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2023 (6) TMI 876 - AT - Income TaxAddition u/s 56(2)(vii)(b) - addition made since the assessee declared less purchase value than the value adopted by the Stamp Valuation authority - CIT-A deleted the addition - HELD THAT - CIT(A) observed that out of the total plot land area of 11951 sq. mtr. mentioned in the Sale Deed, the actual plot area comes to 7171 sq. meter, since 40% had to be deducted on account of implementation of TP Scheme as per the Surat Urban Development Authority orders. Assessee had also paid an amount as a premium to the State Government for the said property. Both these issues were specifically mentioned in the Sale Deed. All relevant details had already been filed before the assessing officer as is evident from the assessment order. Taking these factors into account, the actual stamp duty value of the property comes to Rs. 4,48,18,750/- only and not Rs. 5,37,79,500/- as assumed by the assessing officer. Against this, the assessee had made total payment of Rs. 3,15,97,475/- plus Rs. 1,79,27,500/- amounting to Rs. 4,95,24,975/-. Hence, CIT(A) correctly noted that there was no under valuation - Appeal of the Revenue are dismissed.
Issues Involved:
1. Deletion of addition made under section 56(2)(vii)(b) of the Income Tax Act. 2. Consideration of premium paid for converting agricultural land to non-agricultural land in subsequent year. Issue 1: Deletion of Addition under Section 56(2)(vii)(b) of the Income Tax Act The Revenue appealed against the order of the Learned Commissioner of Income Tax (Appeals) [CIT(A)], which deleted the addition of Rs. 1,48,61,956/- made under section 56(2)(vii)(b) of the Income Tax Act. The Assessing Officer (AO) had made this addition because the assessee declared a purchase value lower than the value adopted by the Stamp Valuation Authority. The AO determined that the market value of the property, ascertained by the Stamp Valuation Authority, was Rs. 5,37,79,500/-, while the actual purchase consideration was Rs. 3,15,97,475/-, resulting in a difference of Rs. 2,21,82,025/-. The AO added 67% of this difference (Rs. 1,48,61,956/-) to the assessee's income under the head "Income from Other Sources." Issue 2: Consideration of Premium Paid for Land Conversion The CIT(A) allowed the assessee to club the purchase cost with the premium paid in the subsequent year for converting agricultural land to non-agricultural land. The AO had not considered this premium, paid to the State Government, while determining the property value. The assessee argued that the total cost of the land should include the premium paid for land conversion, which was Rs. 1,79,27,500/-, making the total cost Rs. 4,95,24,975/-. Judgment Summary: The Tribunal upheld the CIT(A)'s decision to delete the addition made by the AO. The Tribunal noted that the assessee had purchased the property along with an obligation to pay a premium for land conversion, which was specified in the purchase deed. The actual plot area, after accounting for the implementation of the Town Planning Scheme (TP Scheme), was 7171 sq. meters, not 11951 sq. meters as assumed by the AO. The correct stamp duty value of the property was Rs. 4,48,18,750/-, not Rs. 5,37,79,500/-. The total payment made by the assessee, including the premium, was Rs. 4,95,24,975/-, which exceeded the correct stamp duty value. Therefore, there was no undervaluation, and the addition of Rs. 1,48,61,957/- was incorrectly made. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the Revenue's appeal. Conclusion: The appeal filed by the Revenue was dismissed, and the order of the CIT(A) deleting the addition of Rs. 1,48,61,957/- was upheld. The Tribunal concluded that the correct stamp duty value of the property was Rs. 4,48,18,750/-, and the total payment made by the assessee was Rs. 4,95,24,975/-, thus there was no undervaluation.
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