2024 (1) TMI 424 - AT - Income Tax

Addition u/s 56(2)(vii) (b)(ii) - stamp value on the date of registration v/s stamp valuation on the date of agreement to be taken into consideration - AO took stamp value as on the date of registration and declined to give relief of the first proviso to s. 56(2)(vii)(b) of the Act on the premise that the phrase used in the said proviso is may be taken and not shall be taken - HELD THAT - First proviso to section 56(2)(vii)(b) categorically provides that where the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement maybe taken for the purpose of this provision. Admittedly, the agreement fixing the consideration was entered into on 21.06.2022 fixing the value of Rs 1.82 crores and the sale deed was registered on 13.08.2013. Prescription of the second proviso is admittedly fulfilled in the instant case inasmuch as the assessee paid a sum of Rs. 26 lakhs in FY 2010-11 (i.e. on 17.06.2010 i.e. even before the date of the agreement to sell being 21.06.2022) as part payment through banking channel. Provisions of s. 56(2)(vii)(b) do not apply to the facts of the instant case as it is covered by the first and second provisos inasmuch as the assessee entered into an agreement fixing the amount of consideration for the purchase of the immovable property in the year 2010 but the actual registration took place in 2013 and, further, the assessee paid a part of the consideration by cheque in the year 2010 before the date of the agreement. In such circumstances, we hold that, it is the stamp value on the date of agreement in the year 2010, has to be considered. Apeal of the assessee is allowed.

Summary

Issues:
The judgment involves the interpretation of provisions of section 56(2)(vii)(b) of the Income Tax Act, 1961 regarding the stamp duty value of immovable property for tax purposes.

Grounds of Appeal:
1. The appeal challenges the Assessment Order passed by the Dispute Resolution Panel (DRP) under section 147 r.w.s. 144C (13) of the Income Tax Act, 1961, alleging errors in confirming and enhancing additions made to the appellant's income.
2. The appellant contests the addition of Rs. 40,45,000/- to their income under section 56(2)(vii)(b)(ii) of the Act, related to the purchase of a flat, citing discrepancies in dates and compliance with the proviso.
3. The appellant disputes the addition of Rs. 40,45,000/-, arguing against the disregard of the proviso to section 56(2)(vii)(b)(ii) and the nature of its applicability.
4. The appellant challenges the addition of Rs. 40,45,000/-, contesting the recommendation of the Assistant Commissioner regarding the interpretation of the phrase "may be taken" in the proviso, seeking consideration of the stamp duty value as of the agreement date.

Summary of Proceedings:
The non-resident appellant did not initially file a return of income for the relevant year, prompting reassessment proceedings upon information of property purchase. The appellant purchased a flat, with the agreement in 2010 and registration in 2013, leading to a dispute over the stamp duty value for tax assessment.

Assessment and Dispute:
During assessment, the Assessing Officer (AO) applied section 56(2)(vii)(b) using the stamp value at registration date, while the appellant argued for the stamp value at the agreement date. The AO's draft order made an addition based on the registration date stamp value, citing the discretionary nature of the proviso phrase "may be taken."

Observations and Decision:
The AO's assessment considered the stamp duty value at registration date, emphasizing the discretionary nature of the proviso. However, the Tribunal found that the first proviso mandates using the agreement date stamp value if different from the registration date, which was the case here. As the appellant paid part of the consideration before the agreement date, the Tribunal held that the stamp value at the agreement date should be considered, leading to allowing the appeal.

Conclusion:
The Tribunal allowed the appellant's appeal, emphasizing the application of the provisos in section 56(2)(vii)(b) and directing consideration of the stamp duty value at the agreement date for tax assessment purposes.