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2022 (12) TMI 871 - AT - Income TaxAdditions towards difference between guideline value of the property and sale consideration u/s. 50C - difference between stated consideration for sale of property and guideline value fixed for payment of stamp duty - arguments of the assessee is that as per 3rd proviso to section 50C(1) of the Act, inserted by the Financial Act, 2018 w.e.f. 01.04.2019, if difference between stated consideration and guideline value does not exceed 10% of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall be deemed to be the full value of consideration - HELD THAT - Although said amendment came into statue by Finance Act, 2018 w.e.f. 01.04.2019, but the co-ordinate bench of the Tribunal in the case of Amrapalli Cinema 2021 (4) TMI 1160 - ITAT DELHI held that amendment made in scheme of section 50C(1), by inserting third proviso thereto and by enhancing tolerance band for variations between stated sale consideration vis- -vis stamp duty valuation from 5% to 10% are effective from date on which section 50C, itself was introduced in the statue. A series of Tribunal decisions have reiterated said legal position and held that amendment in section 50C(1) is curative in nature and must be held to relate back to the date of introduction of section 50C i.e., 01.04.2003 onwards. The ITAT, Chennai benches in the case of Doraisamy Suresh, (HUF) 2022 (4) TMI 743 - ITAT CHENNAI had also considered an identical issue and held that if difference between stated consideration and guideline value is less than 10% as prescribed under 3rd proviso to section 50C(1), then there cannot be any addition by substituting full value of consideration. In this case, there is no dispute with regard to the fact that difference between stated consideration and guideline value of the property is less than 10% and thus, we are of the considered view that there is no error in the reasons given by the CIT(A) to delete additions made towards difference between consideration received for sale of property and guideline value of the property and thus, we are inclined to uphold the findings of the Ld. CIT(A) and dismiss the appeal filed by the revenue.
Issues:
- Disallowance of interest expenses - Addition under section 50C of the Act Disallowance of Interest Expenses: The Revenue appealed against the order of the Commissioner of Income Tax (Appeals) regarding the disallowance of interest expenses. The Revenue contended that the CIT(A) erred in deleting the disallowance of interest expenses of Rs. 6,29,504, based on a previous decision in favor of the assessee. The Revenue argued that the CIT(A) failed to acknowledge the pending appeal before the High Court and erred in allowing interest under section 37 of the Act. The issue revolved around diversion of borrowed funds and the applicability of section 37. The Revenue sought to set aside the CIT(A) order and restore that of the Assessing Officer. Addition under Section 50C of the Act: The dispute centered on the addition under section 50C of the Act amounting to Rs. 85,36,200. The CIT(A) deleted this addition based on a decision in favor of the assessee by the Chennai Bench of the Tribunal. The Revenue argued that the CIT(A) failed to appreciate the facts of the case and erred in applying section 55A(b)(1) when no reference was made to the DVO. The Revenue sought to set aside the CIT(A) order and restore that of the Assessing Officer. The crux of the matter was the difference between the guideline value of the property and the sale consideration, with the CIT(A) invoking the 3rd proviso to section 50C(1) to justify the deletion of the addition. The ITAT, after hearing both parties and examining the case, found that the difference between the stated consideration and the guideline value was less than 10%. The ITAT referred to a series of Tribunal decisions and held that the amendment in section 50C(1) was curative in nature and related back to the date of introduction of section 50C. Citing precedents, including the case of Doraisamy Suresh (HUF) vs ACIT, the ITAT concluded that if the difference is less than 10% as per the 3rd proviso to section 50C(1), no addition should be made. Therefore, the ITAT upheld the CIT(A)'s decision to delete the addition under section 50C of the Act. Consequently, the appeal filed by the Revenue was dismissed.
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