₹1.46cr stamp value: Why buyer escaped ₹11.35L tax

The Income Tax Appellate Tribunal (ITAT) in Kolkata ruled that a property buyer did not have to pay a tax addition of ₹11.35 lakh based on the property's higher stamp duty value at the time of registration. The taxpayer and her husband had agreed to purchase a property in January 2021 for Rs 1.235 crore, paying Rs 91 lakh as advance consideration through banking channels.

The property's stamp duty value increased to Rs 1.462 crore by the time of registration in September 2023. The Income Tax Officer (ITO) treated the difference as taxable income in the buyer's hands, adding ₹11.35 lakh to her income under Section 56(2)(x). However, the ITAT held that the taxpayer had used a registered agreement and paid part of the consideration through prescribed banking channels on or before the agreement date, which protected the earlier valuation date for stamp duty purposes.

The ITAT therefore reversed the ITO's decision and allowed the taxpayer's appeal. Property buyers who agree to purchase a property before it is registered should ensure that the advance payment is made through banking channels and recorded in the registered agreement to avoid a tax addition based on the later, higher stamp duty value.