2020 (1) TMI 1475 - AT - Income Tax

ITAT Jaipur upholds section 43CA addition, stresses agreement-registration date alignment

The ITAT Jaipur dismissed the appeal challenging an addition under section 43CA of the Income Tax Act, 1961, for a differential consideration amount ... Addition under section 43CA - differential amount of consideration shown in the document and the Stamp Duty Valuation - as per AO assessee has sold one office for less than the value as per Stamp Valuation Authority for which agreement and date of registration is not same - assessee contended before the AO that the agreement of sale of the office in question was entered into with the customer on 28th February, 20 - 13 and at that point of time section 43CA was not in the Statute Book - HELD THAT:- As per sub-section (3) and (4) of section 43CA, the benefit of prior agreement is granted if the consideration is received at the time of agreement other than cash. In the case in hand, the booking is claimed to have been made on 28th February, 2013 whereas the sale deed is executed on 01.04.2013 which falls in the previous year relevant to the assessment year under consideration and provisions of section 43CA are applicable for the assessment year under consideration. Thus once the provision itself has taken care of such a situation of difference in date of prior agreement, then the applicability of provision cannot be questioned based on mere existence of prior agreement. The transfer under the provisions of section 43CA is recognized only when a registered document is executed and, therefore, in view of the facts and circumstances of the case that the transfer through sale deed is made during the previous year relevant to the assessment year under consideration for which the provisions of section 43CA are applicable, then merely because an agreement i.e. booking was made on 28th February, 2013 would not take away the transaction from the ambit of the provisions of section 43CA of the Act. Accordingly, we do not find any error or illegality in the impugned orders of the authorities below. - Decided against assessee. Issues:- Addition under section 43CA of the Income Tax Act, 1961 based on differential amount of consideration shown in the document and Stamp Duty Valuation.- Applicability of section 43CA when the agreement was entered into before the provision came into effect.- Interpretation of provisions of section 43CA regarding the date of agreement and registration of asset transfer.Analysis:1. The appeal involved a challenge against an addition made under section 43CA of the Income Tax Act, 1961, for a differential amount of consideration shown in a document compared to Stamp Duty Valuation. The assessee contended that the agreement for the sale was made before the provision came into effect, thus questioning the applicability of section 43CA.2. The Assessing Officer (AO) noted that the sale deed took place after the provision came into effect, leading to the addition under section 43CA. The assessee argued that the booking was done before the provision's enactment. However, the AO and the ld. CIT (A) upheld the addition, leading to the appeal before the ITAT Jaipur.3. The ITAT considered the provisions of section 43CA, emphasizing that the date of agreement fixing the consideration and the date of registration should align for valuation purposes. The ITAT cited relevant case law and legislative provisions to support the interpretation that the transfer through a sale deed during the relevant assessment year falls under section 43CA, regardless of a prior agreement.4. The ITAT highlighted that section 43CA allows for the consideration received at the time of agreement, other than cash, to be considered. In this case, the sale deed executed during the assessment year under consideration fell within the provision's scope, despite the prior agreement date. The ITAT concluded that the transaction was within the ambit of section 43CA, affirming the lower authorities' decision.5. Ultimately, the ITAT dismissed the appeal, finding no error or illegality in the lower authorities' orders. The judgment emphasized the importance of aligning the dates of agreement and registration for valuation under section 43CA, even if a prior agreement existed. The decision was pronounced on 02/01/2020 by the ITAT Jaipur.