KARDA CONSTRUCTIONS PVT.LTD,,NASHIK vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2,, NASHIK

This appeal by the assessee against the order dated 26-03-2019 passed by the Commissioner of Income Tax (Appeals)-12, Pune [‘CIT(A)’] for assessment year 2014-15.

The assessee raised two grounds of appeal questioning the action of CIT(A) in confirming Rs.3,30,000/- u/s. 43CA of the Act without appreciating the fair market value was lower than the stamp duty value and even referring to the DVO in the facts and circumstances of the case.

Brief facts relating to the issue on hand are that the assessee is a company engaged in the business of land development and building construction etc. The assessee filed return of income declaring a total income of Rs.5,17,88,220/-. Under scrutiny notices u/s. 143(2) and 142(1) of the Act were issued to the assessee. In response to the said notices authorized representative on the behalf of the assessee appeared before the AO and furnished the details. The AO completed the assessment u/s. 143(3) of the Act determining the total income of Rs.5,86,45,537/- inter alia making addition u/s. 43CA of the Act to an extent of Rs.68,57,337/- vide its order dated 30-12-2016. The CIT(A) restricted the said addition to an extent of Rs.3,30,000/- as against the addition of Rs.68,57,337/- made by the AO. Having not satisfied the order of CIT(A), the assessee is before us challenging his action by raising aforementioned two grounds.

Heard both the parties and perused the material available on record. The AO discussed the facts relating to the issue on hand at Para No. 4 of the assessment order. We note that the AO asked the assessee to show cause as to why the difference between the fair market value of flats sold as adopted by the stamp duty authority and sale consideration thereof as offered by the assessee should not be added to the total income as per the provisions of section 43CA of the Act. In response to the said show cause, the assessee furnished its submissions as well as the details of properties sold where we note that the AO reproduced the same at Page Nos. 2 and 3 of the assessment order. The contention of assessee was that the booking of 35 units were made prior to F.Y. 2013-14 in which the consideration amount is less than as compared to Government valuation and vehemently contended the non-applicability of provisions of section 43CA of the Act. We note that the AO reproduced the details of properties sold, name of party, actual consideration offered, value adopted by the stamp duty authority, difference of value adopted by stamp valuation and actual consideration. We note that in most of the cases consideration amount is higher than the valuation on date of booking which were according to the assessee were booked prior to F.Y. 2013-14. We find the difference between the value adopted by the stamp duty authority and the actual consideration of all the said properties has reproduced at Page Nos. 2 and 3 of the assessment order is Rs.68,57,337/-. The CIT(A) considering the same held that the provisions u/s. 43CA of the Act cannot be made applicable to the cases where the agreement fixing price for transfer of assets was entered into prior to insertion of provisions u/s. 43CA of the Act. There is no dispute with regard to the entering agreement for sale between the assessee and its customers before the amendment u/s. 43CA of the Act came into effect from 01-04-2013, but however, the CIT(A) restricted the addition to an extent of Rs.3,30,000/- with regard to Flat C103 (Sneh I) which is at Sr. No. 34, the details as placed on record by the ld. AR at Page No. 69 of the paper book. We find the assessee offered consideration to the said flat at Rs.18,00,000/- and the Government stamp duty value is at Rs.21,30,000/-, the difference between the sale consideration offered and stamp duty is Rs.3,30,000/- as restricted by the CIT(A). The ld. AR argued that there was no difference between the sale consideration offered and stamp duty valuation but the said difference arose because of the assessee as discounted the charges on account of internal flooring, kitchen and bathroom tiles on the said work has done by the customer on his own. The ld. AR further submits though the issue was raised before the CIT(A) about non-reference to DVO with regard to fair market value the CIT(A) dismissed the said ground by holding that there was no issue raised by the assessee before the AO about the reference to DVO. The ld. AR submits that the assessee is ready to produce all the details if this Tribunal remand the issue to the file of AO for reference to DVO for determining fair market value with regard to Sr. No. 34 at Flat No. C103 (Sneh I). The ld. DR reported no objection in remanding the issue to the file of AO. Therefore, considering the facts and circumstances of the case and submissions of ld. AR and ld. DR in the interest of justice, we deem it proper to remand the issue to the file of AO with regard to Flat No. C103 (Sneh I) for its fresh consideration. Thus, the grounds raised by the assessee are allowed for statistical purposes.

In the result, the appeal of assessee is allowed for statistical purposes.