Stamp duty value on date of agreement to be considered when date of agreement and registration is different

Partha Pratim Chakrabarty Vs ITO (ITAT Kolkata)

ITAT Kolkata held that when date of agreement and date of registration are not same, then, stamp duty value on the date of agreement should be considered. Accordingly, since difference is less than 10%, hence addition u/s. 56(2)(vii) unjustified.

Facts- The case of the assessee was selected for scrutiny assessment and a notice u/s. 143(2) was issued. AO found that the assessee has purchased a flat whose sale deed was got registered for a sum of Rs.81,71,000/-, whereas Stamp Duty Valuation Authority have determined the value of the property for the purpose of charging the Stamp Duty at Rs. 1,16,12,200/-. AO made the addition, though he made a reference to the DVO for determining fair market value as contemplated in the 3^rd proviso to section 56(2)(vii) of the Income Tax Act. AO further observed that as and when he will get the DVO’s report, he will make the necessary changes u/s. 154 of the Income Tax Act.

CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.

Conclusion- Held that the 1^st proviso appended to section 56(2)(vii) would contemplate that where 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 purpose of this sub-clause. Both the revenue authorities have miserably failed to appreciate that Stamp Duty Valuation as on 08.10.2014 are to be considered for working out any deemed gift in the hands of the assessee and not the date on which sale deed was registered. The assessee has further filed copy of this Valuation Report obtained by him under RTI and the valuer has only determined the fair market value of the property at Rs.89,48,290/-. This aspect ought to have been entertained by the ld. CIT(Appeals). He should have made sure whether DVO’s report has been received or not. He should have not merely upheld the assessment order. The ld. 1^st Appellate Authority has miserably failed to exercise its appellate jurisdiction in the present case. We find that the value declared by the assessee was to be determined on the date of agreement when first instalment was paid, i.e. 08.10.2014 and if that date be considered, then certainly Stamp Duty must be on the lower side because fair market value determined by the DVO has only variation of less than 10%, which otherwise not required to be adopted.