TMI Blog2023 (5) TMI 1099X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Tribunal in the case of Parth Dasrath Gandhi vs Addl./Deputy/Asst. CIT [ 2023 (1) TMI 1253 - ITAT MUMBAI] held that the allotment letter should be considered as agreement for sale. The assessee fulfills the requirement of proviso 1 2 of section 56(2)(x)(b) of the Act and therefore, we feel appropriate to restore this issue to the file of the AO for limited purpose of comparing the stamp duty valuation as on the date of the allotment with the transaction value recorded in the registration document. Accordingly, the AO shall give effect to this decision after affording adequate opportunity of being heard to the assessee in terms indicated above. The Grounds raised by the assessee are accordingly, allowed. - ITA No.557/Mum/2023 - - - Dated:- 23-5-2023 - Shri Kuldip Singh, Judicial Member And Shri Om Prakash Kant, Accountant Member For the Appellant : Shri Shashi Tulsian For the Respondent : Shri Ajay Singh, Sr.AR ORDER PER OM PRAKASH KANT - AM: This appeal filed by the assessee is directed against the order dated 19.01.2023 passed by CIT(A), National Faceless Appeal Centre ( NFAC ), Delhi [ Ld.CIT(A) ] for Assessment Year ( AY ) 2018-19. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ages 1 o 93. 6. Before us, Ld. Counsel for the assessee submitted that the assessee is one of the joint holders of the property alongwith her son, Shri Ashish Modi, who had booked an under construction residential house as on 22.11.2010 at agreed cost of Rs.83,20,500/-. He referred to the copy of the allotment letter, which is available at page 7 to 10 of the Paper Book. He further submitted that at the time of booking, an amount of Rs.2,00,000/- was paid vide cheque dated 11.11.2010. The property was got registered on 29.07.2017 at a stamp duty valuation of Rs.1,45,55,800/- as against the transaction value of Rs.87,70,500/-. According to the AO, the assessee was only issued an allotment letter, which was according to him, not an agreement and therefore, no benefit of the 2nd proviso to section 56(2)(x)(b) of the Act, can be extended to the assessee. According to the said proviso, if prior to registration of the property, the assessee has entered into an agreement for purchase of the property, then for the purpose of section 56(2)(x)(b) of the Act , the stamp duty valuation as on the date of the agreement shall be taken as sale consideration of the property if substantial amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the above discussion, the difference in the consideration value of and stamp value of the property i.e. Rs.57,85,300/- (1,45,55,800- 87,70,500) and 50% of the same has to be taxed under 'Income from other sources . In the meantime, the assessee had furnished the copy of scrutiny assessment order for the YA 2018-19 in her son's case, Shri Ashish Modi wherein the return income has been accepted. 11. However, as discussed above, since the assessee has not satisfied the basic conditions of section 56(2)(x)(b) of the income tax act, 1961, the entire of Rs.57,85,300/- is taxed substantively in the hands of assessee as 'Income from other sources'. Penal proceedings u/s.270A r.w.s. 274 of the Act are being initiate separately as the assessee has under-reported her income. 7. On further appeal, Ld.CIT(A) also upheld the addition in view of reasoning; firstly, the allotment letter/agreement was not having any legal value as same was not registered; secondly, substantial consideration should have been obligated and paid on the date of the agreement; thirdly, the transaction value of Rs.87,70,500/- was paid as against the allotment value of Rs.83,20,500/-;and fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such sum; (b) any immovable property,- (A) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; (B) for 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 2[or through such other electronic mode as may be prescribed ], on or before the date of agreement for transfer of such immovable property: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for sale. The relevant finding of the Tribunal (supra) is reproduced as under: - 6. We heard the parties and perused the record. We notice that the AO has considered the stamp duty value as on the date of registration of the agreement to sell for the purpose of determining the applicability of sec.56(2)(x) of the Act. However, the facts that the assessee had been allotted both the properties by way of allotment 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 (ITANo.56/Mum/2021 dated 05-09-2022), wherein it was held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etter of intent, still amount mentioned in this so called letter of intent can t be changed by either of the party. At the max the parties involved may opt for exit from the transaction but amount of consideration can t be changed. This transaction of the assessee has to be analysed in commercial parlance, without finalisation of consideration nobody will deposit 20% of the final consideration. The vitality of the agreement further found 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/- vs VAT, Rs1,35,187/- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty on date of registry by invoking section 56(2)(vii)(b) e) Dy. CIT-5(3)(1) vs. Deepak Shashi Bhusan Roy ITA No. 3204 3316/M/2016 dtd. 30/07/2018(Mum.) (Trib.) In order to determine taxability of capital gain arising from sale of property, it is date of allotment of property which is relevant for purpose of computing holding period and not date of registration of conveyance deed f) Mohd. Ilyas Ansari v. ITO-23(2)(3),Mumbai [ITA No. 6174/M/2017dtd.06/11/2020, 186 ITD 407 (Mumbai - 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 ITR131 (Gauhati) (HC).]Two different Assessees having similar/identical facts w.r.t valuation of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2(47)(v) of the Income Tax Act, 1961 read with Section 53-A of the Transfer of Property Act, 1882? ii) Whether the Income Tax Appellate Tribunal, has ignored rights emanating from the JDA, legal effect of non registration of JDA, its alleged repudiation etc.? iii) Whether possession as envisaged by Section 2(47)(v) and Section 53-A of the Transfer of Property Act, 1982 was delivered, and if so, its nature and legal effect? iv) Whether there was any default on the part of the developers, and if so, its effect on the transactions and on exigibility to tax? v) Whether amount yet to be received can be taxed on a hypothetical assumption arising from the amount to be received? 13. The Hon ble Supreme Court accordingly, adjudicated on the issue of interpretation of the transfer defined u/s 2(47) of the Act and upheld the order of Hon ble High Court. Therefore, ratio in the case of Balbir Singh Maini (supra) is not applicable over the facts of the instant case. 14. In view of the above discussion, we are of the opinion that the assessee fulfills the requirement of proviso 1 2 of section 56(2)(x)(b) of the Act and therefore, we feel appropriate to restore t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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