Case Law Details
Sanjay Dattatraya Dapodikar Vs ITO (ITAT Pune)
ITAT Pune rules in favor of Sanjay Dattatraya Dapodikar. Section 56(2)(vii)(b) not applicable in 2015, stamp value on 2008 agreement considered.
Where date of agreement for fixing amount of consideration for purchase of a plot of land and date of registration of sale deed were different but assessee, prior to date of agreement, had paid a part of consideration by cheque, provisos to section 56(2)(vii)(b) being fulfilled, stamp value as on date of agreement should be applied for purpose of said section.
First proviso to section 56(2)(vii)(b) of the Act categorically provides that where the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purpose of this provision. Admittedly, the irrevocable PoA was registered in the year 2008 fixing the price of the property at Rs.21.00 lac, even though the actual transfer took place in the year 2015. Prescription of the second proviso is admittedly fulfilled in the instant case in as much as the assessee paid a sum of Rs.1.00 lakh as part payment prior to the date of the Agreement in the year 2008 through banking channel. In view of the foregoing discussion, it is held that the mandate of the main part of section 56(2)(vii)(b) does not apply to the facts of the instant case as it is covered by the first and second provisos in as much as the assessee entered into an agreement fixing the amount of consideration for the purchase of immovable property in the year 2008 but the actual registration took place in 2015 and further the assessee paid a part of the consideration by cheque in the year 2008 before the date of the Agreement. In such circumstances, it is the stamp value on the date of Agreement in the year 2008, which should be applied for the purpose of the sub-clause and not the stamp value as in the year 2015. Stamp value of the property as on the date of agreement in 2008 was Rs.23,75,000/- as has been recorded in para no.4.2 of the assessment order. As such stamp value is obviously less than the actual consideration at Rs.31.00 lakh, I hold that the mandate of the main part of section 56(2)(vii)(b) is not attracted so as to warrant any addition on this score. I, therefore, order to delete the addition of Rs.26.07 lakh.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal by the assessee arises out of the order passed by the CIT(A)-4, Pune on 21-08-2018 in relation to the assessment year 2015-16.
2. Briefly stated, the facts of the case are that the assessee purchased during the year under consideration a plot of land admeasuring about 256.76 sq.mtrs along with TDR/FSI rights of the said plot of land at Mouje Parvati, Sinhgad Road, Pune for a consideration of Rs.31.00 lakh. Stamp value of such plot was Rs.57,07,775/-. Invoking the provisions of section 56(2)(vii)(b), the Assessing Officer (AO) held that the difference between the stamp value of the property purchased as on the date of registration of sale deed and the actual purchase consideration was liable to be considered as income under this section. He, therefore, made an addition of Rs.26,07,775/- (Rs.57,07,775 – Rs.31,00,000) u/s.56(2)(vii)(b). The ld. CIT(A) sustained the addition against which the assessee has come up in appeal before the Tribunal.
3. I have heard both the sides and gone through the relevant material on record. The factual matrix as set out in the assessment order as well, is that the assessee entered into an agreement with Late Shri Dnyaneshwar Dattatraya Shinde, father of the present vendor, Shri Vishal Dnyaneshwar Shinde for purchase of the property on 30-01-2008 at an agreed consideration of Rs.21,00,000/-. At that time, the stamp value of the property was Rs.23,75,000/-. A registered irrevocable Power of attorney was executed on the same date. The assessee paid sum of Rs.1.00 lakh on 08-01-2008 by Cheque No.724537. Out of balance consideration of Rs.20.00 lakh, a sum of Rs.5.00 lakh was to be paid within 3 months from the date of agreement and Rs.15.00 lakh was to be paid upon sanction of TDR by the Pune Municipal Corporation. Shri Dnyaneshwar Dattatraya Shinde passed away before effecting the transfer of the property in favour of the assessee. Since Shri Dnyaneshwar Dattatraya Shinde had passed away after registering an Irrevocable PoA in favour of the assessee in the year 2008, the assessee entered into a fresh agreement with the legal heir of the deceased vendor for purchase of such property. On 09-03-2015, a purchase deed was executed for the said property at a consideration of Rs.31.00 lakh between the assessee and Shri Vishal Dnyaneshwar Shinde s/o. Late Shri Dnyaneshwar Dattatraya Shinde. The sale deed was registered on 11-03-2015. A copy of the registered sale deed dated 11-03-2015 has been placed in the paper book. Clause (9) of the sale deed clearly mentions that : `the Assignor knows about the agreement and Power of Attorney dated 30-01-2008 between the Assignee and Assignor’s father Mr. Dnyaneshwar Dattatraya Shinde’. Thus, it is apparent that the registered sale deed executed on 11-03-2015 is not an altogether a fresh sale deed, but continuation of the registered irrevocable PoA issued in favour of the assessee in 2008. Under such circumstances, a question arises as to whether provisions of section 56(2)(vii)(b) are attracted in this case.
