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Facts
The assessee, a real estate company, challenged additions made by the AO under Section 43CA for AY 2018-19, amounting to Rs. 99,02,100/-, which were partially confirmed by the CIT(A) to Rs. 79,09,325/-. These additions arose from the difference between the actual sale consideration of flats and the stamp duty valuation. The CIT(A) had allowed relief for variations up to 10% but confirmed additions where the variation exceeded 10%.
Held
The tribunal directed the AO to delete additions for all flats where the difference between the stamp duty value on the date of registration and the actual sale consideration was less than 10%. This relief is contingent upon the assessee fulfilling the conditions of Section 43CA(4), specifically that a part of the consideration was received by account payee cheque or other electronic mode on or before the date of agreement, allowing the stamp duty value on the agreement date to be considered.
Key Issues
Whether additions under Section 43CA are justified due to the difference between actual sale consideration and stamp duty valuation, and whether the benefit of Section 43CA(3) and (4) regarding the date of agreement and mode of payment is applicable.
Sections Cited
250, 143(3), 43CA, 143(2), 142(1), 270A(1), 144B, 50C
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Income Tax Appellate Tribunal, KOLKATA ‘C’ BENCH, KOLKATA
Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2018-19 dated 24.06.2024, which has been passed against the assessment order u/s 143(3) of the Act, dated 27.04.2021. I.T.A. No.: 1665/KOL/2024 Assessment Year: 2018-19 Sugam Griha Nirmaan Limited.
The assessee is in appeal raising the following grounds of appeal:
“1. That the Ld. AO erred in law as well as in facts in making addition of Rs. 99,02,100/-on account of alleged deemed sales consideration u/s. 43CA of the Income Tax Act, 1961 and the Ld. CIT(A) erred in confirming the Said addition to the tune of Rs. 79,09,325/- in as much as in view of the facts and circumstances of the case no such addition was at all liable to be made.
That Ld. AO erred in law as well as in facts in making the said addition of Rs. 99,02,100/- and the Ld. CIT(A) erred in confirming the Said addition to the Tune of Rs. 79,09,325/- in as much as in view of the provisions of section 43CA(3) & 43CA(4), the said additions are liable to be deleted.
That the appellant craves leave to add, alter, change or modify any of the grounds of appeal at or before the hearing of the appeal.”
Brief facts of the case are that the assessee is a company and is in the business of real estate. The assessee filed its return of income on 30.10.2018 declaring total income of Rs. 9,60,56,320/-. The case of the assessee was selected for scrutiny through Computer Assisted Scrutiny Selection (in short ‘CASS’) and notices u/s 143(2)/142(1) of the Act were issued and duly served upon the assessee. The assessee was asked to show cause as to why the difference amount of Rs. 99,02,100/- between the adopted or assessed or assessable value and the consideration received or accrued should not be added to the total income of the assessee u/s 43CA of the Act. In response to the notice, the assessee submitted its reply. The Ld. AO found the submission of the assessee as not acceptable as the assessee failed to submit details of payment received and the registration of transfer of assets for which the Auditor in the audit report mentioned that the flats were sold for a price less than the value adopted by the authority of the State Government. The Ld. AO also found that there were no supporting evidences about the value adopted by the State Government at the time of registration and the ledger accounts of the flat buyers had also not been provided. The I.T.A. No.: 1665/KOL/2024 Assessment Year: 2018-19 Sugam Griha Nirmaan Limited. Ld. AO discussed about the curative amendment by the Finance Act, 2018 with effect from 01.04.2019 that was not applicable in the case of the assessee as the case is of FY 2017-18. The Ld. AO added the difference amount of Rs. 99,02,100/- with certain other additions to the income of the assessee and assessed the total income of the assessee at Rs. 10,59,58,420/- u/s 143(3) r.w.s. 144B of the Act. The penalty proceeding u/s 270A(1) of the Act was also separately initiated. