You buy a house jointly with your wife. When you register it the stamp duty value is higher, and the Income Tax Department decides to place the full tax liability on you. This raises an important question: can one co-owner be taxed on the entire difference between property price and stamp-duty value?Can the entire difference between a property’s actual purchase price and its stamp-duty value be added to the income of just one of its co-owners? A recent ruling by ITAT Mumbai has addressed this question in a case involving a husband and wife who jointly purchased a property.The tribunal was dealing with the case of a Mumbai taxpayer who purchased a flat jointly with his wife in Chembur in 2017. The couple paid Rs 60 lakh for the property, while its stamp-duty value was Rs 94.8 lakh. This created a difference of Rs 34.8 lakh between the actual purchase consideration and the value adopted for stamp duty purposes.Although the flat was jointly owned by the husband and wife, the tax officer added the entire Rs 34.8 lakh difference to the husband’s income. The reason given was that the wife’s case had “escaped scrutiny”. The husband subsequently challenged the order before the tribunal, following the Commissioner of Income-tax’s order in July 2025.
What the case is about
The property transaction took place in 2017, when the Mumbai taxpayer and his wife jointly purchased the flat for Rs 60 lakh. The registering authority, however, had determined its stamp-duty value at Rs 94.81 lakh.During the assessment proceedings, the tax officer noted that the husband had filed his ITR for the relevant year but had not included the Rs 34,81,500 difference between the stamp-duty value and the actual transaction value as taxable income.The tax officer took the view that this amount was taxable under Section 56(2)(x)(b) of the Income Tax Act.The taxpayer challenged the assessment before the tribunal.
What the taxpayer argued
The taxpayer’s argument was that the flat had not been purchased by him alone. He and his wife were joint owners, with his ownership share standing at 41.08% and his wife’s at 58.92%. The wife was also the first-named owner in the registered sale deed.Another argument put forward before the tribunal concerned the actual market value of the property. It was submitted that the stamp-duty value is generally determined on the assumption that the occupation certificate (OC) and other required amenities are available in the locality.In this particular case, however, the builder had not obtained the OC, while other basic amenities were also unavailable. The taxpayer therefore contended that the property’s fair market value was lower than the stamp-duty value.
Why ITAT Mumbai ruled in taxpayer’s favour
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that joint ownership of a property with a spouse or another family member does not automatically make one co-owner solely responsible for tax on the entire difference between the purchase consideration and the stamp-duty value.The tribunal held that the tax officer could not have added the entire Rs 34.8 lakh difference to the husband’s income while disregarding the fact that the property was jointly owned by him and his wife in clearly defined shares.“Merely for the fact that no action was taken by the Department in the case of his wife for taxing the difference to the extent of her share, there could be no justification to add the entire difference in hands of the assessee (husband),” it said.The husband had also disputed the valuation and sought a reference to a departmental valuation officer (DVO). The tribunal agreed that this request should have been considered. It observed that once the taxpayer had specifically challenged the stamp-duty valuation and submitted valuation-related material, the Income Tax officer should have referred the property to the DVO.ITAT Mumbai set aside the appellate order and remanded the matter to the Income Tax officer for fresh consideration. The tribunal also directed that the husband be given a reasonable opportunity to present his case.The order, however, is a remand and does not settle the final taxable amount. The tribunal has sent the matter back to the Assessing Officer to examine it afresh. What the ruling determines is the manner in which the authorities were required to approach the issue, but had not done so.
