Question And Answer
Subject: Difference between Stamp duty and Agreement value is about 5.3% AY 2020-21 being added to Income
Querist: Indrajit Bhattacharyya
Answered by:
Tags: , ,
Date: September 17, 2022
Query asked by Indrajit Bhattacharyya

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.

File Uploaded: Not Available

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 .

Disclaimer: This article is only for general information and is not intended to provide legal advice. Readers desiring legal advice should consult with an experienced professional to understand the current law and how it may apply to the facts of their case. Neither the author nor and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information in this article nor for any actions taken in reliance thereon. No part of this document should be distributed or copied (except for personal, non-commercial use) without express written permission of

Leave a Reply

Your email address will not be published. Required fields are marked *