SHREE ASHAPURA COMBINES,KALYAN vs. ACIT, CIRCLE 3, KALYAN, KALYAN

आदेश / ORDER PER BEENA PILLAI, JUDICIAL MEMBER:

Present appeal filed by the assessee arises out of the order dated 25/07/2025 passed by NFAC, Delhi, for A.Y. 2014-15, on the following grounds of appeal:-

“1. The Hon CIT(A) erred in confirming the addition of Rs.1,31,20,076/- made u/s 43CA of the I.T Act 1961, on account of difference between the actual sale consideration and the market value as per stamp valuation authorities, not appreciating the argument of the appellant that the addition

ITA 5822/MUM/2025 SHREE ASHAPURA COMBINES was not justified as the concerned agreement for grant of development rights for a plot of land situated at village Wadeghar, Tal. Kalyan, Dist. Thane was executed on 7" May 2012, falling in the previous year relevant to A.Y. 2013-14 and therefore the provisions of section 43CA were incorrectly applied, and the unjustified addition required to be deleted.

Assessee is a partnership firm and is engaged in the business of builders and developers. During the year under consideration assessee filed its return of income on 25/09/2014 declaring total income of Rs. 1,31,53,200/-. The case was selected for scrutiny and statutory notices were issued to assesse in response to which representative of assessee filed requisite details as called for. The Ld. AO noted that the assessee, during the year under consideration, the assessee entered into a sale agreement whereby a piece of land admeasuring 4,994 square meters bearing Survey No. 66, Hissa No. 3/1, was sold vide agreement dated 18/07/2013 for a consideration of Rs.1,95,11,674/-. The Ld. AO noted that, stamp duty authorities adopted the value at Rs.3,26,31,750/- for the purpose of registration of the said plot.

2.1. The Ld. AO thus issued a show-cause notice to the assessee invoking the provisions of section 43CA of the Act. The assessee was also called upon to explain as to why the difference between the

ITA 5822/MUM/2025 SHREE ASHAPURA COMBINES agreement value and the stamp duty valuation should not be added in terms of the provisions of section 43CA of the Act.

2.2. In response to the said notice, the assessee submitted that the land sold was reserved under the Higher Secondary School Zone by the local authority and, therefore, would not have fetched the value as computed by the stamp duty authorities. It was submitted that lands covered under the School Zone usually fetched lower values as compared to lands covered under the Residential Zone.

2.3. The assessee further submitted that the land could have been surrendered to the Municipality in consideration of TDR, which would have involved a lot of procedures and formalities. The assessee submitted that, in the event the land was surrendered to the Municipality, the same would have involved considerable procedural requirements and formalities. As the assessee was receiving an amount nearly equal to the TDR value by selling the land directly, thereby avoiding the hassles involved in surrendering the property, the sale agreement was entered into.

2.4. The assessee further submitted that under these circumstances provisions of Section 43CA would not attract as the sale value was not less than the stamp duty valuation. In fact, the sale consideration in the present circumstances is based on many factors, location, Government reservation etc. which has not been considered by the stamp duty authorities before assigning the value. The assessee thus submitted that the stamp duty authorities, therefore, cannot be considered to attract the provisions of Section 43CA of the Act.

The Ld.AO after considering the submission of assessee held as under:-

“4.3 The assessees submission is carefully perused and the same is not accepted for the following reasons:-

ITA 5822/MUM/2025 SHREE ASHAPURA COMBINES 1. It may be noted that assessee had entered into development agreement for the same piece of land, hence, assessee’s contention that no development can be undertaken in the land; is not fully justified.

4.4 Here it is pertinent to mention the provisions of the Section 43CA of the Act:

“(1) Where the consideration received or accruing as a result of the transfer by an assessee of an asset (Other than a capital asset) being land or building or both, is less than the value adopted or assessed or assessable by any authority of State Government for the purpose of payment of the Stamp Duty in respect of such transfer, the value so adopted or assessed or assessable for the purpose of computing profits and gains from transfer of such asset, be deemed to be the full value of consideration received or accruing as a result of such transfer.”

Reading of section 43CA clearly brings out the fact that it is a deeming provision and hence even if assessee is not getting full Stamp duty value as sale consideration even then assessee is required to offer income as per the provision of this section. Section 43CA of the Act is a statutory provision and it is duty of the assessee to offer income as per its provision regardless of the actual sale consideration.”

The Ld. AO thus made an addition of Rs.1,31,20,076/- u/s 43CA of the Act.

Aggrieved by the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A).

ITA 5822/MUM/2025 SHREE ASHAPURA COMBINES become applicable unless the necessary conditions prescribed therein are satisfied.

3.1. The Ld. CIT(A), after considering the submissions of the assessee, observed and held as under:

“5.5 The appellant is a builder and developer. The asset sold here is the stock in trade of the appellant in which case section 43CA is squarely applicable. Section 50C of the Act would not be applicable here as its application is only limited to computation of income chargeable under the head 'Capital gains' as is evident from specific reference in sub-section (1) of section 50 of the Act. In fact section 50C of the Act can only govern the valuation of the property to determine capital gains and cannot govern valuation of transfer of assets (other than a capital asset) i.e. stock in trade.

