We booked a flat in 2014, paid part of the price by cheque, and registered the deed in 2019 when the circle rate had risen sharply. Is the builder's allotment letter an 'agreement' for the provisos to s.56(2)(x)?
On these facts the Jaipur bench held that it is. The allotment letter identified the property, fixed the total consideration and set out the terms of payment, was signed by both sides, and both sides then performed on it, part of the price having been paid by account payee cheque on or before the date of that agreement. That satisfied the two conditions in the provisos to s.56(2)(x)(b) - an agreement fixing the consideration on an earlier date, and part payment by a prescribed banking mode on or before that date - so the stamp duty value on the allotment date, not the registration date, was the relevant figure. The Tribunal declined to treat the label 'allotment letter' as decisive and allowed the appeal, directing deletion of the addition of Rs 58,36,000.
Decided by the ITAT (Dr. S. Seethalakshmi, Judicial Member and Shri Rathod Kamlesh Jayantbhai, Accountant Member (Jaipur Bench)) on 2024-06-25, reported as ITA No. 744/JP/2023. It bears on section 56(2)(x), section 50C of the Income Tax Act 1961, in Gifts, Shares & Angel Tax and Capital Gains matters.
This is the buyer's side of the transaction the s.50C cases look at from the seller's side, and the fact pattern - a long gap between booking and registration in a rising market - is extremely common. The additions produced are large, and the answer usually turns on documents the buyer already has rather than on a valuation dispute.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
Read aloud by your device. Press again to stop.
In financial year 2014-15 the assessee booked flat no. 4602 on the 46th floor of Ruparel Arena, Mumbai. The builder issued an allotment letter dated 14 July 2014 fixing the consideration at Rs 1,70,40,000. During financial year 2014-15 the assessee paid Rs 50,84,046 through banking channels. The sale deed was registered on 6 May 2019, by which date the stamp duty value stood at Rs 2,28,76,000, a difference of Rs 58,36,000. For assessment year 2020-21 the Assessing Officer added that difference under s.56(2)(x), treating the allotment letter as no more than documentary evidence rather than an agreement fixing consideration, and the Commissioner (Appeals) confirmed the addition. A Departmental Valuation Officer's report dated 9 November 2023 valued the property at Rs 1,86,56,000, a difference of Rs 16,16,000 from the stated consideration.
The appeal was allowed and the addition of Rs 58,36,000 directed to be deleted; there was no remand. The stamp duty valuation as on the date of the allotment letter, not the date of registration, was to be taken for the purposes of s.56(2)(x), the conditions in the provisos to s.56(2)(x)(b) being satisfied: an agreement fixing the consideration existed on 14 July 2014, and part of the consideration, Rs 50,84,046, had been paid through banking channels on or before the date of that agreement, as the second proviso to s.56(2)(x)(b) requires.
The Tribunal declined to distinguish between an allotment letter and an agreement on the label. An allotment letter is the document by which a developer records that an arrangement has been reached between the parties to work towards a binding contract, and where it contains the details of the property, the total sale consideration and the terms of payment, is duly signed and executed by both parties, and is then performed by them, it answers the description of an agreement fixing the amount of consideration for the purposes of the provisos to s.56(2)(x)(b). That much is the Jaipur bench's own, at its paragraph 10. The commercial-reality observation a reader will also meet in this order - that the transaction has to be analysed in commercial parlance, and that without finalisation of consideration nobody will deposit 20 per cent of the final consideration - is not the Jaipur bench's. It originates in Sajjanraj Mehta v. ITO, ITA No. 56/Mum/2021 (5 September 2022) and reaches this order at the third level of quotation, through Parth Dasrath Gandhi v. Addl./Dy./Asst. CIT (31 January 2023) and Sulochana Saijan Mod v. ITO, ITA No. 557/Mum/2023, which the Jaipur bench reproduces at length; the criticism of an over-technical reading of the provisos likewise traces to Sajjanraj Mehta rather than to this bench. It followed Sulochana Saijan Mod on the allotment-letter point. It went on to record that the difference between the stated consideration and the Departmental Valuation Officer's figure was within the 10 per cent tolerance, the enhancement of the band being curative and retrospective on the reasoning approved by the Madras High Court in CIT v. Vummudi Amarendran; on the figures recorded in the editor note the variance is within the band whichever consideration figure is taken. It held accordingly at paragraph 10 and allowed the appeal at paragraph 12.
