Addition Under Section 56(2)(vii)(b) Sustained as Earlier Agreement Failed Consideration and Advance Payment Conditions

By | September 23, 2026
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Addition Under Section 56(2)(vii)(b) Sustained as Earlier Agreement Failed Consideration and Advance Payment Conditions

Issue

Whether a non-resident assessee is entitled to adopt the lower stamp-duty value as on the date of an earlier booking agreement rather than the date of the registered sale deed under the provisos to Section 56(2)(vii)(b), where the final consideration was fixed by a new 2016 agreement and no part of the consideration was paid via non-cash modes prior to the 2016 agreement date.

Facts

  • Property Purchase: The assessee, a non-resident individual, purchased a flat in a redeveloped building via a registered sale deed executed in 2016 (AY 2017-18) for a declared consideration of ₹97.65 lakhs.
  • Stamp Value Discrepancy: The prevailing stamp-duty valuation of the property as on the date of execution was ₹1.31 crores, creating a variance of ₹33.10 lakhs.
  • Addition by AO: The Assessing Officer invoked Section 56(2)(vii)(b) of the Income-tax Act, 1961, and added the differential sum of ₹33.10 lakhs to the assessee’s total income under the head “Income from Other Sources.”
  • Assessee’s Claim: The assessee claimed protection under the provisos to Section 56(2)(vii)(b), seeking to adopt the stamp-duty value prevailing on the date of an earlier booking/agreement entered into decades prior with a different builder.
  • Lapses Identified: The 2016 agreement explicitly fixed the fresh consideration at ₹97.65 lakhs for the redeveloped flat, and the assessee failed to prove that any part of this consideration was paid by banking/non-cash channels on or before the 2016 agreement date.

Decision

  • Earlier Agreement Inapplicable: The tribunal/court held that the decades-old agreement with a different builder could not be treated as the agreement fixing the consideration for the transfer that ultimately materialized under the 2016 sale deed [Paras 6.3, 6.7].
  • Statutory Proviso Conditions Unfulfilled: Since the assessee failed to demonstrate advance payment of consideration via specified non-cash modes prior to the agreement date, the statutory criteria set out in the provisos to Section 56(2)(vii)(b) were not satisfied [Paras 6.8, 6.9].
  • Addition Sustained: Consequently, the assessee was denied the benefit of adopting the historical stamp-duty value, and the addition of ₹33.10 lakhs as Income from Other Sources was sustained in favour of the Revenue [Para 6.10].

