ITAT Mumbai Recognises Allotment Date for Stamp Duty Valuation in Property Purchase Case

Allotment Letter Held Relevant for Section 56(2)(x) Computation

The Mumbai Bench of the Income Tax Appellate Tribunal granted substantive relief to Ms. Cherie Tandon Saldahna in a dispute arising from addition made under Section 56(2)(x) of the Income Tax Act for Assessment Year 2018–19. The Assessing Officer had treated the difference between the purchase price of a residential flat and its stamp duty valuation as taxable income from other sources, resulting in an addition of approximately ₹1.14 crore. The valuation was taken as on the date of registration in June 2017, when the stamp duty value had significantly appreciated. The assessee contended that the property was originally allotted in May 2011 through a formal allotment letter, and the entire consideration had been paid through banking channels long before execution of the sale deed. It was argued that in view of the provisos to Section 56(2)(x), the stamp duty value applicable on the date of agreement should govern the tax computation where consideration is paid prior to registration.

Tribunal Restores Matter for Verification and Grants Relief

Accepting the legal position advanced by the assessee, the Tribunal held that the allotment letter constituted a valid agreement to sell for the purposes of Section 56(2)(x). It observed that where payment conditions prescribed under the provisos are satisfied, the relevant stamp duty value must be taken as on the date of allotment and not the date of registration.

Accordingly, the matter was remanded to the Assessing Officer for limited verification of payment details, with directions to recompute the addition by applying the stamp duty value prevailing in May 2011. The appeal was thus allowed for statistical purposes, reaffirming the importance of agreement dates in property taxation disputes.