Nakoda Developers Vs DCIT (ITAT Mumbai)
The assessee, a real estate developer, purchased property for ₹3.25 cr whereas stamp duty value was higher. The AO invoked sec. 56(2)(x) and added ₹1.14 cr being difference between stamp value and purchase consideration. During appeal, based on DVO’s preliminary valuation, CIT(A) reduced addition to ₹28.66 lakh.
Before ITAT, the Tribunal noted that statutory tolerance band of 10% applies while comparing actual consideration and valuation. Following judicial precedents treating this provision as beneficial and retrospective, ITAT held that where difference falls within 10% range, no addition can be sustained. Accordingly, the remaining addition confirmed by CIT(A) was deleted and assessee’s appeal allowed.
Key Takeaways
- 10% tolerance band applies to sec. 56(2)(x) property transactions similar to sec. 50C.
- Beneficial amendment granting safe harbour treated as retrospective.
- Even DVO valuation cannot justify addition where variation falls within statutory tolerance.
- Useful precedent in stock-in-trade/property developer purchase cases involving sec. 56(2)(x).
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal filed by the assessee is against the order of National Faceless Appeal Centre (NFAC), Delhi, vide order no. ITBA/NFAC/S/250/2025-26/1076198744(1), dated 14.05.2025, passed against the assessment order by National E-Assessment Centre, Delhi, u/s. 143(3) r.w.s 143(3A) & 143(3B) of the Income-tax Act (hereinafter referred to as the “Act”), dated 13.04.2021 for Assessment Year 2018-19.
