No Section 56(2)(x) Additions if New Flat Was Received by Assessee in Lieu of Old Flat Surrendered by Him | ITAT

Case Details: Anil Dattaram Pitale vs. Income-tax Officer - [2025] 173 taxmann.com 51 (Mumbai-Trib.)

Judiciary and Counsel Details

• Sandeep Gosain, Judicial Member & B.R. Baskaran, Accountant Member
• Dr. K. Shivaram & Shashi Bekal for the Appellant.
• Kiran Unavekar, Sr.DR for the Respondent.

Facts of the Case

The assessee purchased a flat in the financial year 1997-98 in a Co-operative Housing 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. 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).

The CIT(A) upheld the additions made by AO and the matter reached to the Mumbai Tribunal.

ITAT Held

The Tribunal held that the assessee got a new flat in the redeveloped property in lieu of the old flat. Hence, it is a case of extinguishment of the old flat and in lieu thereof, the assessee has got a new flat as per the agreement entered with the developer for the 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). Accordingly, the provisions of section 56(2)(x) will not apply to the facts of the present case.