Higher stamp value alone can't trigger tax: ITAT Mum

A property buyer from Mumbai purchased a property in Pune for Rs 6.5 crore in the fiscal year of 2017-18, but the government assessed the stamp duty value at Rs 8.85 crore. The Income Tax Department argued that the buyer had paid less than the stamp duty value, and thus owed tax on the Rs 2.35 crore difference. The buyer claimed that the seller sold the property below the stamp duty valuation and that changes to Section 56(2)(vii) in 2018-19 rendered the higher stamp duty valuation inapplicable.

The Income Tax Assessment Officer (AO) ruled in favor of the tax department, but the case was appealed to the ITAT (Income Tax Appellate Tribunal) in Mumbai. The tribunal ruled in favor of the buyer, stating that the higher stamp duty valuation alone was not enough evidence to prove unexplained investment, and that Section 50C, which applies stamp duty value to capital gains, only pertains to the seller.