Sec56(2) appl on prop buy in 2010 but register in 17

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yash sanghrajka (Querist)
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02 December 2020 Respected sir/ madam,
I had bought a residential property in june 2010 with a letter of allotment for the same dated 06/06/2010, after which the said property fell into litigation and was finally registered on june 17, in the period between payments had been made to the builder as per the allotment letter. Now income tax department has opened my file for scrutiny and is telling me that the difference in the amount as on 2010 and 2017 of the SVA will be charged under sec56(2) of the act , they are also asking for registered sale deed of 2010 which i do not have as no such deed exists i only have the letter of allotment from the builder , so what would my remedies be in this case?
Thank you for your replies and help.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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03 December 2020 Section 56(2)(vii)(b) was amended by the Finance Act, 2013 w.e.f. 01.04.2014 or Assessment Year (AY) 2014-15 to cover inter alia any receipt of immovable property for inadequate consideration as 'gift' income under the Income Tax Act, 1961.
Prior to the amendment, receipt of immovable property without consideration was covered within the ambit of section 56(2)(vii)(b). The condition of 'inadequate transaction' or adequacy of consideration was introduced from the AY 2014-15 and hence cannot be applied to a transaction entered and completed before AY 2014-15.
The amendment w.e.f AY 2014-15 will not apply to a purchase transaction of immovable property for which full consideration is paid before the amendment.
Mere registration at a later date will not cover a transaction already executed in the earlier years and substantial obligations have already been discharged and a substantive right has accrued to the assessee therefrom.
Letter of allotment is sufficient to prove your case.