Allotment Letters Backed by Bank Payments Protect Buyers from Tax on Post-Booking SDV Hikes.
1. The “Date of Agreement” vs. “Date of Registration”
The Conflict: The assessee booked a flat in May 2013 for ₹1.03 crores (via an allotment letter). By the time the sale deed was registered in F.Y. 2017-18, the Stamp Duty Value (SDV) had skyrocketed to ₹2.34 crores.
The AO’s Stand: The Assessing Officer compared the 2013 price with the 2017 SDV and added the difference of ₹1.31 crores to the assessee’s income as a “taxable gift.”
The Revenue’s Argument: They argued that the benefit of the old price can only be taken if there is a “formal registered agreement” on the booking date.
The Judicial Verdict (Pro-Assessee):
The Court held that the Proviso to Section 56(2)(x) (inserted by Finance Act, 2017) is meant to protect genuine buyers.
Allotment Letter as Agreement: A formal “Registered Deed” is not mandatory. An allotment letter is sufficient if it fixes the consideration and records key terms like construction timelines and default consequences.
Banking Channel Requirement: As long as at least part of the payment was made via banking channels (cheque/NEFT/RTGS) on or before the date of the agreement (allotment letter), the SDV as of the date of the agreement must be used, not the SDV of the registration date.
2. The “Co-Ownership” Protection
The Conflict: The flat was allotted jointly to the assessee and his wife. However, the AO made the entire addition of ₹1.31 crores solely in the hands of the husband.
The Judicial Verdict (Pro-Assessee):
The Court ruled that the Department cannot ignore the reality of joint ownership.
Proportionate Addition: If there is a taxable difference between the purchase price and the SDV, it must be apportioned among the co-owners based on their share/contribution.
50% Cap: Since the wife was a 50% co-owner, the AO was directed to restrict any potential addition only to the assessee’s proportionate share.
3. Summary of the Remand (AO’s Task)
The matter was sent back (remanded) to the Assessing Officer with strict instructions to:
Identify the Stamp Duty Value as of 08.05.2013 (the allotment date).
Compare that 2013 SDV with the price of ₹1.03 crores.
If any difference remains, attribute only 50% of that difference to the assessee.
Strategic Takeaways for Homebuyers in 2026
Preserve the Allotment Letter: Your 10-year-old booking documents are your best defense against Section 56(2)(x). Ensure they contain terms of sale and payment schedules.
Always Pay the “Booking Amount” via Bank: Never pay the initial booking amount in cash. To avail of the “Date of Agreement” SDV, the law strictly requires the payment to be through banking channels.
Co-Applicant Documentation: If you are buying a property with a spouse or sibling, ensure both names are on the allotment letter and the sale agreement to prevent the tax department from loading the entire tax liability on one person.
SDV Verification: If the SDV on the date of agreement is still higher than your purchase price, you can request the AO to refer the matter to a Valuation Officer under Section 50C(2).
IN THE ITAT MUMBAI BENCH ‘A’
Anand Radhesham
v.
Assessing Officer*
Ms. Kavitha Rajagopal, Judicial Member
and Vikram Singh Yadav, Accountant Member
and Vikram Singh Yadav, Accountant Member
IT Appeal No. 9445 (Mum) of 2025
[Assessment year 2018-19]
[Assessment year 2018-19]
MARCH 30, 2026
Niraj Sheth, AR for the Appellant. Surendra Mohan, Sr. DR for the Respondent.
ORDER
Ms. Kavitha Rajagopal, Judicial Member.- This appeal is filed by the assessee, challenging the order of the Learned Commissioner of Income Tax Appeal, Delhi (‘ld. CIT(A)’ for short), National Faceless Appeal Centre (“NFAC” for short) passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), pertaining to the Assessment Year (‘A.Y.’ for short) 2018-19.
