| Question And Answer | |
|---|---|
| Subject: | Difference between Stamp duty and Agreement value is about 5.3% AY 2020-21 being added to Income |
| Category: | Income-Tax |
| Querist: | Indrajit Bhattacharyya |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | agreement value, Capital Gains, Stamp Duty |
| Date: | September 17, 2022 |
In October 2019, the assessee bought a property at a FMV as stated in a valuation report by a CBDT empaneled valuation officer who is also a valuation officer for the Honourable High Court of Calcutta.
In the valuation report, it was stated that the Stamp duty value of the property would be about 5.55% higher than the FMV of the property.
The assessee proceeded with the agreement of sale on the basis of the valuation FMV in October 2019 and registered the property in March 2020.
The Assessing officer now intends to include the difference in Stamp Duty value and FMV (agreement price) in the assessee’s income as Income from other sources for the AY 2020-21 per Section 56(2)(x) and proceed with penalty proceedings under Section 270A for under-reporting of income.
The additional income would be about 12L+ for AY 2020-21 for a currently unknown tax penalty.
Is there any merit in the assessee disputing the AO’s order given that the agreement was based on a valuation officer’s FMV.
Also, would there be any merit in the assessee appealing the penalty proceedings given that there was no attempt to under-report or mis-report the income in that year.
As per section 50C of the Income-tax Act, 1961 (Act), where a reference is made to the Valuation Officer and the value adopted by the valuation officer is lower than the stamp duty value; the value adopted by the valuation officer would be the Full value of consideration received.
Therefore, only the difference between the value as per the valuation officer and the agreement value can be brought to tax under section 56(2)(x) of the Act, provided the value as per the valuation officer exceeds 110 percent of the agreement value .