Let me explain this by taking a simple eg.
Mr A ( buyer of prop )
Prop Purchased by A say for 80 lK ( lk as in lakhs )
Prop stamp duty value 100 lk
Then as per Section 56(2)(Vii) {AMENDMENT OF FA 2013} 20lk (100-80) will become income from other sources in the hand of A. so yes ITO is correct in saying so.
BUT WAIT SOMETHING CAN BE DONE. IF SITUATION MATCHES . ( consult CA before doing this )
See this is amendment of FA 2013, Earlier if the situation had been the same then 20lk would not have been taxed and reduced from the cost of acquisition ie cost of prop would have been 80lk for A insted of 100lk.
if prop. is purchased in FY 13-14 (1.4.2013 - 31.3.2014) and if only you can show that actual possession of prop was taken by A in FY 12-13 (1.4.2012-31.3.2013) then you dnt have to bear such tax.
Transfer is equivalent to possession and not actual transfer on papers.