Retrospective tolerance band under section 43CA applied where stamp duty value differed by less than 5%, preventing addition.

The first proviso to section 43CA, which introduces a tolerance band for differences between stamp duty value and actual sale consideration, was treated as retrospective on the basis of earlier coordinate bench decisions. Applying that interpretation, the Tribunal noted that the difference in the case was below 5% and therefore no addition was warranted under section 43CA. The issue was decided in favour of the assessee.

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Issues: Whether the first proviso to section 43CA, introducing the tolerance band, applies retrospectively so as to ignore the difference between the stamp duty value and the actual sale consideration where the difference is less than 5%.

Analysis: The dispute turned on the applicability of the proviso to section 43CA in the assessment year concerned. The Tribunal followed earlier coordinate bench decisions holding that the tolerance band introduced by the Finance Act, 2017, effective from 01.04.2018, operates retrospectively. On the facts, the difference between the stamp duty value and the agreed sale consideration was less than 5%.

Conclusion: The first proviso to section 43CA was held to have retrospective effect, and no addition was warranted where the difference was below 5%. The issue was decided in favour of the assessee.

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