2019 (2) TMI 1916 - AT - Income Tax

Addition invoking provisions of section 43CA - difference between stamp duty valuation and actual consideration - application of the case laws with regard to Section 50C - HELD THAT - We refer to the decision of the Co-ordinate Bench of the Tribunal, Pune in the case of Rahul Construction 2012 (1) TMI 229 - ITAT PUNE there is a wide variation between the two values and that they are based on some estimate. Difference between the sale consideration shown by the assessee and the fair market value determined by the DVO which is less than 10%. In view of the fact that valuation is always a matter of estimation where some difference is bound to occur. The Assessing Officer was not justified in substituting the value determined by the DVO for the sale consideration disclosed by the assessee. Therefore, Assessing Officer was directed to take ₹ 19,00,000/- only as the sale consideration of the property. This case of Rahul Construction Vs. DCIT (supra.) was also followed by the Pune Bench of the Tribunal in 2012 (1) TMI 229 - ITAT PUNE therein also, the benefit of 10% difference of sale value was allowed in favour of the assessee. Thus, following the aforesaid decisions, we are of the considered view that difference between the sale consideration of the property shown by the assessee and the fair market value determined by the DVO under section 50C(2) being less than 10%, the Assessing Officer is not justified in substituting the value determined by the DVO for the sale consideration disclosed by the assessee. - We set aside the order of the Ld. CIT(Appeal) and allow the appeal of the assessee.

Summary

Issues:
1. Addition under section 43CA of the Income Tax Act, 1961 for the variance between stamp duty valuation and actual consideration.

Analysis:
The case involved an appeal by the assessee against the addition of ?5,74,924 under section 43CA of the Income Tax Act, 1961. The assessee, a partnership firm engaged in the business of Builders, Promoters, and Developers, had sold a flat for ?67,20,000, while the stamp duty value was ?72,94,924. The Assessing Officer added the difference to the total income of the assessee. The Ld. CIT(Appeal) upheld the addition, stating that section 43CA was invoked, distinct from section 50C, and relied on by the assessee. During the hearing, the Ld. AR contended that the provisions of section 43CA were similar to section 50C and cited relevant case laws to support the argument.

The Tribunal analyzed the provisions of Section 50C and Section 43CA, noting that both deal with the full value of consideration in specific cases. Referring to a Co-ordinate Bench decision in a similar case, it was observed that if the difference between the sale consideration and fair market value is less than 10%, the Assessing Officer cannot substitute the value determined by the DVO. The Tribunal emphasized that valuation involves estimation, and minor differences are expected. Citing precedents, the Tribunal concluded that the difference in this case was less than 10%, hence the Assessing Officer was not justified in substituting the value. Consequently, the order of the Ld. CIT(Appeal) was set aside, and the appeal of the assessee was allowed.

Therefore, the Tribunal's decision focused on the interpretation and application of sections 50C and 43CA, emphasizing the significance of valuation variances within the permissible limit of 10% and the Assessing Officer's discretion in such cases. The judgment provided clarity on the treatment of such differences, drawing parallels between the two sections and relying on established case laws to support its conclusion.