TaxTMI 
TaxTMI 
2025 (8) TMI 1502
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....and the actual consideration is less than 5% then no addition can be made under section 56(2)(x). 2. The revenue's appeal in both the assessee pertains to the CIT(A) deleting the adjustment made by the AO towards stamp duty and registration charges against the consideration paid by the seller while making addition under section 56(2)(x) of the Act. ITA No. 1173 & 1283/Chny/2025 3. The assessee is a private limited company engaged in the business of infrastructure services. The assessee filed the return of income for AY 2018-19 declaring a loss of Rs. 3,65,90,652/-. The assessment was completed under section 143(3) accepting the income returned by the assessee. Subsequently, based on a search and seizure operation carried out under section 132 of the Act in the group case of Shri Ram Prasath Reddy on 27.11.2020 alleging that document found in the search process contained details of concealment of income by the assessee with respect to acquisition of immovable property from M/s Gateway Office Parks Pvt. Ltd. during the previous year 2017-18. Accordingly, the AO issued a notice under section 153C and the assessee filed the return of income declaring a loss of Rs. 3,65,90,....
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....icable only to 'capital asset' and not stock-in-trade. 6. The ld. AR on the other hand submitted that section 29 of the Stamp Duty Act provides that in the absence of an agreement to the contrary the stamp duty is to be born by the buyer at the time of purchase and that in the present case the stamp duty was agreed to be born by the seller. The ld. AR further submitted that in the given case the assessee has paid the consideration as per the Sale-deed and that the stamp duty and registration cost which is besides the consideration is agreed to be borne by the seller instead of the buyer. The ld. AR also submitted that the payment of stamp duty by the seller does not reduce the liability of the buyer i.e. assessee who is required to pay the entire consideration towards acquisition and therefore it is the consideration paid by the assessee that needs to be considered for the purpose of section 56(2)(x). The ld. AR argued that there is no provision under the Act to reduce the stamp duty value or registration charges from the consideration paid towards acquisition of the property. 7. The ld. DR on the other hand argued that the tolerance limit of 5% was introduced only fr....
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....ively, which would otherwise have been Rs. 75,19,64,083/- and Rs. 76,50,19,015/- respectively, had the seller not borne these two charges. As was contended by the appellant in ground No.6.4.1, the registration and stamp duty borne by the seller is beyond the scope of the provisions of section 56(2)(x), since the provisions speak of 'consideration' in the hands of the purchaser. In the case on hand, the appellant paid Rs. 69,62,63,040/- and Rs. 68,92,06,320/- as consideration for purchase of the lands against the guideline value of Rs. 72,27,13,600/- and Rs. 68,92,06,320/-. Therefore, the amounts paid to the seller are the consideration paid for the purpose of acquisition of land and reduction of stamp duty and registration charges borne by the seller from the consideration so paid is not in order. Since Section 56(2)(x) is a deeming provision, one cannot expand the meaning of scope of any word while interpreting such deeming provision and accordingly the consideration actually paid by the purchaser has to be considered as such and no other parameters such as reducing the stamp duty and registration charges from the actual consideration so paid, as was worked out by the AO i....
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....sue of retrospective applicability of tolerance limit in the context of section 50C and 43CA and held that "9. We heard the parties and perused the material on record. The AO has received the information from Stamp duty authorities that during the year under consideration, the assessee has sold two properties for a consideration less than the stamp duty valuation. The AO called on the assessee to show cause as to why the provisions of section 43CA cannot be applied to make the addition towards the difference between the stamp duty value and sale consideration. Therefore before proceeding further we will look at the provisions of section 43CA which read as under - 43CA. - Special provision for full value of consideration for transfer of assets other than capital assets in certain cases. (1) Where the consideration received or accruing as a result of the transfer by an assessee of an asset (other than a capital asset), being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessab....
