Tribunal rules in favor of assessee, deletes Rs.12,50,490 addition for AY 2016-17

The tribunal allowed the appeal in favor of the assessee, ordering the deletion of the section 43CA addition of Rs.12,50,490 for Assessment Year 2016-17. The tribunal rejected the Revenue's argument on the retrospective effect of the tolerance margin change, distinguishing between sections 43CA and 50C. The decision was rendered by SHRI S.S. GODARA, JUDICIAL MEMBER, and DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER, on 4th August 2022.

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Issues:
Challenge to section 43CA addition in assessment for Assessment Year 2016-17.

Analysis:
The appeal was against the Commissioner of Income Tax(Appeals)-3, Pune's order regarding a section 43CA addition of Rs.12,50,490 made during the assessment for the relevant year. The issue pertained to the sale or transfer of seven residential units. The CIT(A) had upheld the addition made by the Assessing Officer. The key contention revolved around the tolerance margin of 10% as per section 43CA(1) 1st proviso. The Revenue argued that the tolerance margin had been changed to 10% by the Finance Act, 2020, effective from 01.04.2021, while the assessment year in question was 2016-17.

The tribunal found no merit in the Revenue's argument, citing a case law where similar tolerance margins in another section were held to have retrospective effect. It was clarified that while section 43CA applied to assets other than capital assets, section 50C applied to capital assets under specified circumstances. The tribunal accepted the assessee's grievance and ordered the deletion of the section 43CA addition of Rs.12,50,490. The appeal was allowed in favor of the assessee.

The judgment was delivered by SHRI S.S. GODARA, JUDICIAL MEMBER, and DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER, on 4th August, 2022.

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