Being consistent to the view taken based on the detailed finding so recorded herein above case, we hold that the stamp duty valuation as on the date of respective allotment letters should be considered for the purpose of sec.56(2)(x) of the Act.
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppOn these facts the Jaipur bench held that it is. The allotment letter identified the property, fixed the total consideration and set out the terms of payment, was signed by both sides, and both sides then performed on it, part of the price having been paid by account payee cheque on or before the date of that agreement. That satisfied the two conditions in the provisos to s.56(2)(x)(b) - an agreement fixing the consideration on an earlier date, and part payment by a prescribed banking mode on or before that date - so the stamp duty value on the allotment date, not the registration date, was the relevant figure. The Tribunal declined to treat the label 'allotment letter' as decisive and allowed the appeal, directing deletion of the addition of Rs 58,36,000. This was decided by the ITAT (Dr. S. Seethalakshmi, Judicial Member and Shri Rathod Kamlesh Jayantbhai, Accountant Member (Jaipur Bench)) and bears on section 56(2)(x), section 50C of the Income Tax Act 1961. It is reported as ITA No. 744/JP/2023. This is the buyer's side of the transaction the s.50C cases look at from the seller's side, and the fact pattern - a long gap between booking and registration in a rising market - is extremely common. The additions produced are large, and the answer usually turns on documents the buyer already has rather than on a valuation dispute. If it applies to you, the first step is this: Assemble the allotment letter and check that it does the work the proviso requires: identifies the property, fixes the total consideration, sets out the payment terms, and is signed by both parties.
In financial year 2014-15 the assessee booked flat no. 4602 on the 46th floor of Ruparel Arena, Mumbai. The builder issued an allotment letter dated 14 July 2014 fixing the consideration at Rs 1,70,40,000. During financial year 2014-15 the assessee paid Rs 50,84,046 through banking channels. The sale deed was registered on 6 May 2019, by which date the stamp duty value stood at Rs 2,28,76,000, a difference of Rs 58,36,000. For assessment year 2020-21 the Assessing Officer added that difference under s.56(2)(x), treating the allotment letter as no more than documentary evidence rather than an agreement fixing consideration, and the Commissioner (Appeals) confirmed the addition. A Departmental Valuation Officer's report dated 9 November 2023 valued the property at Rs 1,86,56,000, a difference of Rs 16,16,000 from the stated consideration. The matter was decided on 2024-06-25 by the ITAT (Dr. S. Seethalakshmi, Judicial Member and Shri Rathod Kamlesh Jayantbhai, Accountant Member (Jaipur Bench)). On those facts the ITAT held as follows. The appeal was allowed and the addition of Rs 58,36,000 directed to be deleted; there was no remand. The stamp duty valuation as on the date of the allotment letter, not the date of registration, was to be taken for the purposes of s.56(2)(x), the conditions in the provisos to s.56(2)(x)(b) being satisfied: an agreement fixing the consideration existed on 14 July 2014, and part of the consideration, Rs 50,84,046, had been paid through banking channels on or before the date of that agreement, as the second proviso to s.56(2)(x)(b) requires.