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.... 43CA of the Act. The AO did not accept the said claim of the assessee and held that the introduction of tolerance band in section 43CA of the Act is prospective and the CIT(A) upheld the said view of the AO. However the CIT(A) gave relief to the extent by considering the value of the property as certified by the DVO. 11. In the light of these facts the limited issue for our consideration is whether the tolerance band introduced under section 43CA of the Act i.e. 5% w.e.f. 01.04.2019 and 10% w.e.f. 01.04.2021 are applicable to assessee's case for AY 2017-18. In this regard we notice that the Co-ordinate Bench of the Tribunal in the case of Macrotech Developers Ltd. (supra) has considered a similar issue where it has been held that - "037. Ground number 4 of the appeal is with respect to the addition of Rs 2,03,051/- by invoking the provisions of section 43CA of the act. During the year, the assessee has sold a commercial property to a customer for the sale consideration of Rs. 47,500,000. The stamp duty value of the flat as determined by the stamp duty authority is 47,703,051/- which exceeded the value of the sale consideration by Rs. 203,051. Thus, the differ....
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....tual sale consideration received by assessee on transfer of asset and therefore, the benefit of tolerance limit is not available to the assessee in view of these decisions. 40. The learned authorized representative vehemently opposed the submission of learned departmental representative and referred to page number 21 of the assessment order wherein assessee specifically objected to the above addition before the learned assessing officer submitting that that there can be several reasons for the difference such as shape of the plot, location et cetera and therefore, the learned AO should have referred the matter to the valuation officer. Even otherwise, he submitted that the several judicial precedents have held that it is retrospective in nature. He further referred to the central board of direct taxes Circular number 8 of 2018 dated 26/12/2018 wherein the tolerance band of 5% was provided which is enhanced to 10% with effect from 1/4/2021. He therefore submitted that there is no reason why assessee should not be given a benefit of the above tolerance band. 41. We have carefully considered the rival contention and perused the orders of the lower authorities. ....
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.... was that search and seizure u/s 132 was conducted on 10-2-2001 pursuant to which the assessment order for the block period from 1-4-1989 to 10-2-2000 was passed on 28-02-2002 at a total undisclosed income of Rs. 85,00,000/-. The tax was charged as prescribed in section 113 of the Act. Subsequently, a proviso was inserted u/s 113 by the Finance Act, 2002 w.e.f. 01-06-2002 to provide for levy of surcharge at 10%. The A.O took the view that the said amendment was clarificatory in nature and he levied surcharge by passing rectification order u/s 154 of the Act. However, the Tribunal and the Hon'ble High Court upheld the assessee's claim that the said amendment was prospective in nature and did not apply to block period falling before 01-06-2002. However, the plea of the assessee was rejected by the Hon'ble Supreme Court in CIT v. Suresh N. Gupta [2008] 166 Taxman 313/297 ITR 322 also held that the proviso to section 113 is clarificatory and hence, should be read into block assessment scheme under Chapter XIV-B with retrospective effect. Similar view was reiterated by the Hon'ble Supreme Court in CIT v. Rajiv Bhatara (2009) 178 Taxman 285/310 ITR 105 by holding the prov....
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....difference of the consideration received from transfer of asset and the value adopted for stamp duty valuation was apparently not less than 10% tolerance margin which has been brought into effect from 1-4-2021 in the first proviso to section 43CA and therefore, the Tribunal in its wisdom had restored the matter to the file of the A.O for fresh adjudication (supra). Before us, admittedly such difference of tolerance margin is less than 10%. Now the question of applicability of this proviso of section 43CA retrospectively covering the assessment year in question i.e. A.Y. 2015-16, from the spirit of Supreme Court decision in Vatika Township (P.) Ltd. (supra) case is analysed. Now, the intent of the legislature is to provide relief to the assessee in case such difference is less than 10% which has been brought into effect from 1-04-2021 thereby providing benefit to the assessee. This being the beneficial provision therefore will even have retrospective effect and would apply to the present assessment year 2015-16. At this juncture we would also refer to the decision of Pune Tribunal in Dinar Umeshkumar More v. ITO [IT Appeal No. 1503 (Pune) of 2015, dated 25-1-2019], where the said pr....
