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TMI Blog2024 (2) TMI 1501X X X X Extracts X X X X X X X X Extracts X X X X ..... M AND MS PADMAVATHY S, AM For the Appellant : Shri Govind Prasad, CA For the Respondent : Dr. Yogendra T. Wakare, DR ORDER PER PADMAVATHY S, AM: This appeal is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC) [for short 'the CIT(A)] dated 16.08.2023 for the AY 2018-19. 2. The only issue contended in this appeal is the addition to the extent of Rs. 17,12,962/- made by the AO under section 56(2)(x) of the Income Tax Act (the Act) considering the date of acquisition of immovable property as the date of agreement and not the date of allotment letter. 3. The assessee is an individual and filed the return of income for AY 2018-19 on 09.07.2018 declaring a total income of Rs. 2,75,120/-. The case was selected for scrutiny and statutory notices were duly served on the assessee. The AO during the course of hearing noticed that the assessee had purchased a flat no. 1504 at Parel, Mumbai for a consideration of Rs. 2,47,66,875/- on 23.06.2017 along with the other co-owner Shri Prakash Keshrimal Shah. The AO further noticed that the stamp duty valued on the date of sale was Rs. 2,81,92,800/- and accordingly the AO invoked the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been received on the date of allotment by the Seller On this basis, the assessee has claimed the benefit proviso the Section 56(2)(x) of the Act. Now, the first question arises is that whether an allotment letter issued by the builder can be treated as an agreement for the purposes of the provisions of sec. 56(2)(x) of the Act. As per Section 2(c) of the RERA Act, 2016, agreement for sale is an agreement to sell a property in future which contains the terms and conditions of any prospective contract for sale and any violations of terms of any agreement to sell can result only in a suit for damages. Further, the execution of an agreement for sale needs to be witnessed by two persons capable of entering into a contract In view of the above, the allotment letter produced by the assessee cannot be treated as an agreement and the benefit of the proviso to Section 56(2)(x) cannot be allowed to the assessee. Moreover, the allotment and claim of the assessee also lacks credibility for the following reasons 1. Allotment letter claimed to be issued by the Seller i.e. Matoshree properties on 02.03.2015 in its letter head and it was not registered or notarized. 2. The allotment letter does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to this extent. 4. On further appeal the CIT(A) confirmed the said addition made by the AO. The assessee is in appeal before the Tribunal against the order of the CIT(A). 5. The ld. AR submitted that the addition has been made for the reason that the allotment letter dated 02.03.2015 cannot be considered as agreement for sale. The ld. AR further submitted that the credibility of the said letter is questioned by the Revenue for the reason that in the letter dated 02.03.2015 it is stated that the assessee should pay a sum of Rs. 49,53,375/- on or before 28.02.2015 which is not possible. In this regard the ld. AR submitted that the assessee agreed to pay the above amount on or before 28.02.2015 at the time of making the advance payment on 18.02.2015 and mere mentioning of the said agreement in the letter having a subsequent date cannot be the reason for not treating the letter of allotment as an agreement. The ld. AR also submitted that the other reason as quoted by the Revenue is that the letter of allotment is not signed by the buyer i.e. the assessee which is not correct since the copy submitted by the assessee is assessee's own copy and that the copy submitted to the builder i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a consideration, the stamp duty value of such property as exceeds such consideration, if the amount of such excess is more than the higher of the following amounts, namely: (i) the amount of fifty thousand rupees; and (ii) the amount equal to ten per cent of the consideration: Provided 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 agreement may be taken for the purposes of this sub-clause: Provided further that the provisions of the first proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed 28, on or before the date of agreement for transfer of such immovable property: Provided also that where the stamp duty value of immovable property is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otment letters and further, the assessee has also paid instalments as per that letter are not disputed. Hence, the question that arises is whether the allotment letter can be considered as agreement to sale within the meaning of the provisos to sec. 56(2)(x) of the Act, which states that the stamp duty valuation as on the sale of sale agreement should be taken into consideration for the purpose of sec. 56(2)(x), provided that amount of consideration or part thereof had been paid as per the mod prescribed on or before the date of agreement for transfer of such immovable property. 7. Before us, the Ld A.R placed reliance on the decision rendered by the coordinate bench in the case of Mr. Sajjanraj Mehta vs. ITO (ITA No. 56/Mum/2021 dated 05-09-2022), wherein it was held that the date of allotment letter can be taken as date of agreement of sale for the purposes of sec. 56(2)(x) of the Act. On the contrary, the Ld D.R placed his reliance on the decision rendered by another co-ordinate bench, which was relied upon by AO CIT(A), viz., Sujauddian Kasimsab (supra). 8. With regard to the decision rendered in the case of Sujauddian Kasimsab (supra), the Ld A.R submitted that the said decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... force from the behaviour of the assessee as confirmed by the A.O also that assessee paid further Rs 34.5 lacs till financial year 2012-13. Assessee also paid Rs 1,00,285/- as VAT, Rs 1,35,187/- as service tax, Rs 5,02,000/- as stamp duty and Rs 30,000/- as registration charges. 12. The chronology of the events confirms that the finding of the A.O treating the agreement of the assessee as letter of intent is not correct. In this matter treating the said agreement as letter of intent shows an over thinking and hyper technical interpretation at the end of the A.O. assessee s case clearly falls in the proviso to Section 56(2)(vii)(b). For sake of clarity we are reproducing herein below the relevant portion of proviso Provided that where the date of the 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 may be taken for the purposes of this sub-clause: Provided further that the said proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by any mode other than cash on or before the date of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i - Trib.)] Where Assessing Officer mechanically applied provisions of section 56(2) to difference between stamp duty value and actual sale consideration paid by assessee and made additions, without making any efforts to find out actual cost of property, additions made by Assessing Officer were to be set aside. 14. Similar property in the case of assessee s wife with similar transactions has been accepted by the same A.O without any addition for the same A.Y. Here we would like to rely on the decision of Hon ble Gauhati HC. Gulabrai Hanumanbox. vs. Commissioner of Wealth-tax [198 ITR 131 (Gauhati) (HC).] Two different Assessees having similar/identical facts w.r.t valuation of property cannot be assessed with different rates for the same property. Thereby, the order passed by the Assessing officer for cosharer of property is arbitrary and unjustified in law 15. Keeping in view the facts of the case, chronology of events and respectfully following the pronouncements of the co-ordinated benches of ITAT, we delete the addition made by A.O and confirms that assessee is entitled to the benefits of proviso to Section 56(2)(vii)(b). 10. Accordingly, following the above said decision, we h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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