Dharmesh Ramesh Jhaveri Vs ACIT (ITAT Mumbai)
Income Tax Appellate Tribunal (ITAT) Mumbai ruled in favor of Dharmesh Ramesh Jhaveri regarding the addition of ₹50.06 lakh under Section 56(2)(vii)(b)(ii) of the Income Tax Act for Assessment Year 2017-18. The Assessing Officer (AO) had added the difference between the flat’s stamp duty value at registration and the purchase price to Jhaveri’s income, arguing that the stamp duty value on the registration date should apply. Jhaveri contended that the stamp duty value as of the flat’s allotment date in 2010, when the advance payment was made, was lower than the purchase price and should be considered under the proviso to Section 56(2)(vii)(b)(ii). The AO and Commissioner of Income Tax (Appeals) [CIT(A)] disagreed, stating the allotment letter did not qualify as an agreement under the section.
ITAT Mumbai, referencing prior decisions, clarified that the allotment letter constitutes an agreement under the proviso to Section 56(2)(vii)(b). The tribunal noted that the stamp duty value at the allotment date was below the purchase price, making the addition unwarranted. Consequently, ITAT set aside the CIT(A)’s decision and directed the AO to delete the addition. The ruling underscores the significance of the allotment date for determining stamp duty value in such cases.
