Rajib Rathindra Saha Vs ITO (IT)-4(2)(1) (ITAT Mumbai)
Summary: The Mumbai ITAT partly allowed Rajib Rathindra Saha’s appeal and deleted an addition of Rs.18,53,457/- made under section 56(2)(vii)(b)(ii) of the Income Tax Act, 1961. The assessee had purchased Flat No.1104 in Zircon Building, a project of Nirmal LifeStyle, for Rs.68,45,550/-. Earnest money was paid on 16/04/2010, stamp duty was paid on 18/03/2013, the agreement was executed on 31/03/2013, and the agreement was subsequently registered on 02/04/2014. At the time of registration, the stamp duty value was Rs.87,02,007/-. The Assessing Officer treated the difference of Rs.18,53,457/- between the consideration and stamp duty value as taxable under section 56(2)(vii)(b)(ii).
The assessee contended that the relevant agreement had already been executed on 31/03/2013 and stamp duty had been paid on 18/03/2013. Therefore, the amendment to section 56(2)(vii)(b)(ii) made by the Finance Act, 2013 could not be applied merely because registration took place subsequently. Reliance was placed on Bajrang Lal Naredi Vs ITO, ITA No.327/RAN/2018, decided on 20/01/2020. The assessee alternatively argued that if valuation by the DVO was required, the relevant date should be 16/04/2010, when earnest money was paid, rather than 31/03/2013.
The Tribunal noted that section 56(2)(vii)(b) was amended by the Finance Act, 2013 with effect from 01/04/2014, i.e. from Assessment Year 2014-15. Before the amendment there was no provision under section 56(2)(vii)(b) for making an addition merely because consideration paid for immovable property was lower than its stamp duty value. In the present case, however, the agreement had been executed on 31/03/2013, falling in Assessment Year 2013-14. The Tribunal therefore held that the provisions applicable to Assessment Year 2013-14 governed the transaction.
