KAPIL AGYARAM ARORA,PUNE vs. INCOME TAX OFFICER WARD 13(1), PUNE

We have heard both the parties and perused the records. In this case, the assessee had not filed return of income for AY 2018-19. The Assessing Officer (AO) received certain information on INSIGHT Portal of the Income Tax Department that the assessee had sold immovable property amounting to Rs.1,83,71,860/- and purchased immovable property for Rs.31,46,286/-. Accordingly, notice u/s 148A(b) of the Act was

The Ld. AR filed paper book. He submitted that the difference between the Actual Sale Consideration received and the Value Adopted by Stamp Authorities for the purpose of Stamp Duty is only 8.8%. The Ld. AR pleaded that the amendment to section 50C was interpreted by ITAT as retrospective and allowed 10% difference which was introduced by amendment in 2021. The Ld. AR submitted that Assessee has invested the said amount in New Flat. But the AO has allowed benefit of Section 54 only 50% as the New Flat has been purchased by Assessee in the Joint name with his father who is a senior citizen. Ld. AR pleaded that Amount has been invested in new flat hence assessee is eligible for full deduction u/s 54. Ld. AR relied on Decision of Hon’ble Delhi High Court in the case of CIT vs Ravinder Kumar Arora, 342 ITR 38 and Kamlesh Keswani vs ACIT WP(C) 13713/2022 Delhi High Court.

The Ld. DR relied on the order of the AO and the Ld. CIT(A). Ld. DR submitted at the most it may be set aside to AO for verification.

The basic fact emanating from the assessment order and submission of the Ld. AR is that the Assessee sold Flat Number A4 and A4a for total consideration of Rs.74,00,000/- during the year. The value adopted by Stamp Authority for the purpose of Stamp Duty was Rs. 80,52,860/-. The AO considered the said value as per section 50C of the Act. The difference between the Actual Sale consideration and the value adopted for section 50C is 8.8%.

The ITAT Mumbai in the case of Assistant Commissioner of Income-tax Vs. Sunil B Dalal, [2022] 145 taxmann.com 313 (Mumbai - Trib.)[12-07-2022] held as under : Quote, “17. The learned Authorized Representative supported the order of the learned CIT (A). He relied on the decision of the co- ordinate Bench in case of Maria Fernandes Cheryl (supra), wherein it is held that the prescribed tolerance band of 10% applies retrospectively. He further referred to the several judicial precedent relied upon before the learned CIT (A) as well as the decision of the co- ordinate Benches in case of Joseph Mudaliarv. Dy. CIT[2021] 130 taxmann.com 250/191 ITD 719 (Mum.), John Flower (India) (P.) Ltd. v. Dy. CIT[IT Appeal No. 7545 (Mum.) of 2014, dated 24-7-2017] and Pankaj Anilkumar Pitale v. ACIT [IT Appeal No. 6813 (Mum.) of 2017, dated 19-3-2019]. Accordingly, he submitted that there is no infirmity in the order of the learned CIT (A) in deleting the addition applying 10% tolerance band limit for this assessment year. 18. We have carefully considered the rival contentions and perused the orders of the lower authorities. Referred facts shows that Assessee has purchased 7 properties. Sale consideration in all the properties is28,78,28,500/- and stamp duty value is Rs. 26,96,75,300/-. Thus difference of Rs. 1,81,53,200/- was made by the LD AO u/s 56(2) (x) of The Act. The LD CIT found that out of 7 properties in case of 6 properties the difference between the agreed consideration and stamp duty value is approximately 6%. In the 7th property, such difference was 14.50 %. Therefore, he confirmed the addition of 7th properties and deleted the addition with respect to 6 properties holding that Proviso to section 50C inserted with effect from 1-4-2019 by the Finance Act 2018 allowed the tolerance band of 5%. It was held to be applicable retrospectively. Further, by the Finance Act 2020 with effect from 1-4-2021 in the same proviso the tolerance band is replaced by increasing it to 10%. Therefore, when there is no change in the wording of the proviso but only tolerance band is increased it should also apply retrospectively. 19. Coordinate bench in case of Maria Fernandes Cheryl (supra) has already held that the amendment made by Introducing proviso [Introduction of tolerance band of 5 % and later on 10%] applies with effect from 1-4-2003 when the provision of section 50C were introduced. 20. Further introduction of tolerance band is for removing the hardship in the section. once a statutory amendment is being made to remove an undue hardship to the assessee or to remove an apparent incongruity, such an amendment has to be treated as effective from the date on which the law, containing such an undue hardship or

Respectfully following the above decision of Coordinate Bench of ITAT Mumbai, we hold that the tolerance band of 10% is applicable in the case of the assessee and accordingly the Sale Consideration should be take as Rs.74,00,000/- which was actual sale consideration. Therefore, the capital gain calculation is as under : i. Sale Consideration Rs.74,00,000/- ii. Less Indexed Cost of acquisition Rs.12,58,780/- iii. LTCG Rs.61,41,220/-

The Cost of new flat purchased is Rs.67,00,000/- . The flat has been purchased in the joint name with father. Therefore, the AO in the assessment Order restricted deduction u/s 54 to 50% of Rs.67,00,000/-. However, Hon’ble Delhi High Court in the case of Commissioner Of Income Tax vs Ravinder Kumar Arora, 342 ITR 38 held as under : Quote, “9. On the aforesaid facts, we are of the view that the conditions stipulated in Section 54F stand fulfilled. It would be treated as the property purchased by the assessee in his name and merely because he has included the name of his wife and the property purchased in the joint names would not make any difference. Such a conduct has to be, rather, encouraged which gives empowerment to women. There are various schemes floated by the Government itself permitting joint ownership with wife. If the view of the Assessing Officer (AO) or the contention of the Revenue is accepted, it would be a derogatory step.

The Ld. DR has not brought to our notice any contrary decision of Hon’ble jurisdictional High Court. Hence,

In the result, the appeal of the assessee is allowed.