2023 (3) TMI 666

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....vailable under section 56(2)(x) of the Act by applying it retrospectively by treating it as clarificatory in nature. 3. Brief facts of the case are that assessee vide its return of income on 27.08.2018 reported total income of Rs.82,60,280/-. Case of the assessee was selected for limited scrutiny including the issue relating to investment in immovable property. During the year under consideration, assessee had purchased a property for which the actual transaction value is of Rs.82,91,250/-. Stamp duty value of the said property is taken at Rs.87,83,700/-. Both these amounts are uncontroverted and undisputed. In the assessment proceedings, the difference between the two amounting to Rs.4,92,450/- has been added to the total income of the assessee as income from other sources by the Ld. AO, u/s. 56(2)(x) of the Act, since it does not fall within the tolerance band of 5% as available under the said section. In the course of assessment proceeding, assessee referred to the amendment made by Finance Bill, 2020 wherein safe harbour limit (tolerance band) of 5% has been increased to 10% and, therefore submitted that difference between stamp duty value and the actual consideration, if it....

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....for the assessee narrated the facts as stated above and placed reliance on the decision of Coordinate Bench of ITAT, Kolkata in the case of Karb Associates Pvt. Ltd. v. DCIT in ITA No. 1941/Kol/2019 dated 25.08.2021 which in turn has placed reliance on the decision of Coordinate Bench of ITAT, Mumbai in the case of Maria Fernandes Cheryl v. ITO(Int'l Tax) 123 taxmann.com 252 (Mum) after considering various decisions as well as CBDT Circular No. 8 of 2018, dated 26.12.2018. 4.1. Ld. Counsel strongly asserted that difference between stamp duty valuation and the actual consideration amounting to Rs.4,92,450/- which comes to 5.93% falls within the tolerance band of 10% under the amended provisions of section 56(2)(x) of the Act and, therefore, no addition is called for in this respect. According to him, the amendment is clarificatory/curative in nature and is to be applied retrospectively. 5. Per contra, Ld. Sr. DR submitted that the amendment made by Finance Act, 2020 to section 56(2)(x) of the Act is effective from 01.04.2021 i.e. relevant to AY 2021-22 and not the present year under consideration i.e. AY 2018-19. He thus, placed reliance on the order of both, the ld. AO and th....

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.... " 7. ..................... The insertion of the third proviso to Section 50C(1) provides for this tolerance band with respect to a certain degree of variations between the stamp duty valuation and the stated consideration of an immovable property. In other words, as long as the variations are within the permissible limits, the anti-avoidance provisions of Section 50C do not come into play. As we have noted earlier, the CBDT itself accepts that there could be various bona fide reasons explaining the small variations between the sale consideration of immovable property as disclosed by the assessee vis-à-vis the stamp duty valuation for the said immovable property. Obviously, therefore, disturbing the actual sale consideration, for the purpose of computing capital gains, and adopting a notional figure, for that purpose, will not be justified in such cases. On a conceptual note, an estimation of market price is an estimation nevertheless, even if by a statutory authority like the stamp duty valuation authority, and such a valuation can never be elevated to the status of such a precise computation which admits no variations. The rigour of Section 50C(1) was thus relaxed, and....

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.... be tolerated and need not be probed further, under section 50C, in 2021, there were no good reasons to probe such variations, under section 50C, in the earlier periods as well. We are, therefore, satisfied that the amendment in the scheme of Section 50 C(1), by inserting the third proviso thereto and by enhancing the tolerance band for variations between the stated sale consideration vis-à-vis stamp duty valuation to 10%, are curative in nature, and, therefore, these provisions, even though stated to be prospective, must be held to relate back to the date when the related statutory provision of Section 50C, i.e. 1st April 2003. In plain words, what is means is that even if the valuation of a property, for the purpose of stamp duty valuation, is 10% more than the stated sale consideration, the stated sale consideration will be accepted at the face value and the anti-avoidance provisions under section 50C will not be invoked. 8. Once legislature very graciously accepts, by introducing the legal amendments in question, that there were lacunas in the provisions of section 50C in the sense that even in the cases of genuine variations between the stated consideration and....