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2020 (7) TMI 690 - HC - Income TaxEffect of application of Section 43CA of the Act and Section 56(2)(vii)(b) of the Income Tax Act, 1961 substituted by Finance Act, 2013 w.e.f 01.04.2014 - scope of total income be substituted by the Valuation assessed by any Authority of a State Government for the purpose of payment of stamp duty - discrimination in application of Section 43CA and Section 56(2)(vii)(b)(ii) of the Act as it is known fact that the levy of stamp duty is a state subject - valuation of the Stamp Valuation Authority - HELD THAT - Learned counsel for the petitioner Mr. Deepak Kumar Sinha at the outset seeks permission to withdraw this writ petition in order to move before the appropriate Forum. Learned counsel for the Income Tax Department does not object to the prayer. Petition dismissed as withdrawn.
Issues:
Challenge to the constitutionality of Section 43CA of the Income Tax Act, 1961 - Double taxation due to application of Section 43CA and Section 56(2)(vii)(b) - Allegations of discrimination in the application of tax provisions - Dispute over the assessable value for tax imposition - Concerns regarding alteration of subject matter of the Income Tax Act. Analysis: The petitioner approached the High Court seeking declarations regarding the constitutionality of Section 43CA of the Income Tax Act, 1961. The petitioner argued that the provision, which deals with the full value of consideration for transfer of assets other than capital assets, is ultra vires the Constitution of India. The petitioner contended that the Income Tax Act is a law made under Entry 82, Schedule VII-List I of the Constitution, and the substitution of 'total income' with 'the valuation assessed by any Authority of a State Government for the purpose of payment of stamp duty' is not permissible. The petitioner further sought a declaration regarding the double taxation issue arising from the application of Section 43CA and Section 56(2)(vii)(b) of the Income Tax Act, 1961. It was argued that when the consideration involved in a transaction of purchase or sale of land or building is less than the stamp duty value, the excess of such value over the actual consideration is treated as income for both the transferor and the transferee, leading to double taxation and taxation of notional income. Moreover, the petitioner raised concerns about discrimination in the application of Section 43CA and Section 56(2)(vii)(b)(ii) of the Act. The petitioner highlighted the differences in the principles, methods, and bases of levy of stamp duty across states, leading to a lack of uniformity in the computation of income related to the transfer or receipt of land or building based on stamp duty value. This, according to the petitioner, results in discriminatory treatment. Additionally, the petitioner disputed the assessable value for tax imposition, arguing that the value of stamp duty paid on the purchase or sale of land building cannot be the assessable value for tax purposes due to variations in property values based on location, area, nature, and other factors. Lastly, the petitioner contended that Section 43CA of the Act alters the subject matter of the Income Tax Act by substituting the 'valuation of the Stamp Valuation Authority' for the 'total income' of the assessee, which, in the petitioner's view, goes beyond the provisions of the Constitution of India. The petitioner raised concerns that the Finance Act seeks to change the subject matter of the Income Tax Act by including the valuation of the Stamp Valuation Authority, which is not in line with the Act's original scope of taxing income other than agricultural income. Ultimately, the petitioner's counsel sought permission to withdraw the writ petition to pursue the matter before the appropriate forum, and the Income Tax Department did not object to this request. Consequently, the High Court dismissed the petition as withdrawn.
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