TaxTMI 
TaxTMI 
2023 (11) TMI 848
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.... inserted in section 43 CA by Finance Act, 2018 w.e.f. 01.04.2019 and subsequently Finance Act, 2020 w.e.f. 01.04.2021 which can even apply to prior assessment as well, where if a fresh benefit is provided by the Parliament in an existing provision then such an amendment should be given retrospective effect." 3. Brief facts are that the assessee is a Private Limited Company engaged in the business of Civil Construction. The assessee filed its return of income on 30.09.2014 declaring total income of Rs. 2,16,66,170/-. Later, the case of the assessee was selected for scrutiny. The AO noted that assessee had sold two units in this relevant year noted that there was difference in the sale consideration/agreed value of sale and stamp duty valuation. Therefore, he sought the details of the sale transaction vis-à-vis the stamp duty valuation of the units under question. Pursuant to the query of AO, assessee filed the details of sale of its two units to Indian Institute of Excellence Consultants Private Limited (hereinafter "IIECPL"), inter alia as under: - Unit Agreement Value Stamp Duty Value Difference 305 2,85,00,000 3,61,46,000 76,46,000 401 6,6....
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....21 which according to him is curative in nature and hence need to be applied retrospectively. For such a proposition, he relied on the decision of the Tribunal, Pune in the case of Sai Bhargavanath Infra Vs. ACIT (2022) (144 taxmann.com 168) wherein the question of retrospective application of proviso to section 43CA of the Act for AY. 2015-16 was considered and the Tribunal taking note of Hon'ble Supreme Court decision in the case of Vatika Township (P.) Ltd. 367 ITR 466 (SC) noted that the intent of the legislature was to provide relief to the assessee in case difference is less than 10%. According to Tribunal, this amendment has been brought into effect from 01.04.2021, thereby providing benefit to the assessee if difference is less than 10%. And since this being a beneficial provision, therefore, needs to be given retrospective effect and would apply to that case i.e. assessment year 2015-16. The Ld. AR also relied on the decision of this Tribunal in the case of Maria Fernandes Cheryle Vs. ITO (International Taxation) (2021) (123 taxmann.com 252/187 ITD 738) (Mum) (AY. 2011-12) wherein similar view (retrospective operation of law) albeit that it relates to section 50C of the Ac....
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....r deletion of the addition of Rs. 2.44 crores. For the aforesaid preposition, the assessee relied on the various decisions including the decision of Pune Tribunal in the case of Radhika Sales Corporation Vs. Addl. CIT in ITA No. 1474/PUN/2016 for A.Y 2011-12 decided on 16.11.2018 wherein the Tribunal held that if the difference in the value declared by the assessee and the value determined by the DVO is less than 10%, then no addition may be made by holding as under: "5. Similar issue had come up before the Tribunal in the case of Radhika Sales Corporation (supra). The Tribunal deleted the addition by observing as under: "5. We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. The solitary issue raised in the appeal by the assessee is against the addition of Rs. 10,38,000/- on account of difference in Long Term Capital Gain declared by the assessee and computed by the Assessing Officer after considering the DVO's valuation report. It is an undisputed fact that the assessee has disclosed sale consideration of the land as Rs. 1,10,00,000/-. During the scrutiny assessment proceedings reference was made....
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....e find that the Pune Bench of the Tribunal in the case of Asstt. CIT V/s. Harpreet Hotels (p) Ltd. vide ITA Nos. 11561160/pn/2000 and relied on by the learned counsel for the assessee had dismissed the appeal filed by the Revenue where the CIT(A) had deleted the unexplained investment in house construction on the ground that the difference between the figure shown by the assessee and the figure of the DVO is hardly 10 percent. 15. Similarly, we find that the Pune Bench of the Tribunal in the case of ITO V/s. Kaaddu Jayghosh Appasaheb, vide ITA No. 441/PN/2004 for the asst. yr 1992-1993 and relied on by the learned counsel for the assessee following the decision of the J&K High Court in the case of Honest Group of Hotels (P) Ltd. V/s CIT (2002) 177 CTR (J&K) 232 had held that when the margin between the value as given by the assessee and the Departmental valuer was less than 10 per cent , the different is liable to be ignored and the addition made by the A.O cannot be sustained. 16. Since in the instant case such difference is less than 10 per cent and considering the fact that valuation is always a matter of estimation where some degree of difference bound to occu....
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....t if there is variation between declared sale consideration vis-a-vis stamp duty value, and in such an event then, no addition is warranted. Similar proviso was inserted by the Finance Act 2018 to sub-section (1) of section 50C of the Act. The said tolerance limit band was enhanced from 5% to 10% by the Finance Act 2020 w.e.f. 01/4/2021. It is noted that the Tribunal in the case of Maria Fernandes Cheryl vs. ITO (International Taxation) reported as 123 taxmann.com 252 (Mumbai) after considering various decisions and the CBDT Circular No. 8 of 2018 dated 26-12-2018 held, that the amendment is retrospective in nature and relates back to the date of insertion of statutory section to the Act. The relevant extract of the observations made by the Tribunal reads as under: "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 earlie....
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....as taken at 5%, in response to the representations by the stakeholders, this tolerance band, or safe harbour provision, was increased to 10%. There is no particular reason to justify any particular timeframe for implementing this enhancement of tolerance band or safe harbour provision. The reasons assigned by the CBDT, i.e., "the variation between stamp duty value and actual consideration received can occur in respect of similar properties in the same area because of a variety of factors, including the shape of the plot or location," was as much valid in 2003 as it is in 2021. There is no variation in the material facts in this respect in 2021 vis-à-vis the material facts in 2003. What holds good in 2021 was also good in 2003. If variations up to 10% need to 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....
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.... except that both the sections have application on different sets of assessee. As has been pointed earlier, Section 43CA gets attracted where the consideration received or accrues as a result of transfer of an asset (other than a capital asset) being land or building or both. Whereas, provisions of section 50C operates where the consideration received or accrues as a result of transfer of a capital asset being land or building or both. Both the sections induce deeming fiction to substitute actual sale consideration with notional value of asset based on Stamp Duty valuation. Further, a perusal of Circular 8 of 2018 (supra) would show that identical reasons have been given in Para 16 for 'Rationalization of Sections 43CA and 50C'. The proviso has been inserted and subsequently tolerance band limit has been enhanced to mitigate hardship of genuine transactions in the real estate sector. Ergo, in the light of reasoning given for insertion of the proviso and exposition by the Tribunal for retrospective application of the said proviso, I have no hesitation in holding that the proviso to sub-section (1) to section 43CA and the subsequent amendment thereto relates back to the date on which....