ITAT Ahmedabad Deletes ₹2.25 Crore Addition On Land Deal Registered In 2019, Notes 2009 Agreement

The Ahmedabad bench of the Income Tax Appellate Tribunal has deleted a tax addition of about ₹2.25 crore made against a Vadodara taxpayer in a land transaction.

The tribunal held that the assessing officer and the Dispute Resolution Panel were not justified in confirming the addition after documents showed that payments had been made before the property's registration.

The bench of Vice President Dr. B.R.R. Kumar and Judicial Member Suchitra Kamble allowed the taxpayer's appeal.

"Though the stamp duty was paid as per the rules of the government, the purchase consideration was as per the academics entered into on 12.01.2009," the tribunal observed.

The dispute concerned land that had remained under litigation for several years. The tribunal recorded the taxpayer's submission that the legal proceedings ended in her favour in 2017.

The order notes that a sale deed for a portion of the land was executed in January 2017 for ₹25.94 lakh. Another sale deed for the remaining portion was registered in April 2019 for ₹6.49 lakh.

During the proceedings, authorities treated this disparity in purchase consideration and stamp duty valuation as income subject to tax leading to a demand of around ₹2.25 crore.

The taxpayer contended that the consideration had been fixed under an earlier arrangement. She also relied on documents showing that payments had been made through cheques before the 2019 registration.

"The Ld. AR pointed out the documents related to the payment through cheques prior to 2019 and therefore the DRP was not right in confirming the addition thereby invoking the provisions of section 56(2)(x)(b)(B) of the Act," the tribunal held.

The tribunal noted that stamp duty was paid on the value prevailing on the date of registration. It also noted that the purchase consideration flowed from the arrangement entered into on January 12, 2009.

According to the tribunal, the assessing officer and the Dispute Resolution Panel had not taken cognisance of the documents relating to the earlier payments.

"Hence, the AO as well as the DRP was not justified in confirming the addition," the tribunal held while allowing the appeal.

For Appellant: Shri Sunil Talati, AR

For Respondent: Shri Vijay Kumar Singh, CIT-DR