XYLON DEVELOPERS PRIVATE LIMTIED ,BANGALORE vs. INCOME TAX OFFICER, WARD-7(1)(3), BANGALORE

At the outset, it was noticed that the appeal was filed with a delay of 93 days. The learned AR filed the condonation petition and stated that assessee was suffering from health issues requiring continuous medical treatment and therefore could not file the appeal within the prescribed time limits. He further submitted that the delay is not intentional and deliberate and prayed for condonation of the delay. From the petition filed by the assessee, we notice that there is sufficient cause as advanced by the assessee and hence we are inclined to condone the delay of 93 days in filing the appeal before the Tribunal and proceed to adjudicate the appeal on merits.

Briefly stated facts of the case are assessee, a company, filed its return of income for the Assessment Year 2016-17 on 08.09.2017 declaring a total income of Rs.28,97,573/- under section 115JB of the Act. Based on the information available with the Department, it was noticed that the assessee company has sold one property via sale deed dated 07.10.2025 for a sum of Rs.1.80 Crores. It was also observed that assessee has received Rs.1.50 Crores by cash from the purchaser. The learned AO observed that the assessee has not followed the sub-section 4 of section 43CA of the Act and hence treated the full consideration for the purpose of section 43CA of the Act at Rs.2,46,58,000/- as escapement of income in the year in which transfer took place i.e., in Assessment Year 2016-17. He therefore proceeded to issue notice under section 148 of the Act on 31.03.2021 after obtaining necessary approval from the competent authorities. In response to the notice, the assessee company filed its return of income on 05.04.2021 declaring Nil income. Subsequently, notice under section 143(2) of the Act was issued and served on the assessee. In compliance with the notice, assessee filed its reply on 01.10.2021 and raised objections to the reasons recorded in the notice under section 148 of the Act. The AO disposed off the objections on 17.12.2021 through a speaking order. Thereafter, notice under section 142(1) of the Act along with the detailed questionnaire was issued on 17.12.2021. The assessee did not respond to the notice. Therefore, notice under section 144 of the Act was issued to the assessee followed by a show cause notice. In response to the show cause notice, the assessee furnished reply. The learned AO found submissions not acceptable and proceeded to add an amount of Rs.2,46,58,000/- as unexplained income under section 43CA (long term capital gain) of the Act.

On being aggrieved by the Order of the learned AO, assessee carried the matter before the learned CIT(A). Before the learned CIT(A), the assessee submitted that assessee company has entered into an agreement to sell on 27.08.2010 for a total consideration of Rs.2,54,42,400/- against which Rs.1.50 Crores is received in cash as advance from the customer. Subsequently, Assignment Deed dated 06.12.2012 was entered into between the assessee company and the original purchaser stating that in view of delay in completing the project, the sale consideration is being refixed at Rs.2,06,00,000/-. Finally, the absolute sale deed was entered on 07.10.2015 for a sale consideration of Rs.1,80,00,000/- wherein the guideline value stood at Rs.4,26,58,000/-. Considering the submissions made by the assessee, the learned CIT(A) found that there is no infirmity in the Order of the learned AO and dismissed the appeal of the assessee.

On being aggrieved by the Order of the learned CIT(A), assessee is in appeal before us by raising the following grounds:

The only issue emerging from the grounds of appeal is with respect to guideline value determined by SRO for the purpose of registration of sale deed which stood at Rs.4,26,58,000/- instead of actual sale consideration agreed at Rs.1.80 Crores. The learned AR submitted that assessee has entered into agreement for sale on 21.08.2010 for a total sale consideration of Rs.2,54,42,400/- and has received an advance of Rs.1.50 Crores which is duly reflected in the audited financial statement of the assessee for the year ended 31.03.2011. He further submitted that at the time of entering into the agreement, the guideline value was Rs.1.24 Crores. Subsequently, the original purchaser transferred their rights in the property to another person through an assignment deed dated 06.12.2012 with the consent of the assessee company owing to delay in completion of the project. The sale consideration was revised to Rs.1.80 Crores out of which Rs.1.50 Crores has already been received by the assessee. The argument of the learned AR is agreement for sale has been entered on 27.08.2010 and substantial amount has been received in advance, the stamp duty valuation in accordance with the provisions of section 43CA of the Act cannot be applied to the instant case as the amendment to section 43CA is effective from Assessment Year 2014-15. He further submitted that the provisions of section 43CA of the Act cannot be applied retrospectively to the transactions entered into prior to its introduction. On this issue, he relied on the decision of the Co-ordinate Bench of Delhi in the case of Bal Kishan Gupta Vs. ACIT (2013) 152 taxmann.com 567 (Delhi – Trib.) and decision in the case of Indexone Tradecone Pvt. Ltd., Vs. DCIT in ITA No.470/JP/2018, Order dated 16.07.2018.

On the other hand, the learned DR fully relied on the Order of the Revenue authorities and submitted that since the sale deed has been executed on 07.10.2015, section 43CA of the Act shall be applicable to the instant case. He prayed that the Order of the learned CIT(A) be upheld.

We have heard the rival contention and perused the material available on record. The facts of the instant case are assessee has entered into an agreement to sell with respect to the Flat at Skav Blanca with Shri. N. M. Spoorthy and Smt. Shilpa Spoorthy (original purchaser) for a total sell consideration of Rs.2,52,42,400/-. The assessee also received an advance of Rs.1.50 Crores by way of cash which is duly reflected in the financial statements as available in Paper Book Page No.41. Subsequently, the above original purchaser transferred their rights in the property to Shri. Mukesh Goklany through an assignment deed dated 06.12.2012 with the consent of the assessee company. Due to the delay in the completion of the project, sale deed was finally executed on 07.10.2015 for a revised consideration of Rs.1.80 Crores. It is noticed that assessee has received substantial amount against the agreement for sale of property on 21.08.2010 before the introduction of section 43CA of the Act w.e.f. 01.04.2014. On the date of agreement, it was submitted that the guideline value was Rs.1.24 Crores as against the guideline value of Rs.4.86 Crores on the date of registration of the sale deed on 07.10.2015. The issue before us is whether the guideline value should be adopted as on the date of agreement or as on the date of registration of the sale deed. The possession of the property was handed over to the parties while entering into the agreement. The final sale deed was registered on 07.10.2015 disclosing the cash and cheque payment received earlier. Further, we also notice that advance sale consideration of Rs.1.50 Crores have been duly declared in the assessee’s return of income which was not disputed by the Revenue for the Assessment Year 2011-12. In these circumstances, wherein the majority of the sale consideration has been received on the date of agreement to sell in the previous years and the significant risk has been transferred by way of legally enforceable agreement, the question that arises for consideration is whether the provision of section 43CA of the Act can be invoked in respect of such transactions for the reason that sale deed has been executed during the year under consideration wherein the SRO value for the purpose of payment of stamp duty is higher than what has been agreed between the assessee and the buyer while entering into the agreement for sale. The provision of section 43CA of the Act is reflected below for the sake of brevity: