Akshay Manoj Pagdhare Vs ITO (ITAT Mumbai)
Mumbai ITAT: Registration of Flat Solely for Mortgage Loan Does Not Automatically Attract Section 56(2)(x)
The Mumbai ITAT held that registration of an already allotted under-construction flat solely to create a mortgage in favour of a bank does not, by itself, amount to a fresh receipt of immovable property so as to attract section 56(2)(x). In the present case, the assessee had obtained an allotment letter in October 2016, paid the entire purchase consideration between 2016 and 2017, and acquired valuable rights in the flat at that stage. The agreement was registered only in A.Y. 2020-21 because the lending bank required registration before sanctioning a mortgage loan. The Assessing Officer, however, invoked section 56(2)(x) and taxed the ₹20.98 lakh difference between the purchase price and the stamp duty value.
The Tribunal observed that the deeming provisions of section 56(2)(x) apply only where there is a receipt of immovable property for inadequate consideration. Prima facie, registration undertaken merely to facilitate a mortgage over pre-existing rights does not constitute a fresh acquisition of property. Since the Assessing Officer had not examined the allotment letter, mortgage agreement, loan documents, payment schedule, possession records, and other contemporaneous evidence, the matter was restored for fresh adjudication. The Tribunal directed that if the registration was only incidental to obtaining a mortgage loan and did not result in any fresh receipt or transfer of property, section 56(2)(x) should not be invoked. Accordingly, the appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The instant appeal of the assessee filed against the order of the NFAC, Delhi [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2020-21, date of order 04.04.2025. The impugned order emanated from the order of the Assessment Unit Income Tax Department (for brevity the ‘Ld. AO’) order passed under section 143(3) r.w.s. 144B of the Act date of order 21.09.2022.
