Facts of the case:
The taxpayer filed their income return on August 27, 2015, declaring a total income of ₹5,93,520/-. Following this, the case underwent limited scrutiny assessment, and a notice under section 143(2) of the Act was issued and served to the taxpayer. During the assessment, the Assessing Officer (AO) noted that the taxpayer, along with her husband, Shri Ajay Kumar Singh, had jointly purchased immovable property for ₹84,15,300/-. The taxpayer held a 50% share in the property as a co-owner.
The AO observed a variance between the purchased consideration of ₹84,15,300/- and the value of the property determined by the Stamp Duty Authority, which was ₹1,32,82,000/-. Given this difference, the AO considered applying the provisions of section 56(2)(vii)(b) of the IT Act. The taxpayer, in response, referred to the proviso to section 56(2)(vii) of the Act, explaining that if the date of agreement and the date of registration for the property transfer are different, the Stamp Duty value on the date of agreement may be considered, provided the consideration was paid by non-cash modes on or before the agreement date.
In this case, the agreement date was December 16, 2010, while the purchase deed was registered on December 29, 2014. The taxpayer’s husband made an initial payment of ₹1 lakh through banking channels on October 18, 2010. Despite this explanation, the AO did not accept the taxpayer’s submission. The AO determined that since the property was transferred for a consideration lower than the stamp duty value, 50% of the total difference was assessable as income in the taxpayer’s hands.
The taxpayer filed an appeal before the Learned Commissioner of Income Tax (Appeals) [Ld. CIT(A)]. However, the Ld. CIT(A) dismissed the appeal, asserting that since the pre-registration payment was made solely by the other co-owner of the property, namely Mr. Ajay Kumar Singh, the action of the Assessing Officer (AO) in adding ₹24,33,350/- under section 56(2)(vii)(b) of the Act was justified.
During the appellate proceedings before hon’ble tribunal, the Learned Counsel contended that the other co-owner of the property was the taxpayer’s husband, and the property was acquired jointly in their names. Therefore, it was immaterial which of them made the payment before the registration date. The Learned Counsel further argued that since the property agreement was executed on December 16, 2010, it should be considered for the purposes of Section 56(2)(vii)(v) of the Act, rather than the registration date of December 28, 2014. The Learned Counsel cited precedents, including the decision of a coordinating bench in Mumbai in the case of Poonam Ramesh Shahjwan v/s ITO(IT) 4(2)(1) A.Y. 2014-15, via ITA No. 2252/Mum/2019, and the decision of the Income Tax Appellate Tribunal (ITAT) in Pune in the case of Sanjay Dattatrya Dapodikar v/s ITO, Ward 6(2) (2019) 107 taxmann.com 219 (Pune Trib.). Additionally, the Learned Counsel submitted a paper book containing copies of the letter of allotment, registered agreement for sale, and stamp duty valuation of the property.
Tribunal observation and decision:
As per proviso to section 56(2)(vii)(b) as reproduced as above provides that where the date of agreement fixing 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 purpose of the aforesaid provision, provided on or before a part of the consideration has been paid by any mode other than cash. We have also perused the decision of ITAT, Mumbai as referred (supra) by the Ld. Counsel in the case of Poonam Ramesh Shahjwan wherein on the similar facts the value of the flat was determined on the date of booking of flat after taking into consideration the payment made by the assessee through banking channel before the registration of the flat as laid down in the proviso to section 56(2)(vii)(b) of the Act. We have also considered the decision of ITAT, Pune bench referred by the Ld. Counsel as referred above in the case of Sanjay Dattatraya Dapodikar (Supra) wherein held that where date of agreement for fixing amount of consideration for purchase of a plot of land and date of registration of sale deed were different but assessee, prior to date of agreement, had paid a part of consideration by cheque, provisos to section 56(2)(vii)(b) being fulfilled, stamp value as on date of agreement should be applied for purpose of said section.
In the light of the above facts and findings we direct the AO that the stamp duty value on the date of allotment in the case of the assessee on 16.10.2010 be taken for the purpose of Section 56(2)(vii)(b) of the Act and not stamp value as on the date of registration of sale deed . Further, we do not find any merit in the findings of the Ld. CIT(A) that before the registration of the flat only other co-owner i.e. Ajay Kumar Singh husband of the assessee has made payment. Since, it is joint property owned by assessee and her husband and its immaterial who had made payment before the date of registration of the property. Therefore the grounds of appeals of the assessee are partly allowed.
