2021 (9) TMI 850 - AT - Income Tax

Revision u/s 263 - relevant date for the applicability of stamp duty valuation - addition in the form of difference between stamp duty value on the date of registration of the property as against stamp duty valuation on the date of booking of the flats and the actual consideration - when there is a time lag between the date of booking of the flat and the final registration of the flat in favour of the prospective buyers by the assessee, then whether the stamp duty value on the date of booking of the flat or on the date of actual registration of the flat should be considered in terms of Section 43CA ? - HELD THAT - As per provisions of 43CA(3) of the Act, it is very clear that stamp duty valuation on the date of booking is to be considered and the said stamp duty valuation shall have to be compared with actual sale consideration. This has been done by the ld. AO and hence, it could be safely concluded that the ld. AO had taken a plausible view in the matter by applying the provisions of the Act. We find that there is no incorrect application of law on the part of the ld. AO as alleged by the ld. PCIT. Having brought on record the time lag between the date of booking and the date of actual registration of the flats, the ld. PCIT ought not to have directed the ld. AO to take the stamp duty valuation on the date of registration of the flat which is completely in contradiction of provisions of Section 43CA(3). AO having taken a plausible view in the matter and the ld. PCIT is only trying to substitute his view in place of the view already taken by the ld. AO. This, in our considered opinion, cannot be done by the ld. PCIT by invoking his revision jurisdiction u/s.263 - AO had not committed any error in the order as he had apparently applied the provisions of Section 43CA(3) of the Act. - Decided in favour of assessee.

Summary

Issues:
1. Validity of assumption of revision jurisdiction u/s.263 of the Act
2. Merits of the addition in the form of difference between stamp duty value on the date of registration of the property as against stamp duty valuation on the date of booking of the flats

Issue 1: Validity of assumption of revision jurisdiction u/s.263 of the Act

The appeal challenged the revision order of the Principal Commissioner of Income Tax-20, Mumbai u/s.263 of the Act for A.Y. 2015-16. The primary issue was whether the Pr. Commissioner of Income Tax validly assumed revision jurisdiction u/s.263. The connected issue was the addition directed by the Pr. CIT regarding the difference between stamp duty values on booking and registration dates. The assessee, engaged in real estate development, filed returns showing income from business. The ld. AO made an addition under Section 43CA based on stamp duty valuation differences. The Pr. CIT, exercising revisionary powers, directed a higher addition, disputing the stamp duty valuation date used by the ld. AO. The Tribunal noted the time gap between booking and registration dates, emphasizing the relevance of Section 43CA(3) which mandates using booking date stamp duty valuation for comparison with sale consideration. The Tribunal found no incorrect application of law by the ld. AO and concluded that the Pr. CIT's direction contradicted statutory provisions. Citing the Gabriel India Ltd. case, the Tribunal held that the Pr. CIT cannot substitute his view for the ld. AO's plausible interpretation. The Tribunal also referenced the Malabar Industrial Company Ltd. case, stating that the twin conditions for invoking revision jurisdiction were not satisfied. Consequently, the Tribunal allowed the appeal on the grounds of invalid assumption of jurisdiction u/s.263.

Issue 2: Merits of the addition in the form of difference between stamp duty value on the date of registration of the property as against stamp duty valuation on the date of booking of the flats

The Tribunal did not delve into the merits of the addition due to the allowed appeal on the jurisdictional issue. The ld. CIT(A) had the pending issue under consideration, and the Tribunal refrained from expressing any opinion on the merits to avoid interfering with the CIT(A)'s decision-making process. The Tribunal's decision to not address the merits was to prevent jeopardizing the ongoing proceedings before the ld. CIT(A). Therefore, the Tribunal left the merits of the addition open for further consideration by the ld. CIT(A) without providing any conclusive opinion.

In conclusion, the Tribunal allowed the appeal based on the invalid assumption of revision jurisdiction u/s.263 by the Pr. CIT, refraining from addressing the merits of the addition. The Tribunal emphasized the statutory provisions and the importance of adhering to the correct interpretation of the law in tax assessments.