THIDUVIL BALAKRISHNAN,CHENNAI vs. ITO, NONCORP, WARD 4(5), CHENNAI

The learned DR, on the other hand, strongly opposing condonation of delay petition filed by the assessee submitted that the reasons given by the assessee do not come within the ambit of reasonable and bonafide reasons, which can be considered for condonation of delay and hence, appeal filed by the assessee may be dismissed as not maintainable.

The assessee has raised the following grounds of appeal: “1. The order of the Commissioner of Income Tax(Appeals) confirming the additions to the extent of 10,79,630 is erroneous, contrary to law and Sustainable to the facts of the case. 2. The CIT(A) erred in confirming the addition of Rs.825000/- under sec.56(2)(vii) of the Act. 3. The CIT(A) failed to appreciate that there was no difference in the stated consideration in the sale deed and the guideline value of property and the stamp duty paid on this account was not disturbed by the registering authority and hence confirming the disallowance was unjustified on the facts of the case. 4. The CIT(A) further failed to appreciate that the additional stamp duty was paid on the 88-year old shed in the land, the value of which was estimated by the registering authority as against the value declared by assessee and hence this cannot lead to disallowance u/s.56(2)(vi) of the Act. 5. The CIT(A) was not justified in concluding that as the assessee had not contested the additional stamp duty paid, the

The brief facts of the case are that, the assessee is an individual and proprietor of ‘Neethu Timber and Saw Mills’, filed his return of income for the assessment year 2016-17 on 07.09.2016, declaring total income of Rs. 8,76,610/-. The case has been selected for scrutiny and the assessment has been completed u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) dated 27.12.2018 and determined total income of Rs. 58,28,888/-, by making addition towards difference between consideration paid for

The first issue that came up for our consideration from ground no. 2 to 5 of assesse’s appeal is addition of Rs. 8,25,000/- u/s. 56(2)(vii)(c) of the Act, towards difference between guideline value and consideration paid for purchase of property. The assessee has purchased a property for consideration of Rs. 3,40,00,000/- and paid additional stamp duty of Rs. 66,000/-. The assessee was confronted with additional stamp duty paid, for which the assessee stated that the building value has been estimated which resulted in

The ld. Counsel for the assessee, submitted that the ld. CIT(A) erred in not appreciating the fact that there is no difference between guideline value and consideration paid for purchase of property as per registered document. Although, there is a difference between value of building but said difference is on account of estimation of building, which cannot be considered as difference in consideration paid for purchase of property and guideline value. The Ld. Counsel for the assessee, further made an alternate submission in light of the decision of ITAT, Chennai Benches in the case of Doraiswamy Suresh (HUF) vs ACIT in ITA No. 609/Chny/2020, that if difference between guideline value and consideration paid for purchase of property is within tolerance band as prescribed u/s. 50C of the Act, then there cannot be any addition u/s. 56(2)(vii)(c) of the Act, because said amendment has to be considered as retrospective in nature from the date provision was inserted in the statue.

The Ld. DR, on the other hand supporting the order of the CIT(A) submitted that the assessee has admitted difference between guideline value and consideration paid for purchase of property and also offered to tax. Further, the assessee could not justify the value paid for purchase of property with any valuation report. Further, the assessee did not dispute the value determined for payment of stamp duty. Therefore, the AO has rightly made additions and their order should be upheld.

We have heard both the parties, perused materials available on record and gone through orders of the authorities below. As per the provisions of section 56(2)(vii)(c) of the Act, if difference between consideration paid for purchase of property and guideline value of said property, then said difference should be treated as income of the assessee for the relevant assessment year. In this case, there is no dispute with regard to the fact that there is a difference between guideline value of the property and consideration paid for purchase of said property, because the registration authority has levied an additional stamp duty of Rs. 66,000/- while

As regards alternate plea of the assessee that, the difference between guideline value and consideration paid for property is less than the tolerance band fixed by virtue of amendment to Section 50C by the Finance Act, 2020 and thus, no addition can be made u/s. 56(2)(vii)(c) of the Act, we find that, the amendment brought to Section 50C by the Finance Act, 2018 and further amendment by Finance Act, 2020 is held to be retrospective in nature, as held by ITAT, Mumbai in the case of Maria Fernades Cheryl vs ITO [2021] 187 ITD 738 (Mum). We, therefore of the considered view that by virtue of said amendment to section 50C of the Act, if difference between guideline value and consideration paid for purchase of property is less than the tolerance band, then said difference cannot be considered as deemed consideration in the hands of the seller and consequently the provisions of section

The next issue that came up for our consideration from Ground No.6 to 9 of assessee’s appeal is disallowance of certain expenditure u/s. 40(a)(ia) of the Act for non deduction of TDS. The AO was disallowed 30% of interest on other payment to the tune of Rs. 8,47,867/- u/s. 40(a)(ia) of the Act. As per Form-3CD filed along with return of income for the assessment year where the tax auditor certified that TDS has not been deducted on certain payments. It was the argument of the assessee that the impugned interest in other payment includes processing charges (upfront fee) paid for taking loan from bank which is not in the nature of interest to deduct TDS u/s. 194 of the Act.