Surendra Nath Mohanty Vs NWC (ITAT Delhi)
Delhi ITAT: Allotment Letter Constitutes Agreement for Section 56(2)(x); Stamp Duty Value on Allotment Date to Prevail over Registration Date
The Delhi ITAT held that, for the purposes of section 56(2)(x), the allotment letter issued by the Air Force Naval Housing Board (AFNHB) constitutes an agreement for transfer, entitling the purchaser to adopt the stamp duty value (SDV) as on the date of allotment, instead of the SDV prevailing on the date of registration, provided the consideration or part thereof had been paid through banking channels before or on the date of the agreement. In the present case, the assessee had been allotted the property in 2008, paid the entire consideration through instalments between 2008 and 2014, and obtained possession in 2014, though the sale deed was registered only in 2017, when the SDV had increased, leading to an addition under section 56(2)(x). The Tribunal rejected the Revenue’s contention that only a registered agreement could qualify for the benefit of the proviso and held that the statute merely requires an agreement fixing the consideration, coupled with payment through prescribed banking modes. Relying on the Mumbai Tribunal’s decision in Sulochana Saijan Modi v. ITO, it held that an allotment letter is sufficient to be treated as the agreement for sale. Accordingly, the Tribunal directed the Assessing Officer to adopt the SDV as on the date of allotment in 2008, delete the addition based on the 2017 SDV, and allow the benefit of the provisos to section 56(2)(x).
Cases Discussed
- Sulochana Saijan Modi vs. ITO (Mumbai ITAT), [2023] 152 taxmann.com 56 (Mum-Trib.)
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is directed against the order dated 29.12.2025 of the National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as the ‘Ld. CIT(A)’] arising out of the Assessment Order dated 30.03.2023 passed under section 147 r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the Assessment Unit, Income Tax Department, (hereinafter referred to as the ‘AO’) pertaining to Assessment Year (A.Y.) 2018-19.
2. The assessee has raised the following grounds of appeal:
“1. The assessee submits that the learned assessing authority and the Honourable Commissioner of Income tax (Appeals) have passed the impugned order against all the facts and circumstances of the case.
2. The assessee submits that the neither the learned assessing authority and the Appellate Authority has given due weightage to the submissions made in this regard and has drawn conclusions on suspicions and surmises which is not correct in law.
3. The learned assessing authority has not given proper reasons for rejecting the entitlement of the claim of entitlement of the proviso to Section 56 (2) (x) therein.
4. The assessee had produced all the documentary evidences relating to the transaction such as agreements, evidences of bank payments, handing over the property earlier itself in pursuance of this agreement etc which clearly prove that the assessee is right in claiming the option available to him in the proviso to Section 56 (2) (x).
5. The assessee submits that the assessee has claimed the option to use the value related to 2014 itself instead of 2017, as permitted by the provisions of the related section in this regard.
6. The assessee submits that the Honourable Commissioner of Income tax (Appeals) has based his order on the preposition that the related agreement is not registered and hence cannot be considered to entail the assessee to avail the option referred in the proviso to Section 56(2) (x) of the Act.
7. The assessee respectfully submits that the assessee is entitled to exercise the option available to him if
a) There is an agreement entered earlier than the date of registration of the sale deed
AND
b) The payments in pursuance of the said agreement are made by banking channels before the date of registration of the sale deed.
8. The assessee submits that he has given sufficient evidence relating to the above requirements by showing that there was an agreement relating to the transaction as early as 2014 itself and he has also started paying the consideration in regard to the said transaction from 2008 itself as evidenced by the schedule of payments placed before the learned assessing authority and the Appellate Authority as well.
9. The assessee respectfully submits that the contention of the Appellate authority that the agreement should have been registered is not correct, as the reading of the proviso does not place such a restriction and requires only the issues referred in para 7 above, to entitle the assessee to use the option available in the provision to Section 56 (2) (x) of the Act.
10. The assessee submits that he may be given an opportunity of personal hearing in case of any clarifications have to be made in this regard.
11. The assessee prays that he may be allowed to add or withdraw or modib, any of the above grounds in the interest of justice.
In view of the above facts and circumstances and any other grounds that may be adduced in the personal hearing, the assessee prays that Your Honour may be pleased to delete the addition of Rs. 8,60,540/-in the interest of natural justice and oblige. “
3. During the course of hearing, none appeared on behalf of the assessee, nor any application for adjournment was held. Therefore, this case was taken up for hearing on the basis of material available on record and Ld. Sr. DR was heard. Sole substantive issue involved in this appeal pertains to the addition of Rs.8,60,540/- made by the AO by invoking the provisions of section 56(2)(x) of the Act, in respect of property purchased by the assessee while he has claimed benefit of the first and second proviso to the said sub section.
4. Brief facts are that the assessee is a retired Indian Air Force employee who purchased a house in Coimbatore from the Air Force Naval Housing Board (`AFNHB’ in short). The assessee paid the total consideration in instalments commencing from 2008 and the allotment letter and possession certificate was issued to the assessee in October, 2014 upon full payment of the total consideration of Rs.42,70,705/-. However, the registration of the property was done much later on 27.09.2017, on which date, the Stamp Duty Valuation (SDV) of the property was Rs.51,31,245/-. Therefore, the AO proposed to add the difference of Rs.8,60,540/- between the actual consideration and stamp duty valuation under section 56(2)(x) of the Act for which proceedings under section 147 of the Act were initiated.
