ITAT Mumbai: Stamp Duty Value on Allotment Date Prevails Over Registration Date Under Section 56(2)(x)

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has delivered a significant ruling regarding the applicability of stamp duty valuation under Section 56(2)(x) of the Income Tax Act 1961. In the case of Sarayu Krishna Kamat Vs DCIT, the Tribunal held that when determining the taxability of immovable property, the stamp duty value (SDV) on the date of the allotment letter must be considered, provided that part of the consideration was paid via banking channels prior to the allotment. This ruling sets aside the practice of mechanically adopting the valuation on the date of the registration of the agreement.

Case Background and Facts

The dispute arose during the assessment proceedings for the Assessment Year 2018-19. The assessee, filing in an individual capacity, had jointly purchased a residential flat with her husband. The timeline of the transaction was pivotal to the case:

• Date of Allotment: The flat was booked in the Financial Year (FY) 2016-17, evidenced by an allotment letter issued by the builder, M/s. Tridhhaatu Construction Pvt. Ltd, dated 21.04.2016.
• Date of Registration: The formal agreement for sale was registered significantly later, on 23.08.2017 (falling within FY 2017-18).
• Payment Mode: The assessee made substantial payments towards the purchase consideration through account payee cheques and other banking channels starting from FY 2015-16 and continuing through the allotment period.