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Big Relief for Home-buyer: Mumbai ITAT Rejects I-T Department’s Stamp Duty Valuation-based Addition
Moneylife Digital Team 10 December 2025
Economy & Nation
The Mumbai bench of the income-tax appellate tribunal (ITAT) has set aside an addition of ₹59.87 lakh made by the income-tax (I-T) department on the basis of stamp duty valuation, holding that the valuation prevailing on the date of the property’s allotment must be adopted when part consideration has been paid through banking channels before the agreement date.
 
In an order last month, the ITAT bench of Anikesh Banerjee (judicial member) and Renu Jauhri (accountant member) says, "In the present case, the assessee entered into an agreement, and the allotment letter was duly issued by the promoter. The payment was made through banking channels. Therefore, the stamp duty valuation of the property should be taken as on the date of allotment, i.e., FY12-13. Upon perusal of the valuation report, it is noted that the valuation of the property, as determined by the registered valuer, is ₹1.10 crore. There is no discrepancy in the purchase value declared by the assessee. Consequently, the addition of ₹59.87 lakh, representing the difference between the set forth value and the stamp duty value, cannot be sustained in the impugned assessment year (AY). Accordingly, the addition is quashed. Further, we remit the matter to the file of the income-tax officer (ward 22(1)(6), Mumbai) (AO) with a direction to consider the stamp duty valuation as per the financial year of the agreement, i.e., FY12-13, and to recompute the assessment accordingly."
 
The case involved Awadhnarayan Bhagwanta Singh, who had purchased a flat for ₹1.10 crore from Shah Housecon Pvt Ltd. The AO invoked Section 56(2)(vii)(b) of the Income-tax Act and added the differential value between the stated consideration and the stamp duty valuation of ₹1.69 crore as on 30 March 2017, resulting in an addition of ₹59.87 lakh.
 
Although Mr Singh furnished documents showing that an allotment letter had been issued on 29 November 2012 and that ₹500,000 had been paid through banking channels in FY11–12, the commissioner of income-tax (appeals) (CIT(A)) upheld the addition, stating that no evidence had been provided to justify the adoption of an earlier valuation.
 
Before the tribunal, Mr Singh produced the allotment letter, bank statements, receipts and a contemporaneous registered valuer’s report, all of which had also been filed during earlier proceedings. He argued that these documents clearly established the conditions required under the first proviso to Section 56(2)(vii)(b), which allows adoption of stamp duty valuation as on the 'agreement date' instead of the registration date when consideration, or part of it, is paid through non-cash modes before the agreement.
 
After reviewing the documentary evidence, the ITAT bench agreed with Mr Singh. The tribunal observed that the allotment letter constituted a valid agreement and since he had made part payment through banking channels prior to the agreement date, the law mandated adoption of stamp duty valuation as on the year of agreement, i.e., FY12–13.
 
The tribunal further noted that the registered valuer’s report for that period reflected the same value as the actual consideration of ₹1.10 crore. As a result, no difference survived between the purchase price and the relevant stamp duty valuation. ITAT held that the addition sustained by the CIT(A) is 'unsustainable' and quashed it in full.
 
However, the bench remanded the matter back to the AO for the limited purpose of recomputation, directing that the valuation as on the agreement year be applied. The AO has been instructed to provide the assessee a reasonable opportunity of hearing during the fresh computation exercise.
 
(ITA no6045/Mum/2025  Date: 27 November 2025)
 
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