Manoj Devshichhadva v. ITO

Case snapshot

Sections / provisions: 56(2)(x)

Questions before the Court / Tribunal

• Redevelopment; alternate accommodation; receipt of property: The matter concerns section 56(2)(x) in a redevelopment context. The reported reasoning examines when property can be said to have been received and how pre-existing tenancy or occupancy rights affect the consideration analysis.

Material facts and background

The brief facts of the case are that the assessee is an individual who filed

his return of income for the Assessment Year 2018-19 on 25.08.2018 declaring a total income of ₹12,47,170/-. During the course of assessment proceedings, the

Assessing Officer observed that the assessee had entered into two registered agreements dated 12.12.2017, which were registered on 13.12.2017, with respect to premises Nos. C-1 and C-50 having stamp duty values of ₹54,79,000/and ₹83,91,000/- respectively. The Assessing Officer observed that the total stamp duty value of the two premises was ₹1,38,70,000/- and the Assessing Officer was of the view that the assessee had received these immovable properties without consideration during the relevant previous year. Accordingly, the Assessing Officer issued a show cause notice asking the assessee to explain why the stamp duty value should not be taxed under section 56(2)(x) of the Income-tax Act (“the Act”). The assessee contended that the new premises had not actually been received since only agreements had been executed and the redevelopment project was still in progress. The assessee was further explained that the agreements were executed in lieu of the assessee's tenancy rights in four existing shops and, therefore, the transaction was supported by valid consideration. The Assessing Officer, however, rejected these explanations by holding that registration of the agreements had given...

In appeal, the Ld. CIT(Appeals) held that the permanent alternate

accommodation received by the assessee under the redevelopment agreement denoted immovable property within the meaning of the Act and the expression "immovable property" could not be confined merely to the physical structure but also comprised the rights attached thereto. The CIT(Appeals) observed that the transaction, in substance, involved receipt of valuable immovable property by the assessee in exchange for extinguishment of tenancy rights. The CIT(Appeals) held that by executing and registering the redevelopment agreements, the assessee had acquired absolute ownership rights over the alternate premises which could not thereafter be altered without his consent. Therefore, the property was deemed to have been received during the relevant assessment year notwithstanding the fact that physical possession had not been handed over. The Ld. CIT(Appeals) also held that the Assessing Officer had rightly invoked section 56(2)(x) of the Act as the assessee had acquired valuable property without paying adequate monetary consideration and accordingly upheld the addition of ₹1,38,70,000/-.

The assessee is in appeal before us against the order passed by

CIT(Appeals) dismissing the appeal of the assessee.

Appellant / assessee submissions

raised by the assessee in the memorandum of appeal, during the course of hearing the learned counsel for the assessee confined his arguments principally to the legality of the addition made under section 56(2)(x) of the Act. Accordingly, the present adjudication is confined to the grounds as argued before us and all findings recorded herein are in the context of the submissions advanced by the learned counsel during the course of hearing.

Revenue / respondent submissions

The judgment copy does not separately set out this component in a distinct section; refer to the full order and the reasoning section below.

Court / Tribunal analysis and reasoning

provision is attracted only where an assessee "receives" an immovable property during the relevant previous year. Therefore, the existence of an actual receipt of immovable property is a fact which needs to be, ascertained before the deeming fiction contained in section 56(2)(x) of the Act can be invoked.

redevelopment agreements itself amounted to receipt of immovable property. In our considered opinion, such an approach ignores the essential requirement contained in section 56(2)(x) of the Act, viz, the actual receipt of the immovable property. Mere execution or registration of a redevelopment agreement creates only a contractual right to obtain a flat in future upon completion of 5

Bench in Amar Narendra Joshi v. ITO [2026] 186 taxmann.com 318 (Mumbai-Trib.), wherein, after following the decision in Anil Dattaram Pitale (supra), it was held: “The assessee received a new residential flat in lieu of surrender of old flat. Therefore, the case of the assessee is squarely covered by the decision in Anil Dattaram Pitale... it was not a case of receipt of immovable property for inadequate consideration that would fall within the purview of section 56(2)(x). Hence, the Assessing Officer was directed to delete the entire addition.”

is being allotted in exchange for surrender of tenancy rights. Therefore, the transaction is supported by valuable consideration and cannot, in our view, be

decisions of the Coordinate Benches in Snehalata Heramb Dhayagude v. Jurisdictional AO (ITA No.258/Mum/2026 dated 21.04.2026), Anil Dattaram Pitale v. ITO [2025] 173 taxmann.com 51 (Mumbai-Trib.) and Amar Narendra Joshi v. ITO [2026] 186 taxmann.com 318 (Mumbai-Trib.), we hold that the Assessing Officer was not justified in invoking the provisions of section 56(2)(x) of the Act.

Operative decision and relief

decisions of the Coordinate Benches in Snehalata Heramb Dhayagude v. Jurisdictional AO (ITA No.258/Mum/2026 dated 21.04.2026), Anil Dattaram Pitale v. ITO [2025] 173 taxmann.com 51 (Mumbai-Trib.) and Amar Narendra Joshi v. ITO [2026] 186 taxmann.com 318 (Mumbai-Trib.), we hold that the Assessing Officer was not justified in invoking the provisions of section 56(2)(x) of the Act.

Copy to: MANOJ DEVSHICHHADVA 1100, MAHAVIR BUILDING, 1 BHANDARKAR ROAD, MATUNGA (C.RLY) MUMBAI – 400 019 INCOME TAX OFFICER – WARD 20(2)(1) 2 PIRAMAL CHAMBERS, DR.S.S. RAO ROAD, PAREL, MUMBAI – 400 012

Authorities and precedents appearing in the judgment

• Mumbai Tribunal in Snehalata Heramb Dhayagude v. Jurisdictional AO
• Pitale v. ITO
• Bench in Amar Narendra Joshi v. ITO
• Coordinate Benches in Snehalata Heramb Dhayagude v. Jurisdictional AO (ITA No.258/Mum/2026 dated 21.04.2026)
• Joshi v. ITO

This list is machine-assisted from the judgment text and is not a substitute for checking the full citation chain in the PDF.

Ratio and legal principle

The decision turns on Redevelopment; alternate accommodation; receipt of property. The operative result is classified as Operative order controls. Read the rule only with the statutory version, factual findings and precedent chain recorded in the full judgment.

Why this judgment matters

The case is relevant to taxpayers, advisers and litigators dealing with Redevelopment; alternate accommodation; receipt of property. Its practical value lies in the interaction between the statutory text, the evidentiary record and the procedural route followed in this case.

Practitioner action points

• Use the judgment as a fact-specific precedent: match the statutory version, assessment period, procedural stage and evidentiary record before relying on the result.
• Check whether a later High Court/Supreme Court order has affirmed, reversed, distinguished or rendered the decision academic.
• For litigation, attach the full judgment/order to the working paper and cite the paragraph/page supporting the proposition rather than relying on a headnote alone.

Full judgment and source trail

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