Question And Answer
Subject: invocation of section 56(2)(x)
Querist: kamlesh ajmera
Answered by:
Tags: , , ,
Date: August 8, 2021
Query asked by kamlesh ajmera

the assessee company had booked a flat in feb 2011 for an agreed consideration of Rs 180.00 lacs . only booking form and allotment letter was executed and a sum of Rs 25.00 lacs was paid in Feb 2011. subsequently the project went into litigation and due to development rules constraint the project was delayed and final agreement was executed in registered in sep 2017. the stamp duty valuation is Rs 250.00 lacs.

The AO is seeking to tax the difference in the agreed value and the stamp duty valuation u/s 56(2)(x), though the assessee is seeking refuge in the proviso to the section 56(2)(x) as payment vide banking mode has been made pursuant to the booking cum allotment form.

Is the AO justified in taxing the differential amount?

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As per the first proviso to section 56(2)(x)(b) of the Income-tax Act, 1961(Act) 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 considered.

It is pertinent to note whether in the registration deed the date of allotment is acknowledged or not. In the event the answer is in affirmative; the allotment letter will be construed as date of agreement.

Further, it needs to be checked whether the consideration for the flat on the date of allotment is higher than the Stamp Duty value as on that date. In the event the answer is in affirmative, the transaction will be held to be good. Refer CIT v. Vummudi Amarendran (2020) 429 ITR 97 / (2021) 277 Taxman 243 (Mad.)(HC) the Court held that as regards , Stamp valuation, amendment with effect from 1-4-2017.Statutory amendment is made to remove an undue hardship-Amendment retrospective

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