4. In order to appreciate the rival contentions, it would be relevant to reproduce the prescription of section 56(2)(vii)(b) as under : –
` In particular, and without prejudice to the generality of the provisions of sub-section (1), the following incomes, shall be chargeable to income-tax under the head “Income from other sources”, namely :—
…..
(b) any immovable property,—
(i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;
(ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration:
Provided that where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purposes of this sub-clause:
Provided further that the said proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by any mode other than cash on or before the date of the agreement for the transfer of such immovable property;’
5. The case of the assessee is that the section 56(2)(vii)(b) was inserted by the Finance Act, 2013 w.e.f. 01-04-2014 and hence the same should not be applied as the agreement for purchase of property was entered into in the year 2008 and at that time this provision was not in vogue. In my considered opinion, this contention is far-fetched. As the sale deed was actually executed in the year 2015 and at that time the provisions of section 56(2)(vii)(b) were on the statute book, the same are held to be applicable, in principle.
6. The ld. AR raised an alternate contention urging that, if at all, the provisions of section 56(2)(vii)(b) are to be applied, then the same should be considered in entirety in the light of two provisos with the effect that, if the date of agreement fixing the amount of consideration and the actual registration for the transfer of capital asset are not same, then the value should be considered with reference to the date of agreement fixing the amount of consideration of an anterior date and not the stamp value on the date of registration of sale deed. The other proviso provides that such substitution would be allowed only if full consideration or part thereof was received by means of banking channel at the time of execution of the agreement for transfer.
7. In my considered opinion, the contention of the ld. AR deserves to be accepted. First proviso to section 56(2)(vii)(b) of the Act categorically provides that where the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purpose of this provision. Admittedly, the irrevocable PoA was registered in the year 2008 fixing the price of the property at Rs.21.00 lac, even though the actual transfer took place in the year 2015. Prescription of the second proviso is admittedly fulfilled in the instant case in as much as the assessee paid a sum of Rs.1.00 lakh as part payment prior to the date of the Agreement in the year 2008 through banking channel. In view of the foregoing discussion, it is held that the mandate of the main part of section 56(2)(vii)(b) does not apply to the facts of the instant case as it is covered by the first and second provisos in as much as the assessee entered into an agreement fixing the amount of consideration for the purchase of immovable property in the year 2008 but the actual registration took place in 2015 and further the assessee paid a part of the consideration by cheque in the year 2008 before the date of the Agreement. In such circumstances, it is the stamp value on the date of Agreement in the year 2008, which should be applied for the purpose of the sub-clause and not the stamp value as in the year 2015. Stamp value of the property as on the date of agreement in 2008 was Rs.23,75,000/- as has been recorded in para no.4.2 of the assessment order. As such stamp value is obviously less than the actual consideration at Rs.31.00 lakh, I hold that the mandate of the main part of section 56(2)(vii)(b) is not attracted so as to warrant any addition on this score. I, therefore, order to delete the addition of Rs.26.07 lakh.
8. In the result, the appeal is allowed to this extent.
Order pronounced in the Open Court on 30th April, 2019.