Key Takeaways

  • Strict Construction of Provisos: To claim the benefit of adopting the stamp-duty value as on the agreement date under Section 56(2)(vii)(b) [or Section 92 of the Income-tax Act, 2025], the consideration must be explicitly fixed by that specific agreement for the transfer.
  • Mandatory Non-Cash Advance Payment: The benefit is strictly conditional upon paying at least part of the consideration by account payee cheque, bank draft, or electronic clearing system on or before the date of the agreement fixing the consideration.
  • Impact of Fresh Agreements: Replacing an old booking arrangement with a fresh registered agreement fixing new consideration resets the evaluation date for stamp-duty valuation purposes to the date of the new transaction.
IN THE ITAT MUMBAI BENCH ‘SMC’
June Alice Fernandes
v.
Income-tax Officer
ANIKESH BANERJEE, Judicial Member
and Om Prakash Kant, Accountant Member
IT Appeal No. 4071 (MUM) of 2026
[Assessment year 2017-18]
AUGUST  31, 2026
Manoj P. Shah, CA for the Appellant. Ms Kanupriya Damor, Sr. AR for the Respondent.
ORDER
Om Prakash Kant, Accountant Member.- This appeal by the assessee is directed against the order dated 12.02.2026 passed by the learned Commissioner of Income-tax (Appeals)-56, Mumbai [in short the learned CIT(A)] for Assessment Year 2017-18, raising following grounds:-
“1. On the facts and circumstances of the case and in law, the Learned Assessing Officer (the AO) erred in making and the Learned Commissioner of Income tax (Appeals) (the CIT(A)) erred in confirming the income of the Appellant at INR 33,10,000/- against the returned Income of Rs. 2,15,320/-.
2. On the facts and circumstances of the case and in law, the Learned AO erred in making and the Learned CIT(A) erred in confirming the adjustment of Rs. 33,10,000/- as income from other sources under Section 56(2)(vii)(b).
3. On the facts and circumstances of the case and in law, the Learned AO erred in making and the Learned CIT(A) erred in confirming the addition being the difference between the amount paid by the Assessee and the treating the stamp duty valuation of the property as fair market value.
4. On the facts and circumstances of the case and in law, the Learned AO erred in making and the Learned CIT(A) erred in not giving the effect to the first proviso to Section 56(2) (vii)(b) of the Income Tax Act, 1961. The Learned AO should have considered stamp duty valuation on the date of first booking of flat and payment made by the assessee in the Financial Year 1986-87. The Purchase of Flat and Payment was made by the Assessee in the Financial Year 1986-87. However the same was not registered due to certain dispute between the builder and the concerned parties which was finally registered in the Financial Year 2016-17 relevant to Assessment Year 2017-18, the Assessment Year under appeal.
5. The Learned Assessing Officer has erred in not considering the explanation and reason of the assessee for the difference between the value of agreement and stamp duty valuation.
6. On the facts and circumstances of the case and in law, the Learned AO erred in charging the interest under sections 234A and 234B of the Income Tax Act 1961.
7. On the facts and circumstances of the case and in law, the Learned AO erred in initiating the penalty proceedings under section 274 read with section 270A of the Income Tax Act 1961.”
2. Briefly stated, the assessee, a non-resident individual, filed her return of income for the year under consideration on 30.07.2017 declaring total income of Rs.2,15,320/-. The assessment was subsequently reopened under section 147 of the Income-tax Act, 1961 (“the Act”) and notice under section 148 was issued on 29.07.2022. But no return of income in response was filed by the assessee.
2.1 During the reassessment proceedings, the Assessing Officer noticed that the assessee had acquired Flat No. 504 in “DLH Dream Tower” from a Builder/Developer namely M/s Dev Land and Housing Pvt. Ltd. The registered sale deed dated 05.10.2016 recorded the consideration at Rs.97,65,000/-, whereas the stamp-duty valuation was Rs.1,30,75,000/-. The Assessing Officer accordingly was of the view that the difference of Rs.33,10,000/- was taxable under section 56(2)(vii)(b) of the Act in the hands of the assessee. It was submitted that some times in June 2014, the said builder sold the plot of land to M/s Dev Land and Housing Private Limited together with sold flats members’ rights. It was further submitted that assessee purchased the current Flat No. 504 in consideration of the old booked flat and paid additional amount of Rs.97,65,000/- to the new builder. It was submitted that Assessing Officer while passing the order under Section 148A(d) stated that by applying the ratio laid down by the coordinate bench of the Tribunal in the case of Sujauddin Kasim Syed (supra), the date mentioned in the letter of allotment could not be considered as date of agreement, and thus the benefit as provided by the legislature in case where there was a difference between the date of agreement and execution of deed, was not available in the instant case.
2.2 The assessee filed reply to the show cause notice issued by the Assessing Officer. The assessee filed a letter dated 22.05.2023 wherein he attached the letter issued by the R.S. Desai Builder and Developers dated 24.04.1990 (AO- page 4) and 06.06.1990 (AO-page 5) indicating that assessee had purchased a Flat No.5 in Wing A on second floor of the building, namely Desai Villa, and said builder had no objection for obtaining loan by the assessee and lien of the bank on the said property. Further the assessee also filed a letter of possession dated 1/10/1998 (AO-page-6) issued by Builder RS Desai that Flat no. A-3 I Desai villa was ready for possession and the builder requested the assessee to take possession of said flat against full and final payment. The letter reads that the builder informed the assessee that after 1/10/1998, responsibility of paying municipal taxes was on the assessee. The assessee also filed a copy of allotment letter undated (AO-page 7), wherein the Flat Number was mentioned as Flat No.4 on the second floor was allotted to the assessee by the builder R.S. Desai Builder and Developer.
2.3 The Assessing Officer, however, found discrepancies in the particulars of the flat appearing in some of the documents and was of the view that the 2016 agreement constituted an independent and fresh transaction. He further observed that the agreement dated 05.10.2016 did not specifically state that the amount allegedly paid to the erstwhile builder was to be adjusted against the consideration of Flat No.504. The addition of Rs.33,10,000/- was accordingly made under section 56(2)(vii)(b) of the Act. The relevant observation of the learned Assessing Officer is reproduced as under:
“7 . On perusal of reply and evidence uploaded by the assessee that there is contradiction in submission filed by the assessee and documents submitted in support of that. The same is summarized as under
1. The assessee as per submission stated that she had booked a flat in year 1988 with a builder named Ramakant Sitaram Desai having flat no. A-5 for a consideration of Rs. 2,42,000/-, in support of that she has uploaded a certificate of allotment and a copy of commencement certificate issued by the Builder itself. On perusal of the documentary evidences uploaded by the assessee, it is clear that the commencement certificate is not issued by the competent authority.
2. Further, there is contradiction in the flat numbers i.e. in some places flat no. is mentioned 5, in A Wing on 2nd floor whereas in the letter of possession issued by the builder dated 1st October, 1998 flat no. is mentioned as A-3 on 2nd Floor, it is also seen from the receipt uploaded by the assessee dated 2006-1991, again the flat no. is mentioned as 6A, 11th Floor. Hence, the document uploaded by the assessee is not reliable to justify the contention of the assessee.
7.1 Therefore, the contention of the assessee in the light of the above documentary evidence is not acceptable. On perusal of the evidences it is noticed that the assessee had entered into an agreement for purchase of flat with Shri Ramakant S. Desal in year 1988 but the residential premise was not completed by Mr. Desai therefore the agreement for the flat never comes in existence. The agreement dated 05-10-2016 is altogether new agreement for flat no. 504 with Dev Land and Housing Pvt. Ltd. for a consideration of Rs. 97,65,000/- and it is also pertinent to mention here that nowhere in the agreement dated 05-10-2016, it is mentioned that the old payment made to Mr. Desai will be adjusted against the Flat No. 504.
7.2 The actual consideration of the property the assessee has paid is Rs. 97,65,000/- and the stamp duty value is Rs. 1,30,75,000/-, hence there is a difference of Rs. 33,10,000/- in both the values which is required to be added as per the provisions of section 56(2)(vii)(b) of the I.T.Act, 1961 which is as under:

