Tushar Ramnath Shetty Vs ITO (ITAT Mumbai)
The assessee challenged the order dated 05/04/2024 passed by the learned CIT(A), National Faceless Appeal Centre, Delhi, for assessment year 2018-19, confirming an addition of Rs. 5,58,000 under section 56(2)(x) of the Income Tax Act, 1961. The addition represented the difference between the purchase consideration and stamp duty value of an immovable property.
The assessee had purchased the property on 19/06/2017 for Rs.90,00,000, whereas the stamp duty value was Rs.95,58,000. The Assessing Officer treated the excess of Rs.5,58,000 as taxable under section 56(2)(x), observing that it exceeded the higher of 5% of the purchase consideration and Rs.50,000. The CIT(A) confirmed the addition.
Before the Tribunal, the assessee challenged the addition and also contended that the difference in value arose on account of the area being wrongly stated in the agreement. The Tribunal noted that, under the amended section 56(2)(x)(b), the tolerance limit had subsequently been increased from 5% to 10% by the Finance Act, 2020 with effect from 01/04/2021.
The Tribunal relied upon the coordinate Bench decision in Sandeep Kumar Poddar v/s ITO, which followed Maria Fernandes Cheryl v/s ITO, and held that the enhancement of the tolerance band from 5% to 10% was clarificatory/curative and had retrospective application. Since the difference in the present case was 5.93% of the consideration, it was below the 10% tolerance limit.
