Stamp Duty Valuation Difference In Purchase of Land By Builder Not Taxable U/S 56 & Entries In Books Not Decisive : Itat Bangalore

Mithun Kerur Vs ITO (ITAT Bangalore)

The Income Tax Appellate Tribunal (ITAT), Bengaluru Bench, has overturned an addition of Rs. 23.33 lakh made against an individual assessee, clarifying the scope of Section 56(2)(vii)(b)(ii) of the Income Tax Act, 1961. The ruling, delivered on May 22, 2025, in ITA No. 151/Bang/2025 for the assessment year 2015-16, underscores that the provision does not apply to transactions where immovable property is acquired as stock-in-trade in the regular course of business.

The case originated from an appeal filed by the assessee against an order passed by the National Faceless Appeal Centre (NFAC), Delhi, dated December 18, 2024. The central dispute revolved around an addition of Rs. 23,33,000/- confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)] under the aforementioned section of the Act.

The Genesis of the Dispute

The assessee, identified as an individual engaged in the real estate business, acquired a parcel of land from a cousin brother during the assessment year 2015-16. The stated consideration for this purchase was Rs. 13,95,000/-. However, the stamp duty valuation of the same land was significantly higher, recorded at Rs. 37,28,000/-. This disparity of Rs. 23,33,000/- became the focal point of the Assessing Officer’s (AO) scrutiny.