Stamp Duty And Registration Fees Counted In Sec 56(2)(x) | ITAT

Case Details: SPL Shelters (P.) Ltd. vs. DCIT - [2025] 177 taxmann.com 255 (Chennai - Trib.) 

Judiciary and Counsel Details

• George K., Vice President &
• Ms Padmavathy S., Accountant Member
• Mrs S. Ananthan, CA for the Appellant
• Ms E. Pavuna Sundari, CIT for the Respondent

Facts of the Case

The assessee was a private limited company engaged in the business of infrastructure services. The assessee filed the return of income for the relevant year during the search proceedings. The Assessing Officer (AO) noticed that the assessee acquired immovable property for a consideration below the stamp duty valuation. Accordingly, AO made an addition under section 56(2)(x) to the income of the assessee. While computing the differential, AO reduced registration and stamp duty charges from the purchase consideration paid by the assessee. Aggrieved by the order, the assessee filed an appeal to the CIT(A).

The CIT(A) deleted the adjustment made by AO, and the matter reached the Chennai Tribunal.

ITAT Held

The Tribunal held that the AO had questioned the logic behind the seller bearing the stamp duty and registration charges. The AO held that the assessee would claim the deduction towards stamp duty and registration charges at the time of selling the property, which would amount to double deduction for the reason that the seller would have paid capital gains only on the actual consideration received from the assessee.

However, the reasons as quoted by the AO were not a valid basis for reducing the stamp duty and registration charges from the consideration paid by the assessee. The assessee paid the consideration as per the Sale deed, which fact was not disputed by the AO.

Therefore, the reduction of consideration paid by the assessee, stating that the stamp duty and registration paid by the seller effectively reduces the cost in the hands of the purchaser, does not have any valid base and is not tenable.
For section 56(2)(x), the consideration is the actual cost paid by the buyer towards the acquisition of the property, and there is no provision under said section for any adjustment towards stamp duty and registration charges born by the seller instead of the buyer.

Accordingly, the Tribunal held that there was no infirmity in the decision of the CIT(A) in directing the AO not to reduce stamp duty and registration charges from the actual consideration paid by the assessee towards the acquisition of the property.

List of Cases Reviewed

• Gaurav Investments v. Dy. CIT [2025] 174 taxmann.com 839 (Mumbai – Trib.) (para 11) followed.

List of Cases Referred To

• Gaurav Investments v. Dy. CIT [2025] 174 taxmann.com 839 (Mumbai – Trib.) (para 5).