56 Income from other sources.

(2) 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

(vii) where an individual or a Hindu undivided family receives, in any previous year, from any or after the 1st day of October, 2009 but before the 1st day of April, person or persons 2017-

(a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;

(b) any immovable property.-

(1) 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;

7.3 Therefore, as per the information, the difference amount of the actual consideration value of the flat i.e. Rs. Rs. 97,65,000/-and the stamp value of the of the flat is Rs. 1,30, 75,000/- of Rs. 33,10,000/- is hereby added to the total income of the assessee as per the provisions of section 56(2) (vii(b) of the Act, 1961.

(Addition: Rs. 33,10,000/-)

Penalty u/s 270A is initiated for under-reporting of income.”

3. The learned CIT(A) affirmed the action of the Assessing Officer. He observed, inter alia, that although the 2016 agreement referred to the earlier booking, the assessee had not conclusively established the payment of Rs.2,42,000/- under the earlier arrangement and that the documents contained discrepancies regarding the flat number. He further held that the proviso to section 56(2)(vii)(b) could not be invoked since the relevant agreement was dated 05.10.2016 and there was no evidence that any part of the consideration under that agreement had been paid before that date through a mode other than cash. The relevant finding of ld CIT(A) is reproduced as under:
4.1 I have carefully considered the assessment order, the reasons recorded for reopening, the submissions filed by the appellant and the material placed on record. The issue involved in the present appeal is whether the Assessing Officer was justified in invoking the provisions of section 56(2)(vii)(b) of the Act and in making addition of Rs.33,10,000/- being the difference between the stamp duty value of the property and the consideration shown in the agreement dated 05.10.2016.
4.2 It is an undisputed fact that the property was registered on 05.10.2016for a consideration of Rs.97,65,000/- and that the stamp duty value adopted by the Stamp Valuation Authority was Rs.1,30,75,000/-. The difference of Rs.33,10,000/- has been brought to tax by the AO under section 56(2)(vii) (b) of the Act.
4.3 The principal contention of the appellant is that she had originally booked a flat in the year 1988 with the erstwhile builder for Rs.2,42,000/- and that the new developer honoured the earlier commitment and adjusted the old payment while executing the fresh agreement in 2016. It has been argued that the transaction is a continuation of the earlier booking and therefore the provisions of section 56(2)(vii)(b) should not apply.
4.4 On perusal of the material on record, it is observed that the agreement dated 05.10.2016 executed with M/s Dev Land and Housing Pvt. Ltd. is an independent and fresh agreement for Flat No. 504 and it merely mentions that the appellant had entered into an agreement for purchase of Flat No. A-5 in the same building with Mr. Sitaram S Desai for a lumpsum consideration for Rs, 2,42,000/- vide agreement entered into and executed in 1988. However, on perusal of the agreement filed by the appellant it is seen that the said agreement is dated 31/12/1991 and as per the agreement the first payment of Rs. 36,300/- was to be made by appellant on 16th May 1991 and remaining payments of the builder achieving certain completion goals. As per the page 2 and 3 of the Agreement to Sale between appellant and Dev Land and Housing Private Ltd. dated 05.10.2016, it is clearly mentioned that Mr. Ramakant Desai had commenced the construction work and constructed one building comprising of ground plus six floors and the said building consisting of 29 premises were lawfully possessed and occupied by their respective purchasers. The Society formed by these 29 members was later transferred the ownership of land and building by Deed of Conveyance dated 10th June 2014 between the builder and developer Mr. Ramakant Desai and New Desai Villa Co-operative Housing Society Ltd. The said society, consisting of all 29 members, has entered into a redevelopment agreement dated 30th December, 2014 for redevelopment of the land and building standing on it, owned by the society. The facts involved clearly show that it is a clear case of redevelopment of property. However, in the case of the appellant the appellan has failed to show the details and evidences of how the claimed payment of Rs. 2,42,000/- for the purchase of flat from Mr. Ramakant Desai was made. Further, there are lost of discrepancies, as brought out clearly in the assessment order with regards to the flat number allotted in the agreement entered with Mr. Ramakant Desai. Further, nowhere in the said agreement is there any specific recital that the earlier payment made to Mr. Ramakant S. Desai in 1988 or subsequently was adjusted against the consideration payable under the new agreement. Further, the documents produced in support of the 1988 transaction contain inconsistencies in flat numbers and other particulars, as rightly pointed out by the AO. The so-called commencement certificate is not shown to have been issued by a competent authority and the documentary trail establishing continuity of rights from the earlier builder to the new developer has not been conclusively demonstrated.