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who, vide order dated 24.06.2024, considered the submission of the assessee on the additions made, but was of the view as mentioned at page 18 of the order that during the appellate proceeding also the assessee failed to give any details regarding the conditions of sub-section (4) of section 43CA of the Act being satisfied for the cases in which he wished to avail the benefit of section 43CA(3) of the Act. As no evidence had been filed to prove that the conditions of section 43CA were fulfilled, no benefit of sub-section (3) of section 43CA of the Act could be allowed in respect of the 10 flats mentioned at page 18 of the appeal order and after adopting the valuation as on the date of registration, he worked out the difference between the valuation as on the date of registration for the purpose of registration and the consideration received and after carrying out detailed analysis and after considering the issue as to whether the variation between the sale consideration and the value adopted by the Stamp Duty Authority is to be allowed up to 5% or 10% and after examining the memorandum explaining the provisions of Finance Bill, 2018 which stated that the amendment shall be applicable from AY 2019-20 and also the case laws in this regard, held that wherever the variation between the sale consideration and the value adopted by the Stamp Valuation Authority I.T.A. No.: 1665/KOL/2024 Assessment Year: 2018-19 Sugam Griha Nirmaan Limited. was up to 10%, relief was allowable and for the cases where the variation exceeded 10% the addition was confirmed. Thus, the addition made of Rs. 79,09,325/- was confirmed and relief was allowed for Rs. 19,92,775/- and appeal was partly allowed.
Aggrieved with the order of the Ld. CIT(A) the assessee has filed the appeal before this Tribunal.
Rival contentions were heard and the submissions made have been examined. It was submitted that the Ld. AO compared the sale consideration in respect of 18 properties on the date of registration as per page 2 of the assessment order. It was submitted that the agreements are available and also the issue was raised before the Ld. AO. Our attention was drawn to page 2 of the paper book filed which is the copy of submission dated 24.04.2021 from page 1 to 3 of the paper book and the Ld. AR drew our attention to sub-section (3) of section 43CA of the Act where it is specifically provided that where the date of agreement fixing the value of consideration for transfer of the asset and the date of registration of such transfer of asset are not the same, the stamp duty value on the date of the agreement shall be taken if the amount of consideration or a part thereof has been received by way other than cash on or before the date of agreement. For the sake of convenience, the provisions of section 43CA of the Act are reproduced as under: “Special provision for full value of consideration for transfer of assets other than capital assets in certain cases. 43CA. (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 a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or I.T.A. No.: 1665/KOL/2024 Assessment Year: 2018-19 Sugam Griha Nirmaan Limited. assessable shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration received or accruing as a result of such transfer: Provided that where the value adopted or assessed or assessable by the authority for the purpose of payment of stamp duty does not exceed one hundred and ten per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration: Provided further that in case of transfer of an asset, being a residential unit, the provisions of this proviso shall have the effect as if for the words "one hundred and ten per cent", the words "one hundred and twenty per cent" had been substituted, if the following conditions are satisfied, namely:— (i) the transfer of such residential unit takes place during the period beginning from the 12th day of November, 2020 and ending on the 30th day of June, 2021; (ii) such transfer is by way of first time allotment of the residential unit to any person; and (iii) the consideration received or accruing as a result of such transfer does not exceed two crore rupees. (2) The provisions of sub-section (2) and sub-section (3) of section 50C shall, so far as may be, apply in relation to determination of the value adopted or assessed or assessable under sub-section (1). (3) Where the date of agreement fixing the value of consideration for transfer of the asset and the date of registration of such transfer of asset are not the same, the value referred to in sub-section (1) may be taken as the value assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer on the date of the agreement. (4) The provisions of sub-section (3) shall apply only in a case where the amount of consideration or a part thereof has been received by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed on or before the date of agreement for transfer of the asset. Explanation.—For the purposes of this section, "residential unit" means an independent housing unit with separate facilities for living, cooking and sanitary requirement, distinctly separated from other residential units I.T.A. No.: 1665/KOL/2024 Assessment Year: 2018-19 Sugam Griha Nirmaan Limited. within the building, which is directly accessible from an outer door or through an interior door in a shared hallway and not by walking through the living space of another household.”
