2024 (11) TMI 241 - AT - Income Tax

Disallowance u/s 43CA - difference between the stamp duty value and the agreement value in respect of Flat - as argued Provisions of Sec. 43CA cannot be made applicable to the present assessment year as no exchange had taken place during year - AO held that on the one hand, the assessee submitted that the flat was allotted to the party in the years 2009 and 2010, while on the contrary, the assessee submitted a copy of the allotment letter, in respect of the same flat, which dates to 05/05/2011, thus contradictions raise doubts on the genuineness of the assessee s claim - as per CIT(A) in this case, there was only one registered sale agreement that was executed during the year under consideration, therefore the value adopted by the stamp duty authority as on the date of the agreement is to be adopted as deemed sale consideration HELD THAT - Agreement for sale executed on 30/04/2011 was the principal agreement honoured by the parties for the sale of Flat no.C-1103. Thus, even though the said agreement was ultimately registered in the year under consideration, in light of the provisions of section 43CA(3) we are of the considered view that the stamp duty value as on the date of the agreement for sale, i.e. 30/04/2011 be considered as the full value of consideration for computation of profits and gains of the assessee from the transfer of Flat. Further, the provisions of section 43CA(4) of the Act are also satisfied in the present case, as the earnest money of INR 2 lakhs was paid by the purchaser vide cheque No. 272834 dated 26/04/2011. Consequently, we set aside the impugned order and delete the addition made by considering the stamp duty value on the date of registration of the agreement. We direct the AO to compute the profits and gains from the transfer of the impugned flat in light of the provisions of section 43CA(3) of the Act by considering the stamp duty value as on the date of agreement for sale, i.e. 30/04/2011. We further direct that no order shall be passed without affording reasonable opportunity of being heard to the assessee. Accordingly, grounds raised by the assessee are allowed for statistical purposes.

Summary

Issues Involved:

1. Applicability of Section 43CA of the Income Tax Act, 1961, to the assessment year in question.
2. Validity of the assessment regarding the disallowance of Rs. 50,15,000 for Flat No. C-1103.
3. Consideration of the date of agreement versus the date of registration for determining the stamp duty value under Section 43CA(3).

Detailed Analysis:

1. Applicability of Section 43CA:

The primary issue is whether Section 43CA of the Income Tax Act, 1961, applies to the transactions in the assessment year 2017-18. The assessee contended that Section 43CA should not apply as no exchange occurred during the year. However, the Tribunal analyzed the applicability of Section 43CA, which states that if the consideration received or accruing as a result of the transfer of an asset is less than the value adopted by the stamp duty authority, the latter shall be deemed the full value of consideration for computing profits and gains from the transfer. The Tribunal found that Section 43CA was applicable since the consideration was less than the stamp duty value.

2. Validity of Disallowance for Flat No. C-1103:

The assessee challenged the addition of Rs. 50,15,000 for Flat No. C-1103, arguing that the allotment letter dated 05/05/2011 should govern the transaction, not the registration date. The Assessing Officer (AO) had considered the stamp duty value as of the registration date, leading to the disallowance. The Tribunal examined the facts, noting contradictions in the assessee's submissions regarding the allotment date and the failure to provide necessary documents like the bank statement and ready reckoner. Despite these issues, the Tribunal emphasized that the original agreement for sale dated 30/04/2011 should be the basis for consideration, as it was the principal agreement honored by the parties.

3. Date of Agreement vs. Date of Registration:

A crucial point was whether the stamp duty value should be considered as of the agreement date or the registration date. The Tribunal referred to Section 43CA(3), which allows the stamp duty value on the agreement date to be considered if the agreement and registration dates differ, provided some consideration was received in a mode other than cash before the agreement date. The Tribunal found that the earnest money of Rs. 2 lakhs was paid via cheque before the agreement date, satisfying Section 43CA(4). Therefore, the Tribunal concluded that the stamp duty value as of 30/04/2011 should be considered for computing profits and gains, not the value on the registration date.

Conclusion:

The Tribunal set aside the impugned order, deleting the addition made by the AO. It directed the AO to compute profits and gains from the transfer of Flat No. C-1103 by considering the stamp duty value as of the agreement date, 30/04/2011, in accordance with Section 43CA(3). The appeal by the assessee was allowed for statistical purposes, with instructions to provide the assessee a reasonable opportunity to be heard before passing any order.