Adjustment of GST Value in Total Consideration to Accommodate Increase in GST Rate Not Covered Under Sec. 56(2)(x) | ITAT

Judiciary and Counsel Details

· Smt. Beena Pillai, Judicial Member & Omkareshwar Chidara, Accountant Member

· Tarang Mehta for the Appellant.

· Asif Karmali, Sr. D.R. for the Respondent.

Facts of the Case

The assessee had booked under-construction property during the assessment year 2016-17. As there was an increase in the GST rates, the builder reduced the agreement value from Rs. 2.63 crores to Rs. 2.55 crores.

The Assessing Officer (AO) believed that the property registration was done at a lower cost. He accordingly added the differential amount in the hands of the assessee under section 56(2)(x).

On appeal, the Commissioner (Appeals) upheld the addition made by AO. The matter reached before the Tribunal.

ITAT Held

The Tribunal held that the builder was called upon a wide press release to accommodate the purchasers in respect of transferring the benefit of the GST by including the same in the total value of consideration. As a result, the value generally agreed upon had to include the GST payable by the purchasers. Such an adjustment cannot fall within section 56(2)(x).

It is opined that the provisions under section 56(2)(x) were introduced to curb the practice of receiving any property without consideration or for inadequate consideration by resorting to the registered valuation as per the stamp authorities. No such intention is found in the present facts of the case to invoke the provisions of section 56(2)(x), and therefore, the addition made by the authorities below cannot be upheld. Accordingly, the grounds raised by the assessee stand allowed.

List of Cases Referred to

· Collector Land Acquisition v. Mst. Katiji & Ors. (1987) 167 ITR 471 (para 5 and 5.1).