In a significant and homebuyer-friendly ruling, the Income Tax Appellate Tribunal (ITAT), Mumbai (SMC Bench) has held that stamp duty valuation for income-tax purposes must be taken as on the date of allotment (booking)—even if the allotment letter is unregistered, provided part payment was made through banking channels.

The decision comes in the case of Meena Arjun Narang vs ACIT, Circle-27(2), Mumbai
ITA No.: 6651/Mum/2025 | Assessment Year: 2018-19
Order dated: 24 December 2025

Background of the Case

The assessee, Ms. Meena Arjun Narang, a senior citizen, had booked a residential flat in Runwal Grand, located on 18th Road, Chembur (East), Mumbai.

Key facts:

• Allotment Letter issued: 11 December 2010
• Initial consideration: ₹44 lakh (plus development charges, taxes, and society charges)
• Part payment made: ₹8.80 lakh via banking channels at the time of allotment
• Co-owner: Husband, Mr. Sandeep Narang (50% share)
• Reason for delay: Disputes between tenants and the builder
• Completion & registration: 03 November 2017

Due to the long delay, the stamp duty value in 2017 rose to ₹58.86 lakh, while the agreement value was ₹46.50 lakh.

Why the Income Tax Department Raised a Demand

Based on data available on the Insight Portal, the Assessing Officer (AO) reopened the assessment under Section 147 and applied Section 56(2)(x)(b) of the Income-tax Act.

The AO held that:

• Stamp duty value on the date of registration (2017) should be adopted
• The difference of ₹12.36 lakh should be taxed as “Income from Other Sources”

The CIT(A)/NFAC, Delhi upheld this view, mainly on the ground that:

• The allotment letter was not a registered document
• Therefore, it could not be treated as a valid agreement

What the Assessee Argued Before ITAT

The assessee challenged the addition, arguing that:

• The allotment letter fixed the consideration and was binding
• Part consideration was paid through banking channels much before registration
• Delay was beyond the buyer’s control
• Stamp duty valuation should be taken as on the date of allotment, not registration

Reliance was placed on multiple ITAT Mumbai rulings, including:

• Pinstripe Properties (P.) Ltd.
• Sajjanraj Mehta
• Dharmesh Ramesh Jhaveri
• Mohini Bharat Kumar Ludhani

ITAT’s Key Finding: Allotment Letter Can Be a Valid Agreement

The Tribunal categorically rejected the Revenue’s argument that only a registered agreement matters.

ITAT held:

• An allotment letter, even if unregistered, constitutes an “agreement to sell”
• What matters is whether:
  • Consideration is fixed, and
  • Part payment is made through account payee cheque / RTGS / banking channels

Since these conditions were satisfied in this case, the Second Proviso to Section 56(2)(x) was fulfilled.

Most Important Ruling: Booking Date Overrides Registration Date

The Tribunal ruled that:

For the purpose of Section 56(2)(x)(b), stamp duty valuation must be taken as on the date of allotment (11.12.2010) and not the date of registration (03.11.2017).

As a result:

• The addition of ₹12.36 lakh was deleted
• The appeal was allowed in full

Why This Judgment Is Crucial for Homebuyers

This ruling addresses a widespread and practical problem faced by homebuyers, especially in cities like Mumbai, MMR, Pune, and NCR.

Key takeaways for buyers:

• Builder delays cannot be used to tax buyers unfairly
• Unregistered allotment letters are legally relevant for tax purposes
• Buyers who paid even a small amount through banking channels at booking are protected
• Section 56(2)(x) cannot be applied mechanically without considering real-world facts

A Broader Message from ITAT

The judgment reinforces that:

• Tax law must align with commercial reality
• Genuine homebuyers should not be penalised for factors beyond their control
• Substance of the transaction prevails over procedural formalities

Conclusion

The ITAT Mumbai ruling in Meena Arjun Narang vs ACIT sets a strong precedent that booking date matters more than registration date when determining stamp duty valuation under income-tax law. For thousands of homebuyers caught in delayed projects, this decision offers long-awaited clarity and relief.

Also Read: Income Tax Tribunal Rules: Redevelopment Gains Not Taxable for Housing Societies; Crucial Shield for Flat Owners

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