4.5 Even assuming that certain payments were made in 1988 and thereafter, the fact remains that the transfer of immovable property, for the purpose of section 56(2)(vii)(b), took place pursuant to the registered agreement dated 05.10.2016. The consideration for such transfer, as evidenced by the registered document, is Rs.97,65,000/-. The stamp duty value as on the date of registration is Rs. 1,30,75,000/-. The provisions of section 56(2)(vii)(b) are clearly attracted where an individual purchases immovable property for a consideration which is less than the stamp duty value by an amount exceeding the prescribed threshold.
4.6 The appellant has relied upon the second proviso to section 56(2)(vii)(b) relating to cases where consideration or part thereof has been paid by non-cash modes on or before the date of agreement. However, in the present case, the relevant agreement for transfer is dated 05.10.2016 and no evidence has been brought on record to show that any part of the consideration under this agreement was paid prior to the date of agreement in the manner contemplated under the proviso so as to warrant adoption of stamp duty value as on an earlier date. The payments allegedly made in 1988 or thereafter were in relation to a separate and incomplete project and cannot automatically be treated as consideration under the 2016 agreement in the absence of specific contractual linkage duly evidenced in the registered document.
4.7 The legislative intent behind section 56(2)(vii)(b) is to tax the benefit arising to the purchaser where immovable property is acquired for a consideration substantially lower than the stamp duty value. In the instant case, the difference of Rs.33,10,000/-is substantial and exceeds the permissible variation. The AO has correctly computed the difference between the stamp duty value and the consideration shown in the registered agreement and brought the same to tax.
4.8 The reopening of the assessment was based on specific information received from the Sub-Registrar Office regarding possible applicability of section 56(2)(vii). The reasons recorded demonstrate tangible material and a live nexus with formation of belief that income chargeable to tax had escaped assessment. Therefore, the reopening is also held to be valid.
4.9 In view of the above discussion, I am of the considered opinion that the Assessing Officer was justified in invoking the provisions of section 56(2)(vii)(b) of the Act and in making addition of Rs.33,10,000/- to the total income of the assessee. “
4. Before us, the learned counsel for the assessee filed a paper book containing pages 1 to 157 and submitted that the authorities below had considered the 2016 agreement in isolation. According to him, the agreement itself records the entire historical background of the original booking and specifically provides that Flat No.504 was being allotted “in lieu of the said Booked Flat”. It was, therefore, submitted that the transaction represented a continuation and settlement of the assessee’s preexisting rights and could not be treated as a fresh acquisition made only in 2016. It was submitted that stamp duty valuation is higher due to escalation in the price of the property during the last 25 years of the booking of the flat and actual registration of the agreement. Accordingly, the learned counsel submitted that the assessee is eligible to the benefit of the proviso to section 56(2)(vii)(b) for considering the stamp duty value on the date of the agreement. The learned counsel relied on the decision of the coordinate bench of the Tribunal in the case of Purvi Nihal Shah v. ITO   (Mumbai – Trib.)/ITA No. 470/MUM/2026 dated 22nd June 2026.
5. The learned Departmental learned DR on the other hand submitted that the old developer was not a party to the 2016 agreement and that the assessee had not established any contractual adjustment or set-off of the alleged payment made to the erstwhile developer against the consideration payable to the new developer. The learned DR also submitted that the assessee has not brought the fact on the record properly. He submitted that the old builder had already constructed flats, and a society was formed, and entire possession of the land along with flats was handed over to the society, and thereafter, it is the society which entered into redevelopment of said plot of land with the new builder, M/s Dev Land & Housing Private Limited and the assessee has merely purchased a flat from the new builder, whereas a reference has been made to the booking of flat by the assessee with the old builder in the agreement. The Assessee in the registered agreement dated 06.10.2016 has given undertaking that he would not take any legal action against the old builder for the booking of the flat but the old developer is not party to this agreement. This undertaking might have been written in the agreement by the assessee for convenience of assessee and which is not a evidence that old agreement has continued while entering into deed dated 06.10.2016. The ld Dr submitted that therefore, assessee is not entitled for the benefit of the proviso to section 56(2)(vii)(b).
6. We have heard rival submissions of the parties and perused the relevant material on record. The sole issue in dispute in the case of the assessee is whether the assessee is entitled to the benefit of proviso to section 56(2)(vii)(b), according to which, if the assessee has entered into an agreement for purchase of the property prior to the registration and made payment at the time of agreement, then the stamp duty value on the date of the agreement should be considered for the purpose of section 56(2)(vii)(b) of the Act. For ready reference, said provision is reproduced as under:
“(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:
Proviso first and second to be reproduced
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;”
6.1 The question is not merely whether the assessee had booked a flat with the erstwhile developer in the distant past, but whether, having regard to the terms of the subsequent registered sale deed and the statutory proviso, the stamp-duty value prevailing on the date of the earlier agreement can be substituted for the value prevailing on the date of the 2016 agreement for the purposes of section 56(2)(vii)(b).
6.2 But in the instant case, on perusal of the paper book filed by the assessee, it is seen that initially, the assessee was allotted flat by the builder R.S. Desai Builder & Developer. An agreement in this respect entered on 17.05.1995 is placed on paper book pages 73 to 115. The agreement entered with the new builder M/s DLHS Dreams Tower is placed on paper book pages 116 to 156. The said agreement has mentioned the entire background of the development of flats by old builder and then formation of the society and handing over the entire right to the building by the old builder to society and thereafter the new developer entered into redevelopment of the said property. The agreement of 2016 clearly brought on record that new developer entered into agreement for redevelopment of society and not entered into any agreement with old developer. The letter of possession available on AO page -6 clearly indicates that the assessee was given flat by the old developer, though possibly the assessee might not have accepted and went into dispute with him. The sub-clause (j) of agreement of 2016, it is mentioned that developer agreed to provide a new Flat No.504 on 7th floor for a total consideration of Rs.97,65,000/- in lieu of the said booked flat and towards the full and final settlement of liability, dues and entitlement under the said agreement to the purchaser on the terms and conditions hereinafter. The relevant clause of the agreement is reproduced as under:
WHEREAS:
(A) As per Agreements dated 28th June, 1986 and 31st July, 1987, one Mr. Ramakant S. Desai, the sole proprietor of M/s. R. S. Desai Builders, hereinafter referred to as the said “DESAI”, had purchased freehold pieces and parcels of the land situate, lying and being at Village: Amboli, Taluka: Andheri, District Mumbai Suburban bearing City Survey nos.394, 394/1 to 12, 407 and 408 collectively and jointly admeasuring or equivalent to 1680.10 Square Meters or about equivalent to 18084.60 Square Feet (hereinafter referred to as the said “PLOT”) from Mr. Hubert D’Mello and others and Mrs. Philomena Luisa D’Mello and others respectively at and for the consideration, terms and conditions as stipulated therein.
(B) Mr. Ramakant Sitaram Desai commenced the construction work on the said Plot in 1989 however; due to some reason the Desai was unable to complete the construction work on the said Plot. The said Desai constructed only one building comprising of Ground plus 6 (Six) upper floors for commercial and residential purposes (hereinafter referred to as said “BUILDING”) standing on the said Plot. The said Plot and the said Building hereinafter jointly and collectively referred to as the said “PROPERTY”).
(C) An agreement was entered and executed in 1988 by and between Mr. Ramakant Sitaram Desai (therein referred to as the said “Promoter”) of the one part and Ms. June Allyson Fernandes (therein referred to as the said “Flat/Shop/Garages Purchasers”) of the second part, hereinafter referred to as the said “AGREEMENT”. In the said Agreement, the said Desai has agreed to reserve/allot to the said Flat Purchasers, the residential premises being Flat No. A-5 admeasuring 605 Square Feet Built Up Area (which is inclusive of full area of balconies and door sills on the 2nd (Second) Floor “A” wing (hereinafter referred to as the said “BOOKED FLAT”) which was to be constructed on the said Plot for a lump sum consideration of RS. 2,42,000/- (RUPEES TWO LAKH FORTY TWO THOUSAND ONLY) upon the terms and conditions as agreed and mentioned therein; However, the said Purchaser is aware that the Desai could not construct the said Booked Flat on the said Plot as agreed in the Agreement.
(D) The said Building consists of 29 (Twenty Nine) premises consisting of 11 (Eleven) Shops and 18 (Eighteen) residential flats which are possessed and occupied by their respective purchasers. The 29 (Twenty Nine) purchasers in the said Building came together and formed the Society namely “New Desai Villa Co-operative Housing Society Ltd. “, duly registered under the provisions of the Maharashtra Co-operative Societies Act, 1960, bearing Registration No. Mum/W.K.W/HSG/(TC)/14308/2008-09 having its registered office at New Desai Villa, Jay Bhavani Mata Road, Amboli, Andheri (West), Mumbai – 400 058, hereinafter known and referred to as the said “SOCIETY”.