Our attention was also drawn to page 35 of the paper book which runs into 216 pages. At page 35 the details of variation between Stamp Duty Value of flats with actual sale consideration have been worked out and only in the case of the flat of Shri Biplab Konar, the percentage difference between the Stamp Duty Value as on the agreement date and the actual sale consideration is Rs. 6,54,954.50 which works out to 11.62% of the actual sale consideration of Rs. 56,37,192.50 for area of flat of 1763 sqft. with the date of agreement being 16.10.2013. The copies of agreement are also enclosed with the paper book filed and it was submitted that the entire consideration had been received by cheque and not by cash and therefore, sub-section (4) of section 43CA of the Act was applicable. On page 37 of the paper book, the copy of sale agreement between Sugam Griha Nirman Ltd. and Mr. Arup Kumar Raha and Mrs. Sreemoyee Raha for the Dup-4G on the 4th and 5th Floor, Block 3 of the property at Kolkata has been enclosed for which the agreement is dated 29.11.2013 and as mentioned on page 47 of the paper book, the details of advance received on 14.08.2012 for Rs. 5 Lakh vide cheque No. 939184 (bank clearing date 18.08.2012) is also mentioned. The agreement dated 29.11.2013 gives the details of the price at Rs. 58,22,307.50 for the super built-up area of the flat being 1763 sq. ft. and the payment schedule for Ground plus seven storied building has also been mentioned at page 45 and details of cheque payments of Rs. 5 Lakh on 14.08.2012 and Rs. 10,43,077/- on 19.09.2012 are also mentioned on page 47. The copy of the ledger account of Shri Arup Kumar Raha for property at 3/Dup-4G is also enclosed at page 49 of the paper book and the copy of bank account of I.T.A. No.: 1665/KOL/2024 Assessment Year: 2018-19 Sugam Griha Nirmaan Limited. the assessee showing credit of the cheque on 18.08.2012 is also enclosed. The market value of the flat is mentioned as Rs. 41,32,800/- at page 52 of the paper book. Similar agreements are enclosed for other flats in the Apartment as well in the paper book filed. The Ld. DR supported the order of the Ld. CIT(A) and submitted that the same may be upheld.
We have considered the rival submissions and as the Ld. CIT(A) had allowed relief in respect of the flats and considered the difference of 10% for giving relief, the Ld. AO is directed to consider the registration deeds and delete the addition in respect of all the flats which has been upheld by the Ld. CIT(A) wherever the difference between the valuation for the purpose of stamp duty on the date of registration and the actual sale consideration received is less than 10% as the conditions of sub- section (4) of section 43CA of the Act are found to be fulfilled as part of the consideration has been received by way of account payee cheque or through such other mode as specified in sub-section (4) of section 43CA of the Act on or before the date of transfer of the asset and, therefore, the value referred to in sub-section (1) of section 43CA of the Act may be taken as the value assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer on the date of the agreement and the addition may be made only where the difference is more than 10% of such value. The assessee shall produce the required details before the Ld. AO who shall allow the requisite relief as per the direction given above. Hence Ground nos. 1 & 2 raised by the assessee are allowed subject to the directions as mentioned above.
Ground no. 3 being general in nature does not require any separate adjudication. I.T.A. No.: 1665/KOL/2024 Assessment Year: 2018-19 Sugam Griha Nirmaan Limited.
In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 9th May, 2025. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 09.05.2025 Bidhan (P.S.) I.T.A. No.: 1665/KOL/2024 Assessment Year: 2018-19 Sugam Griha Nirmaan Limited. Copy of the order forwarded to:
Sugam Griha Nirmaan Limited, 1st Floor, Unit -1F, 2/5, Sarat Bose Road, Minto Park, Kolkata, West Bengal, 700020. 2. D.C.I.T., Central Circle-4(3), Kolkata.
CIT(A)-NFAC, Delhi.
CIT-
CIT(DR), Kolkata Benches, Kolkata.
Guard File. //// By order