RAJPRABHA DEVELOPERS PRIVATE LIMITED,MUMBAI vs. ACIT CIRCLE-4, THANE

This appeal by the assessee is directed against the order of learned CIT(A) dated 4.16.2018 and pertains to A.Y. 2014-15.

2 Rajprabha Developers Pvt. Ltd. since the said section has been inserted w.e.f. 01.04.2014. Moreover, the market position was also dull and hence the assessee had to sell the galas at lower rate than the rate prescribed by the Stamp Valuation Authorities. The AO, however, rejected the reply of the assessee and added the difference on sale of 3 galas totaling to Rs.19,36,500/- to the total income of the assessee.

“On perusal of the above submission, I am of the opinion that the AO has rightly made addition u/s.43CA of the Act on the following grounds (a) The final date of registration of sale agreement is to be considered as it proofs the fulfillment of the contractual obligation. Even if reference is done in A.Y. 2013-14 but the Valuation is based on sale agreement (b) Section 43CA has come into effect from A.Y.2014- 15 and it is applicable in the case of builder/developer, who hold the land or building or both as a stock in trade. Therefore, the introduction of section 43CA is to control the evasion of tax in real estate business, where the involvement of on money is rampant and cannot justify that only the sale agreement value is the final consideration, therefore, the addition of the differential amount is justified, if it is not excessive and the component of cheque and cash cannot be ruled out in real estate business, (c) The appellant argued that, the AO should have referred to DVO, but such plea was not taken before the AO in the assessment proceedings. However, normally, in the real estate business, the registered sale agreement value is always suppressed and it is a well known fact to on real estate business with regard to buying and selling of immovable assets. Therefore, the addition of the differential amount of Rs.19,36,500/- is not excessive and reasonable as the differential is not more than 10% of stamp duty value. In view of the above stated facts, the appeal of the appellant is dismissed and the addition made by the AO u/s.43CA is sustained”.

regard assessee placed reliance upon several Tribunal decision for the proposition that section 43CA came into effect from 1.4.2014 and hence applies for F.Y. 2013-14 and the same would not be applicable in the case of the present assessee when agreement was entered during F.Y. 2012-13. I find considerable cogency in the submission of learned Counsel of the assessee. Hence, I set aside the orders of the authorities below and decide the issue in favour of the assessee.