Allotment letters should be considered as ‘agreement to sell’ for section 56(2)(x)

Sulochana Saijan Modi Vs ITO (ITAT Mumbai)

ITAT Mumbai held that allotment letters issued for purchase of flat should be considered as ‘Agreement to sell’ for the purpose of section 56(2)(x) of the Income Tax Act.

Facts- The case was selected for limited scrutiny for examining the reasons for stamp duty valuation of property being higher than the transaction value. The statutory notices under the Income Tax Act, 1961 (“the Act”), were issued to the assessee and complied with. In the assessment completed u/s 143(3) of the Act, the Assessing Officer (“AO”) added the difference in value of the property between the stamp duty valuation and the transaction value, in terms of section 56(2)(x)(b) of the Act, amounting to Rs.57,85,300/-.

Ld.CIT(A) upheld the addition made by the AO. Being aggrieved, the present appeal is filed.

Conclusion- Under the proviso if prior to registration of the property , the assessee has entered into purchase agreement fixing the amount of consideration and also partly paid the amount of consideration by way of account payee cheque/draft etc, then for the purpose of section 56(2)(x) of the Act, the stamp duty value as on the date of the agreement may be taken for the purpose of the working out deemed sale consideration.

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