5.6 Section 43CA has been introduced into the Act w.e.f. 1st April, 2014 which governs taking of full value of consideration for transfer of assets other than capital assets on. the basis of stamp duty valuation. Thus, this section is applicable from AY 2014-15 onwards. Section 43CA of the Act finds a place as a part of Chapter IV-D - Profits and gains of business or profession. Therefore, with effect from 1st April 2014 the stamp duty valuation of assets sold could be taken as value of consideration. Section 50C of the Act has no application to value stock in trade is also a view taken by Hon'ble Allahabad High Court in Commissioner of Income Tax v. Ken Construction and Colonizers (P.) Ltd. (2012) 208 Taxman 478/20 taxman.com 381. The Hon'ble Madras High Court in CIT v. Thiruvengadam Investments (P.) Ltd. (2010) 320ITR 345 has also held that section 50C of the Act cannot be invoked to arrive at full consideration of sale of business asset.

5.7. In view of the above, it is held that section 43CA is applicable from AY 2014-15 onwards and since the case of the appellant falls under the assessment year 2014-15, the section is squarely applicable in its case. Further, section 50C is not applicable in its case as the asset involved here is the stock in trade of the appellant being in the business of a developer and builder. Thus, I am of the view that the AO has correctly assessed the asset sold taking the stamp duty valuation as the value of consideration u/s 43CA. Therefore, I find no infirmities in the order of the appellant.

5.8 The contention of the appellant that the AO ought to have referred the case to DVO holds no relevance as the addition has been made u/s 43CA and that section 50C of the Act cannot be invoked to arrive at full consideration of sale of business asset. Therefore, case laws cited by the appellant are not applicable in its case for the aforementioned reasons.”

Aggrieved by the order of Ld.CIT(A) assessee is in appeal before this Tribunal.

ITA 5822/MUM/2025 SHREE ASHAPURA COMBINES notified by the Government, is 4,994 square meters. He referred to page 90 of the sale agreement placed in the paper book, wherein the sale agreement categorically identifies the free area available for residential purposes and the area reserved for school purposes as notified.

4.1. The Ld. AR thus submitted that the area which actually falls in the residential zone and could be commercially exploited is only 293 square meters. The Ld. AR emphasized that nearly 95% of the land is not available for development, being under municipal reservation for a specific purpose. This specific reservation was not considered by the stamp duty authorities and, therefore, the entire plot was valued as a residential plot, which is contrary to the Government notification.

4.2. The Ld. AR further submitted that the assessee had obtained a valuation report from a Government-approved valuer, placed at pages 12 to 17 of the paper book, wherein the value of the total land was worked out at Rs.1,95,79,002/-. He submitted that the agreement value at which the assessee registered the sale deed was Rs.1,95,11,674/-, which is within the permissible range.

4.3. The Ld. AR argued that the provisions of section 43CA would not be applicable to the present transaction as the said provision was introduced with effect from 01/04/2014.

4.3.1. The Ld. AR submitted that section 43CA is not applicable to the present transaction, as the said provision was introduced with effect from 01/04/2014, which governs the adoption of stamp duty valuation as the full value of consideration in respect of transfer of assets other than capital assets. He submitted that, by the plain language of the provision, it is not retrospective in nature and there is no statutory provision based on which the stamp duty valuation could have been adopted as the basis in the present case.

ITA 5822/MUM/2025 SHREE ASHAPURA COMBINES 4.4. On the contrary, the Ld. DR relied upon the orders passed by the authorities below. The Ld. DR emphasized the observations of the Ld. CIT(A) in paragraphs 5.6 and 5.7, reproduced hereinabove. It was submitted that, as the land forms part of stock-in-trade, section 50C cannot be applied and, therefore, the only provision under which the transaction could be examined is section 43CA.

We have perused the submissions advanced by both sides in light of the records placed before this Tribunal.

5.1. Even before applying the provisions of section 43CA, the Ld. AO did not call for a DVO's report in order to ascertain the actual valuation of the said land. In the interest of justice, we deem it appropriate to remit this issue back to the file of the Ld. AO with a direction to refer the valuation of the said land to the DVO in order to ascertain the value that could be considered.

5.2. Insofar as the applicability of section 43CA is concerned, the decision of the Hon'ble Bombay High Court in the case of PCIT vs. Swaananda Properties Pvt. Ltd., reported in 111 taxmann.com 94 (Bombay) [2019] has categorically held that the provisions of section 43CA would be applicable from 01/04/2014 and any transaction prior thereto would not attract the said provisions. We thus hold that provisions of Section 43CA would not be applicable to the present facts of the case.

ITA 5822/MUM/2025 SHREE ASHAPURA COMBINES 5.3. We, thus, remand this issue back to the file of the Ld. AO with the directions hereinabove to consider the claim of the assessee in accordance with law as per direction in Para 5.1. Needless to say, proper opportunity of being heard shall be granted to the assessee.

In the result, the appeal filed by the assessee stands allowed for statistical purposes.

Order pronounced in the open court on 05/06/2026

Sd/- Sd/- JAGADISH BEENA PILLAI ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai Dated: 05/06/2026 SC. Sr. P.S.

ITA 5822/MUM/2025 SHREE ASHAPURA COMBINES Copy to: SHREE ASHAPURA COMBINES, OM RESIDENCY, NEAR RAUNAK CITY, DON BOSCO SCHOOL ROAD, KALYAN, 1 DIST. THANE, THANE-421301, MAHARASHTRA

ACIT, CIRCLE 3, KALYAN, 2ND FLOOR, RANI MANSION, MURBAD 2 ROAD, KALYAN (W), DIST. THANE, THANE-421301, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE