Asha Vijay Vs ITO (ITAT Kolkata)
This case analysis focuses on the ITAT Kolkata order in the case of Asha Vijay Vs ITO. The main issue in this case is whether a sum of Rs. 9,74,950/- should be added to the assessee’s income under Section 56(2)(vii)(b) of the Income Tax Act. The ITAT examines whether the difference between the valuation for stamp duty purposes and the purchase cost disclosed by the assessee in the deed should be deemed as income. The key contention revolves around the applicability of Section 56(2)(vii)(b) to transfers that occurred before the accounting year 2014-15.
Analysis: The assessee, Asha Vijay, filed her return of income for AY 2015-16, disclosing a total income of Rs. 5,48,510/-. The Assessing Officer (AO) initiated scrutiny assessment and determined that the difference between the sale value disclosed in the sale deed and the value determined by the Stamp Duty Valuation Authority should be treated as deemed gift under Section 56(2)(vii) of the Act.
The appeal to the Commissioner of Income Tax (Appeals) did not provide relief to the assessee. However, before the ITAT, the assessee argued that the possession of the property was taken prior to the accounting year 2014-15, and therefore, the provisions of Section 56(2)(vii)(b) should not be applicable.
The ITAT referred to a judgment of the Allahabad High Court in the case of CIT vs. Shimbhu Mehra, which held that possession of a property constitutes transfer for the purposes of the Income Tax Act. In the present case, the assessee had taken possession of the property on 09.01.2013, which was prior to the accounting year 2014-15. Therefore, if the transfer was deemed to have taken place before 2014-15, no income could be deemed on account of the lower purchase price.
The ITAT also referred to a decision of the ITAT Ranchi Bench in the case of Bajrang Lal Naredi vs. ITO, which supported the view that the pre-amended provisions of Section 56(2)(vii)(b) would apply to transactions executed before the accounting year 2014-15.
Based on these precedents and the facts of the case, the ITAT held in favor of the assessee and deleted the addition made under Section 56(2)(vii)(b) of the Act.
Conclusion: The ITAT Kolkata order in the case of Asha Vijay Vs ITO highlights the inapplicability of Section 56(2)(vii)(b) to transfers that took place before the accounting year 2014-15. The ITAT ruled in favor of the assessee, deleting the addition made under Section 56(2)(vii)(b) of the Income Tax Act. This analysis underscores the significance of the timing of transfers in determining the applicability of relevant tax provisions.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals)- National Faceless Appeal Centre (NFAC), Delhi [in short ‘ld. CIT(A)’] dated 02.03.2023 passed for assessment year 20 15-16. The assessee has taken two grounds of appeal. However, her grievance relates to a solitary issue namely, whether a sum of Rs. 9,74,950/- deserves to be added in her hand u/s 56(2)(vii) of the Income Tax Act, 1961 (in short the ‘Act’) on the ground that difference between the valuation (for the stamp duty purpose) vis-à-vis purchase cost disclosed by the assessee in the deed deserves to be deemed as income of the assessee or not.
2. The brief facts of the case are that the assessee has filed her return of income on 19.01.2016 for AY 2015- 16. She disclosed a total income of Rs. 5,48,510/-. The case of the assessee was selected for scrutiny assessment and a notice u/s 143(2) of the Act was issued and served upon the assessee. The Assessing Officer (in short ld. ‘AO’) found that the assessee has purchased a flat from Pansari Developers Pvt. Ltd. at “Purti Flower”, Unit No. 1 1E, Type-Standard containing a total built-up area of 860 square feet (Super built-up area of 1147 square feet). The initial booking was done in 2010 and all payments were made up to in 2013. The developer has delivered possession to the assessee. The sale deed has been executed in the accounting year relevant to AY 2015-16. Ld. AO construed the difference between the sale value disclosed in the sale deed vis-à-vis determined by the Stamp Duty Valuation Authority as deemed gift in the hands of the assessee and brought it to tax u/s 56(2)(vii) of the Act.
3. The appeal to ld. CIT(A) did not bring any relief to the
4. Before us, ld. Counsel for the assessee has placed on record certain dates and events in a tabulated form which read as under:
