Purchase of property below stamp duty valuation : Whether Section 56(2)(vii)(b) Addition by adopting Land Value of Adjacent Area is unjustified?

 1,715 total views

Purchase of property below stamp duty valuation : Whether Section 56(2)(vii)(b) Addition by adopting Land Value of Adjacent Area is unjustified?

 

The stamp Duty Valuation of the Property is fixed by the State Authorities on a broader basis and not on specific basis. It may so happen that a building may have Y valuation if it is considered on the basis of back road basis and may have 3 × Y if considered on the basis of front Road basis.

 

Even the rate of flat in the same apartment scheme may vary significantly om above logic.

 

Question arises as to whether Income Tax Officer can question such rate adoption which is admitted by the Stamp Duty Authorities ?

 

Here was an interesting issue before Chennai ITAT in the case of 

 

Damodaran Jaishankar Vs ITO (ITAT Chennai)

 

I.T.A. No. 2418/Chny/2019.

 

Short Overview of the case :

 

– The issue under consideration is whether the AO is correct in adopting land value of adjacent area, just because the colony is adjacent to a road, which has a higher guideline value is justified in law and in ignoring the specific guideline value fixed by the Government in respect of specific colony or flat?

 

– Chennai ITAT held  that the sale deed is not a subject matter of re-valuation of the Sub-Registrar, nor is there any allegation of low stamp duty in respect of the said property by the Sub-Registrar.

 

– Guideline value listed shows that in respect of Jayanth colony specific guideline value has been fixed by the Government.

 

– The purchase deed shows the specific prescribe value.

 

–  When there is a specific guideline value fixed by the Government in respect of specific colony or flat, just because the said colony or flat is adjacent to a road, which has a higher guideline value, the higher value cannot be adopted for the purpose of making an addition by invoking the provisions of section 56(2)(vii)(b)(ii) of the Act.

 

– This being so, ITAT are of the view that the addition made by the Assessing Officer is unsustainable in so far as the sale deed has been executed at the value as prescribed by the Government in respect of Jayanth colony itself.

 

– This being so, the addition made by the Assessing Officer and confirmed by the ld.CIT(A) stands deleted.

 

– With above logic, ITAT prounounced the case in favor of assessee

Leave a Comment

Your email address will not be published.

the taxtalk

online portal for tax news, update, judgment, article, circular, income tax, gst, notification Simplifying the tax and tax laws is the main motto of the team tax talk, solving