Interpretation of Section 43CA Proviso: Retroactive Relief for Marginal Value Variation

The ITAT partially allowed the appeal, interpreting a proviso to section 43CA as retroactive, providing relief for cases with a marginal variation of up to 5% between agreement and stamp values. The assessing officer was directed to restrict disallowances to cases where the variation exceeded 105%. The matter was remitted for further action, emphasizing the taxpayer's right to be heard. The judgment was pronounced on 12.03.2020.

---

---

Issues:
1. Upholding additions under section 43CA by CIT(A)
2. Date of sale for invoking provisions of section 43CA
3. Marginal difference between Ready Reckoner rates and sale consideration
4. Appeal against CIT(A) order

Analysis:
1. The appeal challenged the CIT(A)'s decision upholding additions under section 43CA for the assessment year 2015-16. The assessing officer invoked section 43CA, making disallowances based on the variance between agreement value for sales and stamp value for registration. The CIT(A) upheld the action, rejecting the claim that the agreement for a specific flat was made before the introduction of section 43CA. The appellant contended that the marginal difference between Ready Reckoner rates and sale consideration should have been ignored in certain cases. The ITAT considered both submissions.

2. Regarding the sale of a specific flat (No. 1902) and the contention that the agreement was made in 2012, the ITAT agreed with the CIT(A) that since the sale was declared in the present assessment year, the claim could not be accepted. However, the ITAT analyzed the provisions of section 43CA(1) and a proviso inserted with effect from 1.4.2019. The proviso aimed to grant relief where the stamp duty value did not exceed 105% of the consideration received. The ITAT interpreted the proviso as retroactive, providing relief for cases with a marginal variation of up to 5% between agreement and stamp values. Consequently, the ITAT directed the assessing officer to restrict disallowances to cases where the variation exceeded 105%.

3. The ITAT's decision partially allowed the appeal, emphasizing the retrospective application of the proviso to section 43CA(1) for cases with a marginal variation of up to 5%. The matter was remitted to the assessing officer for appropriate action, ensuring the taxpayer's right to be heard. The judgment was pronounced on 12.03.2020.

---