Section 43CA addition not warranted when sale value difference within 10% tolerance limit

ITAT Mumbai held that no addition under section 43CA is warranted when the difference between declared sale value and stamp duty value is within the 10% tolerance limit. The tribunal applied the proviso retrospectively, finding the 4.35% difference between declared value (Rs. 9.5 crores) and DVO valuation (Rs. 9.91 crores) fell within tolerance limits. The matter was remanded to AO for verification, with directions that no addition should be made if facts are confirmed correct.

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Issues Involved:
1. Consideration of Fair Market Value vs. Stamp Duty Value
2. Retrospective Application of Curative Amendment in Section 43CA

Summary:

1. Consideration of Fair Market Value vs. Stamp Duty Value:
The assessee, a Private Limited Company engaged in Civil Construction, filed its return of income for the assessment year 2014-15. The Assessing Officer (AO) noted a discrepancy between the sale consideration and the stamp duty valuation of two units sold by the assessee. The AO made an addition of Rs. 2.44 crores under Section 43CA of the Income Tax Act, 1961, without awaiting the Departmental Valuation Officer's (DVO) report. The assessee argued that the difference between the DVO's valuation and the sale consideration was only Rs. 41,25,000/- (4.35%), which is below the tolerance limit of 5%. The Commissioner of Income Tax (Appeals) [CIT(A)] dismissed the appeal without considering the DVO report. The Tribunal noted that the difference was less than 10% and, therefore, no addition was warranted. The Tribunal directed the AO to verify the facts and, if found correct, to delete the addition.

2. Retrospective Application of Curative Amendment in Section 43CA:
The assessee argued that the curative amendment to Section 43CA, which provides a tolerance band of 10% for the difference between the sale consideration and the stamp duty value, should be applied retrospectively. The Tribunal supported this view, citing various precedents, including the Tribunal's decisions in the cases of Sai Bhargavanath Infra Vs. ACIT and Maria Fernandes Cheryle Vs. ITO. The Tribunal held that the amendment is curative in nature and should be applied retrospectively to provide relief to the assessee. The Tribunal directed the AO to verify the facts and, if the difference is found to be less than 10%, to delete the addition.

Conclusion:
The Tribunal allowed the appeal for statistical purposes, directing the AO to verify the facts and, if the difference between the sale consideration and the DVO's valuation is less than 10%, to delete the addition. The Tribunal emphasized the retrospective application of the curative amendment to Section 43CA, aligning with previous judicial decisions.

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