The appeal filed by the assessee was directed against the order passed by the National Faceless Appeal Centre for Assessment Year 2018-19, arising from an assessment framed under section 143(3) read with sections 143(3A) and 143(3B) of the Income-tax Act, 1961.

The assessee, an individual, along with her husband, had booked a residential flat pursuant to an allotment letter dated 21.04.2016 issued by the builder. The agreement for sale was subsequently registered on 23.08.2017. The total purchase consideration for the jointly owned flat was ₹4.50 crore, which was paid through banking channels. For the relevant assessment year, the Assessing Officer adopted the stamp duty valuation as on the date of registration, amounting to ₹4,55,55,939, and treated the difference of ₹5,55,939 as income under section 56(2) of the Act. Considering the assessee’s 50% share, an addition of ₹2,70,970 was made to her total income.

The assessee contended that the property had been effectively acquired pursuant to the allotment in Financial Year 2016-17 and that, in terms of the proviso to section 56(2), the stamp duty value as on the date of allotment ought to have been adopted. It was further submitted that the applicable ready-reckoner value in Financial Year 2016-17 was ₹4,19,98,028, which was lower than the actual consideration paid. The Commissioner (Appeals), however, rejected the contention and sustained the addition.

On further appeal, the Tribunal examined the statutory provisions and the factual matrix. It was observed that the allotment letter was issued in Financial Year 2016-17 and that substantial consideration had been paid through non-cash modes prior to the execution of the registered agreement. The Tribunal held that, in such circumstances, the stamp duty valuation as on the date of allotment was required to be adopted.

The Tribunal noted that the ready-reckoner value applicable in Financial Year 2016-17 was lower than the actual purchase consideration paid by the assessee. Consequently, there was no basis for making an addition under section 56(2) in the impugned assessment year. Reliance was placed on the decisions of the coordinate benches of the ITAT, Mumbai, in Awadhnarayana Bhagwanta Singh vs ITO and Manjulaben Himmatlal Jain vs ITO, wherein it was consistently held that the stamp duty value as on the date of allotment is relevant where consideration is paid through banking channels.

Accordingly, the Tribunal set aside the impugned appellate order and deleted the addition of ₹2,70,970 made under section 56(2) of the Act. The appeal of the assessee was allowed.

Source Link:  https://itat.gov.in/public/files/upload/1767782738-PwDqZc-1-TO.pdf

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