2. The assessee has raised the following grounds of appeal:
| “1 | . The learned Commissioner of Income tax Appeals erred in law and on facts in confirming the addition of Rs.13138500 made by the Assessing Officer under section 56 2 x of the Income tax Act 1961 which is unjustified arbitrary and bad in law. |
| 2. | The learned CIT A failed to properly appreciate the facts evidences and detailed submissions placed on record by the appellant while passing the impugned appellate order. |
| 3. | The addition confirmed by the learned CIT A is contrary to the provisions of section 56 2 x of the Income tax Act 1961 and settled judicial precedents applicable to the facts of the appellants case thereby violating the principles of natural justice and rendering the impugned order unsustainable in law. |
| 4. | Without prejudice to the above grounds the learned CIT A erred in law and on facts in confirming the impugned addition without appreciating that the subject flat was booked and the allotment letter was issued in the year 2013 and that only 50 percent ownership in the said property vested in the appellant the remaining 50 percent being jointly held by his wife Smt Rekha Anand Kanodia Accordingly any addition made in the hands of the appellant for the entire value is excessive unjustified and bad in law. |
| 5. | The appellant denies his liability to the extent of the additions sustained and the consequent levy of tax interest and other statutory charges thereon. |
| 6. | The appellant craves leave to add alter amend or withdraw any of the above grounds of appeal at or before the time of hearing.” |
3. Brief facts of the case are that the assessee is an individual and had filed his return of income dated 01.10.2018 declaring total income at Rs.1,61,590/- and the same was processed u/s 143(1) of the Act. The assessee’s case was selected for limited scrutiny under CASS to verify the issue of investment in “immovable property” and notices u/s 143(2) & 142(1) of the Act were duly issued and served upon the assessee. The Learned Assessing Officer (“Ld. AO” for short) observed that the assessee had purchased an immovable property for a consideration of Rs.1,02,72,000/-, which according to the Ld. AO the stamp duty value of the property was Rs.2,34,10,500/- and after duly considering the assessee’s submission the Ld. AO passed the assessment order dated 08.04.2021 u/s 143(3) r.w.s. 143(3A) r.w.s. 143(3B) of the Act determining the total income at Rs.1,33,90,000/- after making an addition of Rs.1,31,38,500/- towards the difference in the value between the purchase consideration and the stamp value determined by the Ld. AO to be income from other sources u/s 56(2)(x) of the Act.
4. Aggrieved, the assessee was in appeal before the first appellate authority who vide order dated 11.11.2025 upheld the addition made by the Ld. AO rejecting the assessee’s contention that the assessee has received the allotment letter for the property during F.Y. 2013-14.
5. Aggrieved, the assessee is in appeal before us, challenging the order of the Ld. CIT(A).
6. The Learned Authorized Representative (“Ld. AR” for short) for the assessee contended that the assessee has booked the flat during F.Y. 2013-14 and since then payments were made from time to time up to F.Y. 2017-18 and the property was subsequently registered during F.Y. 2017-18 pertaining to A.Y. 2018-19 after completion of the building. The Ld. AR further contended that the 2nd proviso to section 56(2)(x)(b) of the Act would be applicable to the assessee where the stamp duty value has to be ascertained on the date when the agreement fixing the amount of consideration for transfer of the immovable property was entered into and subsequent to which the assessee has made substantial payment towards purchase of the said property. The Ld. AR further contended that the provisions of section 50C and section 43CA of the Act empower the Ld. AO to refer the valuation to the DVO, if in case the assessee has objection to the value determined by the Ld. AO, which in this case was not complied with by the Ld. AO. The Ld. AR without prejudice contended that even otherwise the property was purchased jointly by the assessee and his wife who has also contributed equally for the purchase of the said property and in that case the Ld. AO erred in making the entire addition in the hands of the assessee who was holding only 50% of the share in the immovable property. The Ld. AR relied on a catena of decisions in support of his contention and had filed additional evidences to substantiate the payment made by the assessee’s wife towards purchase of the said property and prayed that the same be admitted in terms of Rule 29 of the Income Tax Appellate Tribunal Rules, 1964 (“the Rules, 1964” for short).
7. The Learned Departmental Representative (“Ld. DR” for short), on the other hand, controverted the said fact and contended that the allotment letter relied upon by the assessee is not akin to that of an agreement and since the assessee did not have a sale agreement executed in F.Y. 2013-14 the lower authorities were right in determining the stamp value on the date of registration of the sale deed. The Ld. DR further stated that even assuming that there is an agreement the same ought to be registered as per section 53A of the Transfer of Property Act failing which it will not come under the purview of “Transfer” as per the provisions of section 2(47)(v) of the Act. The Ld. DR relied on the order of the lower authorities.
