that in respect of Jayanth colony specific guideline value has been fixed by the Government. The purchase deed shows the specific prescribe value. In respect of 20th Main Road also, there is a guideline value fixed by the Government. There is a specific guideline value fixed by the Government in respect of specific colony or flat, just because the said colony or flat is adjacent to a road, which has a higher guideline value, the higher value cannot be adopted for the purpose of making an addition by invoking the provisions of section 56(2)(vii)(b)(ii). Addition made by the AO is unsustainable in so far as the sale deed has been executed at the value as prescribed by the Government in respect of Jayanth colony itself. This being so, the addition made by the Assessing Officer and confirmed by the ld.CIT(A) stands deleted. Appeal of the assessee is allowed.
Issues:
1. Assessment of property value based on guideline rates. 2. Application of provisions of section 56(2)(vii)(b)(ii) of the Act. 3. Validity of addition made by the Assessing Officer. Analysis: Issue 1: Assessment of property value based on guideline rates The appellant contested the assessment of the property's value by the Assessing Officer, arguing that the property was located in Jayanth colony, for which a specific guideline value was fixed by the Government. The appellant disclosed the sale consideration at ?9,000 per sq.ft, while the Assessing Officer applied the guideline rate of ?12,000 per sq.ft for the adjacent 20th Main Road, Anna Nagar. The Tribunal noted that the property was in Jayanth colony, and the purchase deed reflected the prescribed value for that area. The Tribunal held that just because the property was adjacent to a road with a higher guideline value, the higher value could not be adopted for assessment purposes. Therefore, the Tribunal found the Assessing Officer's valuation unsustainable and deleted the addition made. Issue 2: Application of provisions of section 56(2)(vii)(b)(ii) of the Act The Assessing Officer invoked the provisions of section 56(2)(vii)(b)(ii) of the Act to determine the property's value, resulting in an addition of ?14,16,000. However, the Tribunal found that since the sale deed was executed at the prescribed value for Jayanth colony, the application of this provision was incorrect. The Tribunal held that when specific guideline values were fixed by the Government for a particular area, the higher value of an adjacent area could not be used for assessment purposes under section 56(2)(vii)(b)(ii) of the Act. Issue 3: Validity of addition made by the Assessing Officer The Tribunal concluded that the addition made by the Assessing Officer and confirmed by the ld.CIT(A) was not valid. The Tribunal emphasized that the sale deed reflected the prescribed value for Jayanth colony, and as such, the Assessing Officer's valuation based on a different area's guideline rate was unjustified. Therefore, the Tribunal allowed the appeal of the assessee and deleted the addition. In conclusion, the Tribunal ruled in favor of the appellant, holding that the Assessing Officer's valuation based on a higher guideline rate from an adjacent area was unsustainable, and the addition made was not valid. The appeal was allowed, and the addition was deleted.
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