The Tribunal declined to distinguish between an allotment letter and an agreement on the label. An allotment letter is the document by which a developer records that an arrangement has been reached between the parties to work towards a binding contract, and where it contains the details of the property, the total sale consideration and the terms of payment, is duly signed and executed by both parties, and is then performed by them, it answers the description of an agreement fixing the amount of consideration for the purposes of the provisos to s.56(2)(x)(b). That much is the Jaipur bench's own, at its paragraph 10. The commercial-reality observation a reader will also meet in this order - that the transaction has to be analysed in commercial parlance, and that without finalisation of consideration nobody will deposit 20 per cent of the final consideration - is not the Jaipur bench's. It originates in Sajjanraj Mehta v. ITO, ITA No. 56/Mum/2021 (5 September 2022) and reaches this order at the third level of quotation, through Parth Dasrath Gandhi v. Addl./Dy./Asst. CIT (31 January 2023) and Sulochana Saijan Mod v. ITO, ITA No. 557/Mum/2023, which the Jaipur bench reproduces at length; the criticism of an over-technical reading of the provisos likewise traces to Sajjanraj Mehta rather than to this bench. It followed Sulochana Saijan Mod on the allotment-letter point. It went on to record that the difference between the stated consideration and the Departmental Valuation Officer's figure was within the 10 per cent tolerance, the enhancement of the band being curative and retrospective on the reasoning approved by the Madras High Court in CIT v. Vummudi Amarendran; on the figures recorded in the editor note the variance is within the band whichever consideration figure is taken. It held accordingly at paragraph 10 and allowed the appeal at paragraph 12. In the words reproduced by the source cited on this page: "Being consistent to the view taken based on the detailed finding so recorded herein above case, we hold that the stamp duty valuation as on the date of respective allotment letters should be considered for the purpose of sec.56(2)(x) of the Act." The decision followed or applied Sulochana Saijan Mod v. ITO, ITA No. 557/Mum/2023 (Mumbai)(Trib.) - followed on the allotment-letter point; reproduced at length in the order; Parth Dasrath Gandhi v. Addl./Dy./Asst. CIT dated 31.01.2023 (Mumbai)(Trib.) - adopted through Sulochana Saijan Mod; Sajjanraj Mehta v. ITO, ITA No. 56/Mum/2021 dated 05.09.2022 (Mumbai)(Trib.) - adopted through Parth Dasrath Gandhi; the source of the 'commercial parlance' observation; CIT v. Vummudi Amarendran (2020) 429 ITR 97 (Madras) - relied on for the curative and retrospective character of the tolerance band; Sujauddian Kasimsab - distinguished; no fuller citation is recorded here; CIT v. Balbir Singh Maini (SC) - relied on by the Commissioner (Appeals) and held inapplicable.
It was decided by the ITAT on 2024-06-25 and is reported as ITA No. 744/JP/2023. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 56(2)(x), section 50C, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed and the addition of Rs 58,36,000 directed to be deleted; there was no remand. The stamp duty valuation as on the date of the allotment letter, not the date of registration, was to be taken for the purposes of s.56(2)(x), the conditions in the provisos to s.56(2)(x)(b) being satisfied: an agreement fixing the consideration existed on 14 July 2014, and part of the consideration, Rs 50,84,046, had been paid through banking channels on or before the date of that agreement, as the second proviso to s.56(2)(x)(b) requires. It arises in Gifts, Shares & Angel Tax and Capital Gains matters, on section 56(2)(x), section 50C of the Income Tax Act 1961, and was decided by Dr. S. Seethalakshmi, Judicial Member and Shri Rathod Kamlesh Jayantbhai, Accountant Member (Jaipur Bench). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Prove the payment condition on its own terms - the second proviso needs part of the consideration paid by account payee cheque, account payee bank draft or an electronic mode through a bank on or before the date of the agreement. Produce the bank statement and the instrument. Obtain the stamp duty value as on the allotment date, not merely the registration date, and put both on record so the comparison can be made. Show performance on both sides after the allotment letter - further instalments, possession correspondence, builder's receipts - because the Tribunal relied on the parties having acted on its terms. If a Departmental Valuation Officer's report has been obtained, compute the difference against that figure as well, and consider the tolerance band as an alternative ground. Coordinate with the seller's position: the same variance may be under examination in the seller's assessment under s.50C or s.43CA, and the two files can move in opposite directions.