4.1 Since the possession was taken over by the assessee in 2014 itself, the assessee claimed that proviso to Section 56(2)(x) allows for adoption of the value as on the date of agreement to purchase the property i.e. in 2008. Rejecting the assessee’s contention, the AO made an addition of Rs.8,60,540/- under section 56(2)(x) of the Act.
4.2 Aggrieved, the assessee preferred an appeal before the CIT(A). The assessee’s contentions were rejected by the CIT(A) with the following observations :-
“5.4. Upon detailed examination of the facts, it is observed that while the appellant claims that payments started in 2008, the actual “Deed of Absolute Sale” was executed and registered only on 27/09/2017. The “allotment” mentioned by the appellant as occurring in 2008 was a mere registration for a scheme, and the tentative cost was settled much later.
5.5. The appellant contends that the “agreement” for the purpose of the proviso should be the date of initial allotment or the date of payment of installments. However, for the application of the proviso to Section 56(2)(x), there must be a legally binding agreement that fixes the consideration. In the case of AFNHB, the costs are often “tentative” and subject to revision until the final costing is completed and the sale deed is executed. The Sale Deed itself states: “mutually agreed tentative cost of the dwelling unit for the allotment of Rs. 42,70,705… however, in case final cost worked out by final costing committee at later stage is found more such additional amount will be payable”. This indicates that the consideration was not final or fixed in 2008 or 2014.
5.6. Furthermore, the appellant’s attempt to provide a self-calculated valuation based on 2008 guideline values (Rs. 296 per sq. ft.) and 2014 PWD rates is not acceptable. The statute is clear the reference point for Section 56(2)(x) is the “Stamp Duty Value” (Guideline Value) as determined by the state authorities. An assessee cannot substitute the official Guideline Value with their own calculations or PWD rates unless they follow the procedure of referring the matter to a Valuation Officer under Section 50C(2), which was not pursued here in the requisite manner during assessment.
5.7. The law explicitly uses the Stamp Duty Value at the time of registration unless a specific, fixed agreement exists prior to that date. Since the registration happened in September 2017 (A. Y. 2018-19), the prevailing Stamp Duty Value of Rs. 51,31,245 is the correct legal benchmark. The difference of Rs. 8,60,540 clearly exceeds the statutory threshold and is squarely covered under the charging provisions of Section 56(2)(x).”
5. We have heard the learned DR and perused the material on record. We note that the assessee has purchased the impugned property from the AFNHB. Admittedly, the property was allotted to the assessee in April, 2008 for total purchase consideration of Rs.42,70,705/- which was paid through Banking channels in instalments during 2008-2014. Thereafter, the allotment and possession certificate was issued to him in October, 2014 and the assessee had taken over possession of the property in 2014 itself. Accordingly, the assessee has claimed that benefit of 1st and 2nd proviso to section 56(2)(x) is admissible to him. In this regard, the relevant provision of section 56(2)(x) read as under:
56(2)(x) where any person receives, in any previous year, from any person or persons on or after the 1st day of April, 2017,—
(a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;
(b) any immovable property,—
(A) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;
(B) for a consideration, the stamp duty value of such property as exceeds such consideration, if the amount of such excess is more than the higher of the following amounts, namely:—
(i) the amount of fifty thousand rupees; and
(ii) the amount equal to ten per cent of the consideration:
Provided that 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 taken for the purposes of this sub-clause :
Provided further that the provisions of the first proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof has been paid by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed, on or before the date of agreement for transfer of such immovable property:
Provided also that where the stamp duty value of immovable property is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub-section (15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of this sub-clause as they apply for valuation of capital asset under those sections: Provided also that in case of property being referred to in the second proviso to sub-section (1) of section 43CA, the provisions of sub-item (ii) of item (B) shall have effect as if for the words “ten per cent”, the words “twenty per cent” had been substituted;
In view of above, it is clear that the date of agreement can be adopted for the purpose of this section provided the amount of consideration is paid in full or part via banking channels on or before the date of agreement.
5.1 We further note that in several decisions of the co-ordinate benches, it has been held that the SDV in the year of allotment should be considered provided full or part payment had been made on or before the date of such agreement. Specifically, in Sulochana Saijan Modi vs. ITO [20231 152 taxmann.com 56 (Mum-Trib.), it has been held by the Co-ordinate Bench that the allotment letter can be considered as an agreement for sale for the purposes of section 56(2)(x) of the Act.
5.3 Admittedly, in this case, the property was allotted to the assessee in 2008 by the NFNHB and the assessee has paid the consideration through banking channel in installment paid during 2008 to 2014.
5.4 In view of these facts, we are of the considered view that the assessee is entitled to claim the benefit of the proviso to Section 56(2)(x) of the Act and the SDV on the date of allotment in 2008 has to be adopted instead of the SDV on date of registration in 2017.
5.5 We therefore, hold that the AO was not justified in adopting the SDV as on the date of registration in 2017 and direct him to consider the date of allotment in 2008 as the date of agreement in terms of proviso to section 56(2)(x), and adopt the SDV as on that date.
6. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 24.07.2026