8. We have heard the rival contentions and perused the materials available on record. The issue that requires adjudication is whether the assessee has booked the flat in F.Y. 2013-14 as alleged by the assessee and whether or not in the absence of an agreement for sale the assessee can claim the benefit of the proviso to section 50C and section 43CA of the Act. Further, whether the allotment letter determining the consideration for the purchase and the subsequent payments made by the assessee can be treated as an agreement for sale. It is observed that the assessee was allotted a flat promoted by Omkar Realtors and Developers Pvt. Ltd. jointly in favour of him and his wife as per an allotment letter dated 08.05.2013 where the sale consideration was fixed at Rs.1,02,72,000/- which is to be paid by way of instalments which is detailed as below:
| Sr. no. | Description | Installment amount |
| 1. | On initiation of plinth | 19% |
| 2. | On completion of Lower Ground Plinth | 11% |
| 3. | On completion of 4th Lower Ground Slab | 5% |
| 4. | On completion of 3rd Podium floor Slab | 5% |
| 5. | On completion of 2nd Floor Slab | 5.50% |
| 6. | On completion of 6th Floor Slab | 5.50% |
| 7. | On completion of 10th Floor Slab | 5.50% |
| 8. | On completion of 14th Floor Slab | 5.50% |
| 9. | On completion of 18th Floor Slab | 5.50% |
| 10. | On completion of 22nd Floor Slab | 5.50% |
| 11. | On completion of 26th Floor Slab | 5.50% |
| 12 | On completion of 30th Floor Slab | 5.50% |
| 13. | On completion of 34th Floor Slab | 5.50% |
| 14. | On completion of 34th Floor Slab | 5.50% |
| 15 | On Possession | 5% |
9. Subsequent to the commencement of the construction work the assessee had made substantial payments through banking channels which details are summarized at page no.50 of the paper book. The Ld. AR brought our attention to the MOU dated 20/03/2013 between Good Value Financial Services Pvt. Ltd. who was the transferor in this case which in turn had entered into a MOU dated 25.06.2010 with Omkar Realtors and Developers Pvt. Ltd. for investing in an area admeasuring approximately 50,000 sq. ft. of salable area in the project Crescent Bay in tower 1 by Omkar Realtors and Developers Pvt. Ltd., basis which the property purchased by the assessee was booked and part consideration of Rs.45,54,480/- was paid by Good Value Financial Services Pvt. Ltd. to the builder namely Omkar Realtors and Developers Pvt. Ltd. Based on the MOU dated 20.03.2013 Good Value Financial Services Pvt. Ltd. had transferred and assigned the right in the property to the assessee and his wife jointly for a total consideration of Rs.84,10,000/- to be paid in an instalment of Rs.50,44,480/- on or before the execution of the MOU and Rs.33,65,520/- to be paid by the assessee and his wife jointly to Omkar Realtors and Developers Pvt. Ltd. as per the terms and conditions of the original MOU dated 25.06.2010. It was further observed that the 45.54 lakhs paid by Good Value Financial Services Pvt. Ltd. is treated to be the consideration paid by the assessee to the builder for purchasing said property. The Ld. AR brought our attention to the valuation report of the government registered valuer Kanti Kanti Karamsey and co. which had determined the fair market value of the said property to be Rs.1,05,04,600/- as on 01.04.2013.
10. On the above facts of the case, the issue now to be determined is whether the allotment letter given to the assessee by the builder dated 08.05.2013 can be treated as an agreement fixing the amount of consideration for the transfer of immovable property as per the proviso to section 56(2)(x)(b) of the Act. For taking benefit of the provision, wherein a case where the date of agreement and the date of registration are not the same then the stamp duty value on the date of agreement may be taken for the purpose of determining the valuation provided the same shall apply only when the consideration or part consideration has been made by the assessee by any mode other than cash on or before the date of agreement for the transfer of such immovable property. For this purpose, it is pertinent to read through the terms and conditions of the allotment letter dated 08.05.2013 where it is observed that the consideration for the property is fixed at Rs.1,02,72,000/- along with the detailed description of the installment payment to be made in accordance with the different level of completion of construction along with various other conditions running to several pages. This, according to us, satisfies all essential terms and conditions of the sale including parties, property description, consideration, payment schedule, conditions etc. with no iota of doubt that the said allotment letter is akin to a sale agreement. It is not a case where the document is merely a preliminary allotment or a letter of intent granting a right to obtain an immovable property without a conclusive sale terms and conditions. It is not mandatory that there has to be a “formal deed of agreement” registered as alleged by the Revenue for the purpose of claiming the benefit of the proviso to section 56(2)(x) of the Act but merely “an agreement” which fixes the amount of consideration supported by either full or part payment by account payee cheque, account payee bank draft or by any other mode through banking channel is suffice to avail the benefit of the stamp duty valuation as on the date of such agreement. Here, in the present case, the allotment letter records all the key conditions of sale such as the timelines for construction, rights and obligations of buyers and builders, consequences of default or breach etc. to establish the fact that the allotment letter is not a mere tentative offer but reads like a complete sale agreement backed by payments made through banking channel. We also draw support from the decision of the co-ordinate Bench in the case of Sulochana Saijan Modi v. ITO (Mumbai – Trib.) wherein it was held that the stamp duty valuation has to be determined as on date of the allotment letter for the purpose of section 56(2)(x) of the Act thereby treating the allotment letter to be akin to that of an “agreement to sell”. Therefore, we are of the considered opinion that the proviso to section 56(2)(x) of the Act inserted by Finance Act, 2017 is applicable in the present case and deem it fit to restore this issue back to the file of the Ld. AO only to the limited purpose of determining the stamp duty valuation as on date of the allotment letter for the sale consideration recorded in the registered sale deed. We also direct the Ld. AO to determine the stamp duty value of the property of the assessee to the extent of his holding after duly considering the additional evidence filed by the assessee to substantiate the holding of the immovable property jointly by the assessee and his wife Mrs. Rekha Anand Kanodia which is 50% each as alleged by the assessee. Accordingly, the grounds of appeal raised by the assessee are allowed on the above terms.
11. In the result, the appeal filed by the assessee is hereby allowed.