(E) By Deed of Conveyance dated 10th June, 2014 duly registered with the Sub Registrar of Assurances at Mumbai under Serial No. BDR17/6283/2014 on 11th August, 2014 (hereinafter referred to as the said “DEED”) made and executed by and between Mr. Ramakant Sitaram Desai (therein referred to as the “Promoter”), herein known as the said Desai, of the One Part and New Desai Villa Co-operative Housing Society Ltd., (therein referred to as the “Purchasers”) herein known as the Society, of the Other Part. The said Promoter under the said Deed sold, transferred and conveyed unto the Purchasers, the said Property viz. a Plot of land admeasuring about 1680.10 Square Meters or equivalent to 18084.60 Square Feet lying and being and situate at Village: Ambivali (also known as Amboli), Taluka : Andheri (West) bearing City Survey nos. 394, 394/1 to 12, 407 and 408, the said Building and structures standing thereon and more particularly described in the FIRST SCHEDULE OF PROPERTY hereunder written. As per the said Deed, the said Society is the lawful owner of the said Property and the 29 (Twenty Nine) Members of the said Society are lawfully seized and possessed of their respective flats and shops in the said Building known as “DESAI VILLA”. The copy of latest Index II and Property Card are jointly and collectively annexed hereto as “ANNEXURE 1 “;
(F) The said Society and its members have unanimously decided to redevelop their Property by appointing M/s Devland and Housing Private Limited, the Developer herein vide Development dated 30th December, 2014 executed between New Desai Villa Co-operative Housing Society Ltd. (therein referred to as the said “Society”) of the One Part and Dev Land And Housing Private Limited (therein referred to as the said “Developer”) of the Other Part duly registered with the Office of the Sub Registrar of Assurances at Bandra, under Serial No. BDR17-10269-2014 on 30th December, 2014 (hereinafter referred to as the said “DEVELOPMENT AGREEMENT”) which is more particularly described therein.
(G) In pursuance to the said Development Agreement, the said Society also executed a General Power of Attorney dated 30th December, 2014 and duly registered with the Office of the Sub Registrar of Assurances at Bandra, Mumbai under Serial No. BDR17-10270-2014 on 30th December, 2014 (hereinafter referred to as the said “POWER OF ATTORNEY”) executed by New Desai Villa Co-operative Housing Society Ltd. (therein referred to as the “Society”) in favour of Dev Land & Housing Pvt. Ltd. through its Director Mr. Vijay T Thakkar (therein referred to as the said “Constituted Attorney”).
(H) The Developer in pursuance to the terms of the said Development Agreement and the said General Power of Attorney thus became fully well and sufficiently entitled to carry out the development of the said Property of the Society by demolishing the existing said Building standing on the said Plot and constructing thereupon a proposed new building/s for residential and commercial user having residential flats and commercial shops as may be permissible under law;
(I) The Developer proposes to construct the new building/s for residential and commercial user a building comprising of Ground plus 2/3 Podium Level/s and 11 or more Upper Floors on the said Plot (hereinafter referred to as the said “PROPOSED BUILDING”) to be known as “DLH DREAM TOWER”, for which the Developer has got approved and sanctioned from the Municipal Corporation of Greater Mumbai (hereinafter referred to as the said “MCGM”) the requisite and necessary building plans for construction of the said Proposed Building for residential and commercial usage and obtained Intimation Of Disapproval bearing No. CHE/WS/1729/K/337 (NEW) dated 9th February, 2016, (hereinafter referred to as the said “IOD”) and Commencement Certificate (hereinafter referred to as the said “CC”) bearing No. CHE/WS/1729/K/337 (NEW) dated 12.08.2016 for the construction of the said Proposed Building and will obtain further permissions as and when required. Annexed hereto are the copies of the IOD and CC jointly and collectively marked as “ANNEXURE 2”;
(J) Pursuant to several deliberations, negotiations and understanding arrived between the Parties hereto, the Developer agreed to provide and allot a New flat no. 504 on 7th (Seventh) Level admeasuring 780 Square Feet Built Up Area i.e. 650 Square Feet Carpet Area (which shall be inclusive of full area of balconies and door jambs) (hereinafter referred to as the said “NEW FLAT”) for a total consideration of Rs.97,65,000/- (RUPEES NINETY SEVEN LAKH SIXTY FIVE THOUSAND ONLY) (hereinafter referred to as the said “SALE CONSIDERATION”) in lieu of the said Booked Flat and towards the full and final settlement of liability, dues, entitlement under the said Agreement, to the Purchaser on the terms and conditions herein after appearing;
(K) The Purchaser has demanded from the Developer and the Developer had given to the Purchaser and Purchaser had the inspection of all the documents relating to the title of the Developer to the said Property. The Developer further has also handed over to the Purchaser, copies of all the sanctions, permissions, plans, obtained from the MCGM, plans, designs, specifications and schemes as prepared by the Developer’s Architects in respect of the said Proposed Building and all such other documents as are specified under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (hereinafter referred to as “MOFA ACT”) and the Rules made thereunder;
(L) The Purchaser in pursuance of the inspection provided by the Developer and the documents as received from the Developer is fully satisfied with the title of the Developer to the said Property in all respects. The Purchaser shall hereafter not raise any requisition/s or objection/s, claim/s or demand/s etc. in respect of the title of the said Property and/ or in respect of the plans, specifications, features, schemes, user in respect of the said Proposed Building under any guise or pretext whatsoever, nor shall the Developer shall be liable to entertain any such requisition/s or objection/s, claim/s, demand/s etc. from the Purchaser;
