FABER CONSTRUCTION,MUMBAI vs. ACIT -21(1), MUMBAI

This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals) [in short learned CIT(A)] 30.1.2019 pertaining to assessment year (AY) 2014-15.

2. The grounds of appeal

read as under :- “On the facts and circumstances of the case and in law, the Learned Commissioner (Appeals) 48, Mumbai, erred in:

1. Upholding the additions made by the Learned AO under the provisions of section 43CA without considering 1.1 the fact that the Ready Reckoner rates for the impugned flats were lower than the sale value, despite the fact that copies of Agreements in respect of the said flats along with Ledger extract of the purchasers accounts were filed which proves the date of first payment towards purchases , 1.2 the fact that it is clearly mentioned in the grounds of appeal and submissions filed before the Learned C1T(A) that the ready reckoner rates are lower, on the date of first payments, than the document value, and the additions are wrongly made.

2 Faber Construction Hence, the addition of Rs 6,60,750/- wrongly upheld by the Learned CIT(A) be deleted .

The appellant craves leave to add to, alter and /or amend the above grounds of appeal as the occasion may demand or circumstances require.

In response to the same, the AR of the assessee vide letters dt.21/11/2016 and 28/11/2016, furnished the details of the same. On verification of the same, it is found that the assessee has registered two agreements during the year wherein Stamp Duty Valuation is more than the agreement value. The details of the same are as under :-

Sr. Name of flat Floor Flat No. Agreement Agreement Agreement No. owner area date value

(1) (2) (3) (4) (5) (6) (7)

Market Allotment Date of Amount Total R.R. value Difference value as letter date Payment on received on amount on Between per regn allotment booking Received allotment market date value on allotment date of allotment (8) (9) (10) (11) (12) (13) (14)

5835500 10/02/2010 10/02/2010 1000000 3600000 3365130 -234870

4501485 02/04/2011 02/04/2011 1000000 3500000 3047120 -425880 As regards to the show cause, as to why the income should not be brought to tax u/s.43CA of the IT Act, 1961, the assessee has stated as under :-

".....1) With regard to provisions of section 50C and 43CA, we enclose herewith a chart of 5 fiats registered during the year indicating various

3 Faber Construction details such as flat number, agreement date, agreement value, allotment letter date, amount received on booking and the ready recknor value as on the allotment date. Further, copies of the ready recknor for the respective years in which the flats were booked are enclosed herewith. From the chart it can be verified that there is a marginal difference in the value between the value of the flat in terms of the ready recknor value than and the agreement value entered into. There is a marginal difference in two cases as reflected in the chart and since the same is less than, 50% of the value and hence, not taxable as even under the Bombay Stamp Act if the difference between market value and agreement value is less than 10%.

2) Without prejudice to our above contention it is submitted that since the flats are agreed to be sold prior to 31/03/2013 the provisions of section 50C and 43CA would not be sold prior to 31/03/2014 the provisions of section 50C and 43CA would not be applicable in our client's case as they are builder.

3) Statement of advance received against sale of flats in your desired format."

5. Learned CIT(A) discussed the language of the Statute and concluded as under:-

“Therefore, since the language of section 43CA is absolutely clear, any difference how so ever small must be brought to tax as such is the intention of law.

4 Faber Construction 5.1,4 As per the details given in para 4.1 of the order, which is not disputed by assessee, the fact is that stamp duty valuation is more than the consideration shown in the transfer documents. Infact, though it has been claimed, however, there are no details/proof of any agreement signed by assessee with buyer before Registration. Infact, content and nature of any agreement were never filed/produced. In the light of these facts, clearly provisions of section 43CA are attracted and addition made by AO is upheld and all grounds of appeal are dismissed singly and collectively.”

6. I have heard learned Departmental Representative and perused the record. Upon careful consideration I note that perusal of the assessment order shows that the total amount received as per column 12 of the assessment order is higher than the ready reckoner value in column 13. In these circumstances I fail to understand how there can be an addition when agreement value is more than the ready reckoner value. Learned CIT(A) has also not at all appreciated the issue. Hence, this addition is not at all sustainable when the stamp value rate itself written by the Assessing Officer is lower than the agreement value, no addition can be made under section 43CA of the Act. Hence, I set aside the orders of the authorities below and decide the issue in favour of the assessee.