Top Stories Stamp Value on Date of Agreement on Sale of Property to be considered for Applicability of Section 56(2)(vii)(b) of Income Tax Act: ITAT [Read Order] Stamp Value on date of agreement on sale of property to be considered for applicability of Section 56(2)(vii)(b) of Income Tax Act, rules ITAT By Kalyani B. Nair – On March 5, 2024 3:32 pm – 2 mins read

The New Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) held that stamp value on date of agreement on sale of property to be considered for applicability of Section 56(2)(vii)(b) of the Income Tax Act, 1961. The Appellant, a non-resident individual, did not file return of income for the Assessment Year 2014-15 on the premise that the total income has not exceeded the exemption limit. Based upon the information received by the Assessing Officer that the Assessee has purchased an immovable property for INR 2,22,45 ,000/-, reassessment proceedings were initiated under Section 147 of the Income Tax Act and notice dated 28/03/2021, was issued served on the Appellant. During the assessment proceedings, AO invoked provisions of Section56(2)

(vii)(b) on the premise that the stamp value on the date of registration being 13.08 .2013 ( being Rs. 2 ,22,45 ,000/- ) shall be taken into consideration while the assessee argued that the stamp valuation on the date of agreement i.e . on 21.06 .2010 was to be taken into consideration. The AO passed a draft assessment order. First proviso to section 56(2)(vii)(b) categorically provides that where the date of agreement fixing the amount of consideration for the trans fer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purpose of this provision.

Admittedly, the agreement fixing the consideration was entered into on 21 .06.2022 fixing the value of Rs 1 .82 crores and the sale deed was registered on 13.08.2013. Prescription of the second proviso is admittedly fulfilled in the instant case inasmuch as the assessee paid a sum of Rs. 26 lakhs in FY 2010-11 ( i.e . on 17.06.2010 i.e. even before the date of the agreement to sell being 21.06 .2022 ) as part payment through banking channel. A Two-Member Bench of C.N Prasad, Judicial Member and Dr. B. R. R. Kumar, Accountant Member observed that “In view of the foregoing discussion, the provisions of s. 56(2)(vii)(b) do not apply to the facts of the instant case as it is covered by the first and second provisos inasmuch as the assessee entered into an agreement fixing the amount of consideration for the purchase of the immovable property in the year 2010 but the actual registration took place in 2013 and , further , the assessee paid a part of the consideration by cheque in the year 2010 before the date of the agreement. In such circumstances, we hold that, it is the stamp value on the date of agreement in the year 2010, has to be considered.”