(M) The Developer has also given to the Purchaser inspection of the Copy of the Certificate of Title dated 21st March, 2014 issued by Attorney Vijay & CO., Advocates and Legal Consultants (annexed hereto is a copy of the Certificate of Title dated 21st March, 2014 of the Advocates of the Developer and marked as “ANNEXURE 3”;
(N) The Purchaser further confirms to have done complete due diligence in respect of the title of the Developer to the said Property and after having inspected and verified all documents, plans, sanctions, permissions, approvals, schemes etc. and upon being fully and completely satisfied in all respects thereto, have approached the Developer for settlement of her dispute with the said Desai and entered into this Agreement for Sale for purchase of Flat No. 504 admeasuring 780 Square Feet Built Up Area which is inclusive of 650 Square Feet constructed usable carpet area (which shall be inclusive of all area of balconies and door jambs) on the 7th (Seventh) Floor (the said New Flat) in the said Proposed Building to be known as “DLH DREAM TOWER” for a Sale Consideration in lieu of the said Booked Flat. The said New Flat is as shown delineated in red colour boundary line on the Typical Floor Plan, annexed hereto is a copy of the Typical Floor Plan and marked as ANNEXURE “4” including and along with the benefits of all types of permissible FSI (including fungible FSI or otherwise) and exclusive user of the areas of the Roof/ornamental/aesthetic/architectural and mandatory features appurtenant thereto which is particularly described in the SECOND SCHEDULE OF PROPERTY hereunder written;
(O) Under Section 4 of the said MOFA Act, the Developer is required to execute a written Agreement for Sale of the said New Flat with the Purchaser being in fact these presents and also to register this Agreement under the Registration Act 1908;
(P) Relying upon the said representations, applications, declarations and various agreements herein contained, the Developer agrees to sell and the Purchaser has agreed to purchase from the Developer the said New Flat at and for a lump sum amount of Rs.97,65,000/- (RUPEES NINETY SEVEN LAKH SIXTY FIVE THOUSAND ONLY) known as Sale Consideration in lieu of the said Booked Flat on the terms and conditions as hereinafter appearing.
NOW THIS AGREEMENT FOR SALE WITNESSETH AND IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:
1. All the recitals mentioned hereinabove shall form an integral part of this Agreement as if the same are set out verbatim in the body of this Agreement.
2. NEW FLAT IN LIEU OF THE SAID BOOKED FLAT
As per the discussions, negotiations, understanding and in the interest of Redevelopment of the Property, the Developer hereby agrees to sell and allot to the Purchaser and the Purchaser hereby agrees to purchase from the Developer, a Residential Flat in lieu of the said Booked Flat, being Flat No. 504 in the said Proposed Building admeasuring 650 Square Feet constructed usable carpet area (inclusive of fungible area, doors jambs and the area coming under the structural members) on the 7th (Seventh) Floor in the said Proposed Building to be known as “DLH DREAM TOWER” to be constructed on the said Plot at a concessional rate in view to settle the Purchaser’s dispute with said Desai pertaining to the said Booked flat and the Property for a Total Sale Consideration of Rs.97,65,000/- (RUPEES NINETY SEVEN LAKH SIXTY FIVE THOUSAND ONLY) including the proportionate price for the Common Areas and Facilities appurtenant to the said New Flat along with the benefits of all types of permissible FSI (including fungible FSI of otherwise) and exclusive user of the areas of the ornamental/aesthetic/architectural and mandatory features appurtenant thereto. The said New Flat is shown demarcated by a red colour boundary line on the Typical Floor Plan Hereto annexed and marked as “Annexure 4″. The percentage and undivided interest of the Purchaser in the Common Areas and Facilities is limited to merely its use and access commonly along with the other owners/occupants in the said Proposed Building or otherwise pertaining only to the said New Flat shall be in proportion of the area of the said New Flat agreed to be sold hereunder to the Total Area of the Common Areas and Facilities to be provided in the said Proposed Building. The nature, extent and location of the Common Areas and Facilities is more particularly described in the SECOND SCHEDULE OF PROPERTY hereunder written. The said Agreement subject to full payment of Sale Consideration. It is agreed by the said Purchaser that on execution of this Agreement, all the complaint/s/case/s/concerns raised/ if any filed by her or on behalf of her related to the Booked flat and/or Property shall automatically stand withdrawn/cancelled/revoked/released.”
6.3 On perusal of the above terms and conditions, we find no material on record to establish that the assessee was given the benefit of any payment made to M/s R.S. Desai Builders & Developers, particularly when the new developer had acquired the development rights from the society. Whatever dispute might have existed between M/s R.S. Desai Builders & Developers and the assessee, as referred to in the registered agreement, cannot, by itself, entitle the assessee to claim the benefit of the earlier agreement against the subsequently executed registered agreement with the new developer. The latter agreement specifically records the consideration of Rs.97,65,000/- agreed with the new developer. Therefore, for the purposes of the proviso to section 56(2)(vii)(b) of the Act, the relevant agreement would be the one which fixes the consideration of Rs.97,65,000/-. However, no such agreement entered into prior to the registered sale deed has been brought on record. The assessee, therefore, is not entitled to the benefit of the proviso to section 56(2)(vii)(b) of the Act.