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.... provided under section 43CA of the act same was not the issue argued before it. 45. The decision of the honourable Bombay High Court in case of 111 taxmann.com 94 in case of Swanand properties private limited was only with respect to applicability of provisions of section 43CA of the act for assessment year 2005-06 wherein it has been held that this provisions are applicable only with effect from 1/4/2014. Therefore, it does not help the case of the revenue. 46. Accordingly we hold that if the difference between the stamp duty value of a stock in trade and the transaction value covered by the provisions of section 43CA is less than 10% even prior to 1/4/2021, does not warrant any addition in the hands of the assessee. Accordingly, we direct the learned assessing officer to delete the addition of Rs. 203,051/- made under section 43CA of the act. Ground umber 4 of the appeal of the assessee is allowed." 12. From the perusal of the above decision, it is noticed that the coordinate bench has held that the proviso to section 43CA providing relief to the assessee to the extent of the difference being less than 10% is applicable retrospectively for the reason t....
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....ital gains under this anti-avoidance provision. In our humble understanding, it is a case of a curative amendment to take care of unintended consequences of the scheme of Section 50C. It makes perfect sense, and truly reflects a very pragmatic approach full of compassion and fairness, that just because there is a small variation between the stated sale consideration of a property and stamp duty valuation of the same property, one cannot proceed to draw an inference against the assessee, and subject the assessee to practically prove his being truthful in stating the sale consideration. Clearly, therefore, this insertion of the third proviso to Section 50C(1) is in the nature of a remedial measure to address a bonafide situation where there is little justification for invoking an anti-avoidance provision. Similarly, so far as enhancement of tolerance band to 10% by the Finance Act 2020, is concerned, as noted in the CBDT circular itself, it was done in response to the representations of the stakeholders for enhancement in the tolerance band. Once the Government acknowledged this genuine hardship to the taxpayer and addressed the issue by a suitable amendment in law, the next question....
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....e on which the related provision, i.e., Section 50C, itself was introduced. These amendments are thus held to be retrospective in effect. In our considered view, therefore, the provisions of the third proviso to Section 50C (1), as they stand now, must be held to be effective with effect from 1st April 2003. We order accordingly. Learned Departmental Representative, however, does not give up. Learned Departmental Representative has suggested that we may mention in our order that "relief is being provided as a special case and this decision may not be considered as a precedent". Nothing can be farther from a judicious approach to the process of dispensation of justice, and such an approach, as is prayed for, is an antithesis of the principle of "equality before the law," which is one of our most cherished constitutional values. Our judicial functioning has to be even-handed, transparent, and predictable, and what we decide for one litigant must hold good for all other similarly placed litigants as well. We, therefore, decline to entertain this plea of the assessee. 9. We have noted that as against the stated consideration of Rs. 75,00,000, the stamp duty valuation of the pr....
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....rative in nature and therefore the same is to be applied retrospectively. In our considered view a similar analogy should be applied to Section 56(2)(x) for the same reason that that the amendment to the said section is also clarificatory / curative in nature. Therefore we have no hesitation in holding that the ratio in the above decision is applicable to assessee's case also. Accordingly in assessee's case the AO is directed to delete the addition made under section 56(2)(x) taking into consideration the tolerance limit of 5% as prescribed. 12. Since we have allowed the claim of the assessee with regard to retrospective applicability of tolerance limit, the other contentions of the assessee with respect to applicability of section 56(2)(x) to asset held as stock-in-trade and on the legal contention with regard to section 153C have become academic and are left open accordingly. ITA No. 1172 & 1273/Chny/2025 13. From the perusal of the grounds raised by the assessee and the revenue in the above appeal, we notice that the contentions are identical to the facts in ITA No. 1173 & 1283/Chny/2025. We further notice that the grounds on which the claim of the assessee with....