Validity check could not be completed. Later treatment was not established. No appeal to the Rajasthan High Court was located, but no citedby search was run on this order and no decision applying or doubting it was examined. On the tolerance-band limb the reasoning follows the same line as Maria Fernandes Cheryl v. ITO, which is well supported at Tribunal level; on the allotment-letter limb the position rests on coordinate bench authority and has not been tested in a High Court so far as could be seen. The tolerance-band limb has since been reinforced: a Mumbai Special Bench in Shreyas Naynesh Modi v. ITO, ITA No. 4453/Mum/2024, decided 23 January 2026, held that once a reference has been made and the Departmental Valuation Officer has determined the value, that value replaces the stamp duty value and the 10 per cent band applies over the Departmental Valuation Officer's figure as well for the purposes of s.56(2)(x). That is directly the alternative ground this order takes at paragraph 11. A later Mumbai order, Shreem Properties v. DCIT, ITA No. 6874/Mum/2025 dated 18 May 2026, follows the Special Bench and applies the band under s.43CA to assessment year 2018-19; on the seller's side that runs against Prithvi Developers v. DCIT, also in this library, which holds the first proviso to s.43CA prospective from assessment year 2019-20, so a practitioner should treat the band's reach into pre-2019-20 years as contested. Neither Mumbai order was retrieved in full - the Special Bench order is not on Indian Kanoon and was not found on itat.gov.in, and its holding is taken from two independent secondary sources that agree - so nothing should be quoted from either. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The relief is settled and there is no need to re-open it. Paragraph 12 allows the appeal and directs deletion of the addition of Rs 58,36,000; there was no remand. A reader working through the order will meet the sentence "Accordingly, we are restoring this issue to the file of AO for the limited purpose of comparing the actual sale consideration with the stamp duty valuation as on the date of respective allotment letters". That direction sits inside the extract from Sulochana Saijan Mod v. ITO, ITA No. 557/Mum/2023 which this order reproduces in full and at length; it is the Mumbai bench's direction in that case, not the Jaipur bench's here. The order prints the name as Sulochana Saijan Mod. Paragraph numbering in this order is not a safe reference: it restarts inside the reproduced extracts, so that "10." appears three times at different nesting levels with different text each time, and the sentence quoted above is in an unnumbered paragraph. The bench's own paragraph 10 closes with a substantively identical holding - "Accordingly, the stamp duty valuation as on the date of respective Allotment letters should be considered for the purposes of sec.56(2)(x) of the Act. Hence the AO was not justified in considering the stamp duty valuation as on the date of execution of agreement to sell." The order is also inconsistent with itself on the consideration: paragraph 9 records Rs 1,70,40,000, which is the figure adopted in the facts here and the figure consistent with the Rs 58,36,000 addition against a stamp value of Rs 2,28,76,000, while paragraph 11, computing the variance from the Departmental Valuation Officer's Rs 1,86,56,000, records "the actual consideration of Rs. 1,74,40,000/-". Anyone checking the percentage against the figures given here will not reproduce the order's working: the variance is 9.48 per cent on Rs 1,70,40,000, 6.97 per cent on Rs 1,74,40,000 and 8.66 per cent measured against the Departmental Valuation Officer's figure - inside the band on any of them. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed and the addition of Rs 58,36,000 directed to be deleted; there was no remand. The stamp duty valuation as on the date of the allotment letter, not the date of registration, was to be taken for the purposes of s.56(2)(x), the conditions in the provisos to s.56(2)(x)(b) being satisfied: an agreement fixing the consideration existed on 14 July 2014, and part of the consideration, Rs 50,84,046, had been paid through banking channels on or before the date of that agreement, as the second proviso to s.56(2)(x)(b) requires.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
The AO adopted the stamp duty value and I never asked for a DVO reference. Can he do that?
I fixed the price in 2005 but registered the sale in 2007. Which date's stamp duty value applies?
The stamp duty value is above what I paid for the property. Does the 10% tolerance cover my earlier year?
I sold Bitcoin in FY 2020-21, before the VDA regime — capital gains or income from other sources?