Section 43CA of the Income Tax Act
Income-tax Act, 2025: s.53
Section 43CA of the Income-tax Act, 1961 corresponds to section 53 (Full value of consideration for transfer of assets other than capital assets in certain cases) of the Income-tax Act, 2025.
Read section 53 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 43CA is CIT v. Vatika Township (P.) Ltd. (49 Taxmann.com 249), cited in 294 of the 521 judgments on BharatTax that turn on this section.
Leading authorities on Section 43CA
Legislation is ordinarily presumed not to have retrospective operation, especially for taxing statutes unless explicitly stated or when intended to remove hardship for the assessee. The decision clarifies the principles for determining whether an amendment to a taxing statute applies prospectively or retrospectively, distinguishing between clarificatory and substantive amendments.
Interest received on delayed payments for sales is considered part of the sale proceeds and is eligible for deduction under Section 80-IA as business income.
Curative amendments, such as a proviso to Section 40(a)(ia) introduced to remove undue hardship, apply retrospectively even without specific legislative declaration, rectifying shortcomings and obviating unintended difficulties.
The revenue must prove that an assessee received extra consideration beyond the declared value; a Departmental Valuation Officer's (DVO) report alone is insufficient to establish such receipt.
The amendment introducing a tolerance band (safe harbour) under section 50C, allowing a difference of up to 10% between actual sale consideration and stamp duty valuation, applies retrospectively. If the difference falls within this limit, the actual sale consideration is adopted as the full value of consideration for computing capital gains.
An amendment to a section is declaratory and clarifies the existing legal position, rather than introducing a new rule.
The primary burden of proof for concealment of income lies with the revenue, and a DVO valuation report can only be relied upon after the revenue has discharged this initial burden.
The valuation of shares is not relevant for determining the genuineness of a transaction under Section 68 of the Income Tax Act. Interest income earned on the deposit of surplus funds is taxable as business income.
Prior to the incorporation of the proviso to section 43CA(1) with effect from 1st April 2019, section 43CA did not envisage any limit regarding the difference between the stamp duty value and the actual sale consideration received by the assessee for the transfer of immovable property that was stock-in-trade.
Dharmashibhai Sonani holds that if a statutory proviso is declaratory and curative, intended to remedy unintended consequences of a main provision, it should be given retrospective effect. This principle applies when determining the effective date of such provisos, including the third proviso to Section 50C(1).
