The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has ruled that redevelopment flat value is not taxable as income from other sources under section 56(2)(X) Of Income Tax Act, 1961.
The bench of Sandeep Gosain (Judicial Member) and B.R. Baskaran (Accountant Member) has observed that the assessee got a new flat in the redeveloped property in lieu of old flat. Hence, it is a case of extinguishment of old flat and in lieu thereof, the assessee has got new flat as per the agreement entered with the developer for redevelopment of the society. Thus it is not a case of receipt of immovable property for inadequate consideration that would fall within the purview of the provisions of section 56(2)(x).
The appellant/assessee had purchased a flat in the financial year 1997-98 in Mahavir Nagar Tristar Co-op Hsg Society. The society underwent redevelopment as per the agreement entered with the developer. As per the terms and conditions of the agreement, the assessee got a new flat in lieu of the old flat surrendered by him. The stamp duty value of new flat was Rs.25,17,700.
The indexed cost of the old flat was Rs.5,43,040. Accordingly, the AO assessed the difference between the above said values amounting to Rs.19,74,660 as income of the assessee under section 56(2)(x) of the Income Tax Act. The CIT(A) confirmed the same.
The assessee has filed this appeal challenging the order dated 30-09-2024 passed by the CIT(A), NFAC, Delhi and it relates to the Assessment Year (AY.) 2018-19. The assessee is aggrieved by the decision of CIT(A) in confirming the addition of Rs.19,74,660/- made by the AO under section 56(2)(x) of the Income Tax Act.
The tribunal held that the tax department is not correct in law in assessing the transaction under section 56(2)(x) of the Income Tax Act.
The ITAT quashed the order passed by CIT(A) and directed the AO to delete the addition made by him under section 56(2)(x) of the Income Tax Act.
Case Details
Case Title: Anil Dattaram Pitale Versus ITO
Case No.: ITA No. 465/Mum/2025
Date: 17-03-2025
Counsel For Appellant: Dr. K. Shivaram a/w. Mr. Shashi Bekal
Counsel For Respondent: Shri Kiran Unavekar, Sr.DR
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