In re-allotment of flat by builder, stamp duty valuation is of the date of booking original flat

In case of re-allotment of flat by builder, stamp duty valuation would be with reference to date of booking of original flat.

In a recent judgment, ITAT Mumbai has held that when another flat was allotted by the builder in place of original booking, stamp duty valuation should be taken with reference to date of booking of original flat.

ABCAUS Case Law Citation:
4914 (2025) (12) abcaus.in ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A), National Faceless Appeal Centre (NFAC) in confirming addition on account of difference in stamp duty valuation and purchase price paid for the flat.

The appellant assessee e-filed the return of income, the case was selected for limited scrutiny under CASS. During the assessment proceedings, the AO observed that the assessee had purchased a property whereas the stamp duty valuation of the said property, as per the registered agreement was nearly four times than the sale consideration as per agreement.

The assessee submitted that the flat was originally booked in 2009, supported by payments of stated sale consideration vide two cheque payments as evidenced by bank statements.

The AO observed that while the registration was carried out for one Flat No. 1002, the developer had initially issued an allotment letter in 2009 for another Flat (i.e; Flat No. 1403) measuring 700 sq. ft.. However, due to certain issues in the builder’s project, an amended allotment letter was issued in 2016 wherein the developer allotted Flat No. 1001 in place of Flat No. 1403, with the same area of 700 sq. ft. in the same project. Ultimately, the registration came to be executed for Flat No. 1002, measuring the same area of 700 sq. ft.

The AO adopted the stamp duty valuation of 2016. The assessee, on the other hand, contended that the valuation of the property should be adopted with reference to the year 2009, in view of the Explanation to section 56(2)(vii)(b) of the Act. However, the AO rejected the claim and made the impugned addition being the difference between the stamp duty value and the declared purchase consideration.

The CIT(A) dismissed the appeal of the assessee by observing that the assessee had booked multiple flats with the intention of evading tax, and therefore the change in flat number could not be accepted as a genuine transaction.

Before the Tribunal, the assessee submitted that he had originally booked Flat No. 1403 in the year 2009. Due to certain complications in the builder’s project, the developer was unable to allot Flat No. 1403 to the assessee. Subsequently, an amended letter of allotment was issued in 2016, whereby the developer allotted Flat No. 1002, having the same carpet area of 700 sq. ft., in the very same project. However, in the said allotment letter, the mention of Flat No. 1001 was a mere typographical error committed by the developer, which the developer had already admitted in the letter.

It was also submitted that the payment made by the assessee in 2009 had been duly acknowledged and fully adjusted against the new allotment. No additional payment was made, nor was there any variation in the area of the flat.

Considering the totality of facts, the Tribunal held that the assessee was squarely protected by the Explanation to section 56(2)(vii)(b) of the Act. Accordingly, the valuation is required to be adopted with reference to the financial year 2009–10.

The Tribunal opined that the assessee was entitled to the benefit of the said Explanation. The assessee had furnished additional evidence in the form of an affidavit and the developer’s letter admitting the mistake in mentioning wrong Flat No.

The Tribunal admitted the additional evidence and restored the matter to the file of the Assessing Officer for the limited purpose of verifying the letter of the Developer, the agreement, and the assessee’s contention that the stamp duty valuation of Flat No. 1002 should be considered with reference to A.Y. 2010–11.

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