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Facts
The assessee sold an immovable property with a sale consideration of Rs.1,08,25,000/-, but the stamp duty value was Rs.1,14,36,480/-. The Assessing Officer (AO) applied Section 50C of the Income Tax Act, treating the difference as taxable. The assessee also claimed a long-term capital loss of Rs.4,99,369/-, which the AO reduced to Rs.2,13,269/-.
Held
The Tribunal held that the amendment introduced by the Finance Act, 2021, which allowed a variation of up to 10% (later increased to 20%) between sale consideration and stamp duty value, was not retrospective for Assessment Year 2020-21 as the legislation specified a cut-off date. Therefore, the AO's action was upheld.
Key Issues
Whether the amendment introduced by the Finance Act, 2021, regarding the variation in stamp duty value for property transactions, is applicable retrospectively to Assessment Year 2020-21.
Sections Cited
50C, 24, 43CA, 56
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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH, AHMEDABAD
Before: Ms. SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA
PER SUCHITRA KAMBLE, JUDICIAL MEMBER:
This appeal is filed by the Assessee against order dated 16.09.2024, passed by the CIT (A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2020-21.
The assessee has raised the following grounds of appeal :-
“1. The Learned Assessing Officer (hereinafter referred as ld. AO) has erred in law and in facts in considering the Long Term Capital Loss on sale of property at Rs.2,13,269/- instead of Rs.4,99,369/-.
2. The Learned AO has erred in law in not appreciating that as per the amendment introduced by Finance Act, 2021, the variation upto 10% is permitted in the value assessable by the stamp valuation authority vis- à-vis actual sales consideration received for the sale of immovable property and since the said amendment has been curative in nature the same has been applicable to Assessment Year 2020-21 as well.”
Assessment Year: 2020-21 Virang Jayendrabhai Shah vs. ITO Page 2 of 4 3. The assessee is engaged in the business of trading in toy at Domestic and International level. The case of the assessee was selected for scrutiny with the following reasons:-
1) Reduction in income in revised return and claim of refund 2) Unsecured loan 3) Capital gain/income on sale of property.
3.1 The assessee filed his return of income for the Assessment Year (A.Y.) 2020- 21 on 12.01.2021 declaring income of Rs.40,89,730/-. The assessee revised his return of income on 16.02.2021 thereby declaring income at Rs.35,75,610/-. The Assessing Officer, after taking cognisance of the assessee’s details, observed that the assessee sold immovable property for a total consideration of Rs.1,08,25,000/-. However, the Stamp Duty value of the said property is Rs.1,14,36,480/-, thus, there is difference of Rs.6,10,980/- between the transaction value and the stamp duty value. The provisions of Section 50C of the Income Tax Act, 1961 as per the Assessing Officer, was attracted in respect of difference of Rs.6,10,980/- and the same was required to be taxed under Section 50C of the Act. The property under consideration was a joint property owned by three members Bhartiben Jayendrabhai Shah, Jayendrabhai Pragjibhai Shah and Virangbhai Jayendrabhai Shah i.e. the assessee, with assessee’s share being 32.57%. The assessee submitted before the Assessing Officer that his share of 32.57% in sale consideration of Rs.1,08,25,000/- comes to Rs.35,26,060/- and in stamp duty value of Rs.1,14,36,480/- comes to Rs.37,25,239/- in the purchase consideration of Rs.53,90,450/-. The assessee claimed his share as one third which comes to Rs.17,96,818/- as per the observation made by the Assessing Officer in paragraph no.3 of the Assessment Order. After issuing salutatory notices and taking on record the assessee’s submissions alongwith evidences, the Assessing Officer held that the assessee failed to furnish relevant documents alongwith nature and purpose of loan i.e. whether it was used for acquiring the said property or not. The assessee furnished Bank interest certificate which is also unsigned and without any stamp of Bank and it bears the name TOYCRA. The certificate issued by the Bank does not contain assessee’s name and the loan product Assessment Year: 2020-21 Virang Jayendrabhai Shah vs. ITO Page 3 of 4 mentioned as “Loan against Property”. Therefore, the amount of Rs.5,14,119/- claimed as interest on loan under Section 24 of the Act was disallowed and added back to the taxable income of the assessee.
Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
The Ld. AR submitted that the assessee has returned the Long Term Capital Gain (LTCG) of Rs.16,60,941/- while filing the original return of income and there was a calculation error in computation of LTCG which was revised at LTCG loss of Rs.4,99,369/- during the course of the assessment proceedings. The Assessing Officer has reduced the LTCG loss from Rs.4,99,369/- to Rs.2,13,269/-. The Ld. AR further submitted that the value calculated by the stamp valuation authority has been taken at Rs.1,14,36,480/- wherein the share of the assessee was taken at Rs.38,12,160/- as per the Assessing Officer. The variation in the stamp duty value for value of the property is more than 5% and thus the Assessing Officer considered sale value of property at Rs.1,14,36,480/- instead of Rs.1,08,25,000/- and considered LTCG loss at Rs.2,13,269/- as against Rs.4,99,359/- and claimed by the assessee. The disallowance made by the Assessing Officer is not justifiable as the assessee had a transaction amount in respect of sale value of property is only Rs.1,08,25,000/- and not that of Rs.1,14,36,480/-. The Ld. AR submitted that the Assessing Officer as well as the CIT(A) ignored the fact that as per the amendment introduced by the Finance Act, 2021, the variation upto 20% is permitted in the value assessable by the Stamp Valuation Authority vis-a-vis actual sales consideration received for the sale of immovable property and since the said amendment is curative in nature the same is applicable in A.Y. 2020-21.
The Ld. DR relied upon the Assessment Officer and the order of the CIT(A). The Ld. DR pointed out paragraph no. 3.9 wherein it is categorically mentioned that the provisions of Section 43CA, 50C and 56 of the Act provide for safe harbour of 5%. There was representation requesting that the said safe harbour of 5% may be increased and the same was proposed subsequently w.e.f. 01.04.2021 i.e. A.Y. 2021- 22 and subsequent A.Ys. safe harbour limit of 5% is applicable upto A.Y. 2020-21 and 10% is specifically from A.Y. 21-22 onwards.
Assessment Year: 2020-21 Virang Jayendrabhai Shah vs. ITO Page 4 of 4 7. We have heard both the parties and perused all the relevant material available on record. The contention of the ld. AR that the said amendment is curative amendment and the assessee be given the benefit of 10% as regards the increase in safe harbour limit as per Finance Act 2020 will have to be looked into the aspect that whether the legislation has intention to reduce the said safe harbour of 5% into 10% with retrospective effect then the amendment would have specifically mentioned that the said provision of safe harbour limit for 10% which otherwise is applicable for A.Y. 2021-22 will be applicable in assessment year prior to the said amendment. But, in the present case, this was not the intention of the legislation and thus the contention of the ld. AR that it is curative amendment and should be granted with retrospective effect fails when the Legislature has notified this specific cut off date, the same should be directly adhered to as the cut off date has the sanctity for the particular cases from this specified date onwards when there is no express intention of the Legislature the said amendment should be applicable retrospectively then the course cannot expand the scope of the amendment as per the interpretation of the cutoff date. Thus, appeal of the assessee is dismissed.
In the result, appeal of the assessee is dismissed.
Order pronounced in the open Court on this 18th February, 2025.