The Tax Publishers2021 TaxPub(DT) 0858 (Bang-Trib)


Section 56(2)(vii)(b)

Under section 56(2)(vii)(b) assessee-HUF could purchase immovable property from Member of HUF where value of property in the sale agreement was below stamp duty valuation but paid stamp duty on stamp duty value, the transaction entered into was exempt from tax under section 56(2)(vii)(b) as assessee-HUF and assessee-Member of HUF were relative.

Income from other sources - Applicability of section 56(2)(vii) - Sale consideration paid by assessee-HUF to vendor (Individual Member relative of HUF) -

Assessee-HUF agreed to purchase one flat constructed by JDA for Rs. 53,16,00,000 from one of Members of HUF. Agreement to sale was entered into on 20-9-2011. The stamp duty valuation was Rs. 98,50,000. Assessee had contended that as per the proviso to section 56(2)(vii)(b) the value of the property should be taken as on the date of the agreement to sale, i.e., 20-9-2011. Assessee's submission before the AO was that as the notification of the Government of Karnataka, dated 17-4-2007 was valid till 25-9-2011, the value taken in the agreement to sell, i.e., Rs. 53,16,000 was the fair market value. The AO, however, has relied upon the stamp duty value as given in the sale deed, dated 26-7-2013 which shows a value of Rs. 98,12,500. Held: Where an individual or HUF receives from any person any immovable property for a consideration, which is less than stamp duty value of such property that exceeds Rs. 50,000 and the stamp duty value of such property exceeds the consideration paid, the provisions of pre-amended section 56(2)(vii)(b) would apply. In present facts, there was a consideration paid by assesse. HUF, to the vendor (individual Member of HUF) in respect of the subject property that is less than the stamp duty valuation. The transaction is exempt from tax as the transferor and transferee are relative, as defined in clause (e)(ii) to 3rd proviso to section 56(2)(vii). Admittedly the transferor and the transferee in the present facts of the case was the Karta, his individual capacity and the HUF itself. Therefore, the argument that property received by HUF from its members, was not chargeable to tax. CIT(A) relied on provisions of section 50C to consider the value adopted by stamp duty authority on the date of agreement. This provision is applicable in case of recipient of sale consideration present case, assessee was the purchaser. Tribunal, therefore, rejected applicability of section 50C to present facts. The revenue was, therefore, debarred to hold the transaction under section 56(2)(vii)(b) as taxable and the addition sustained by CIT(A) was, therefore, deleted.

REFERRED : Bagri Impex (P) Ltd. v. Asstt. CIT, Circle-9, (2013) 131 39 (Cal) : 2013 TaxPub(DT) 1084 (Cal-HC).

FAVOUR : In assessee's favour.

A.Y. : 2014-15