6.4 The relevant provision, as applicable to the year under consideration, provided that where an individual received an immovable property for a consideration which was less than its stamp-duty value by the prescribed amount, the excess of such stamp-duty value over the consideration was chargeable to tax under the head “Income from other sources”. The first proviso to clause (b) contemplated a situation where the date of the agreement fixing the amount of consideration for the transfer and the date of registration were different. In such a case, the stamp-duty value as on the date of the agreement could be adopted. The further proviso stipulated that such benefit would be available only where the consideration, or part thereof, had been paid by a mode other than cash on or before the date of such agreement.
6.5 Thus, the statutory requirement is not satisfied merely by establishing the existence of some antecedent transaction concerning the property. The assessee must establish that there was an agreement fixing the amount of consideration for the transfer in question, preceding the date of registration, and that the further statutory condition relating to payment was also satisfied.
6.6 In the present case, the documents undoubtedly establish that the assessee had entered into an arrangement with the erstwhile developer in 1988 in respect of a flat for a consideration of Rs.2,42,000/-. The subsequent agreement records that the erstwhile developer had commenced construction in 1989. It further records that the existing building was thereafter occupied by its purchasers, that the purchasers formed the society, that the property was conveyed to the society in 2014, and that the society subsequently entered into a registered development agreement with M/s Dev Land and Housing Pvt. Ltd. for redevelopment of the property
6.6 The proviso requires an agreement fixing the amount of consideration for the transfer which is ultimately registered. The earlier agreement was entered into between the assessee and the erstwhile developer in respect of the originally booked flat. The property transferred to the assessee under the 2016 sale deed, however, is Flat No.504 in the redeveloped building, and the consideration expressly fixed with the new developer is Rs.97,65,000/-.
6.7 Therefore, the question that arises is whether the earlier agreement can be regarded as the agreement fixing the consideration for the transfer which ultimately took place under the 2016 sale deed. On the facts brought on record, we are unable to answer the question in favour of the assessee. The earlier agreement contemplated Flat No.A-5 in the old building for Rs.2,42,000/-, whereas the subsequent registered sale deed relates to Flat No.504 in the redeveloped building for a consideration of Rs.97,65,000/-. The subsequent agreement itself specifically fixes the consideration payable for the new flat.
6.8 Equally material is the condition contained in the second proviso. The assessee has not established from the material available on record that the consideration of Rs.97,65,000/-, or any part thereof, was paid through a mode other than cash on or before the date of the agreement fixing such consideration. The payments allegedly made decades earlier to the erstwhile developer cannot, in the absence of legally established linkage with the consideration under the 2016 agreement, be treated as payments made towards the consideration fixed under that agreement.
6.9 We are, therefore, of the considered view that the assessee cannot invoke the first proviso to section 56(2)(vii)(b) merely on the strength of the original booking. The statutory benefit is available only where the agreement relied upon fixes the consideration for the transfer in question and the further statutory condition relating to payment is also satisfied. The sale deed dated 05.10.2016 relates to Flat No.504 and records the consideration of Rs.97,65,000/-. No earlier agreement fixing the consideration for that transfer, satisfying the conditions of the provisos, has been brought on record. The facts of the decision relied upon by the assessee in Purvi Nihal Shah (supra) are distinguishable and, therefore, the said decision does not assist the assessee.
6.10 The stamp-duty value of Rs.1,30,75,000/- as against the consideration of Rs.97,65,000/- consequently results in a difference of Rs.33,10,000/-. We, therefore, find no infirmity in the conclusion of the learned CIT(A) in sustaining the addition under section 56(2)(vii)(b) of the Act.
7. The grounds challenging the addition of Rs.33,10,000/- are accordingly dismissed. The ground challenging the reopening of assessment has also been adjudicated upon by the learned CIT(A) and, in the absence of any sustainable challenge before us, does not call for any interference. The ground relating to interest under section 234A/234B is consequential, whereas the ground relating to initiation of penalty proceedings is premature. Both are accordingly dismissed.
8. In the result, appeal of the assessee is dismissed.