2021 (9) TMI 176 - AT - Income Tax

Addition u/s 56(2)(vii)(b) - difference between the sale consideration declared by the assessee and the stamp duty value - whether the assessee would be eligible for benefit of 3rd proviso to section 50C(1) inserted by the Finance Act, 2018 and subsequently amended by the Finance Act, 2020? - HELD THAT - Undisputedly, the difference in the sale consideration declared by the assessee and the stamp duty value is 5.8% approximately. The co-ordinate bench in the case of Maria Fernandes Cheryl 2021 (1) TMI 620 - ITAT MUMBAI while considering the similar issue held that the 3rd proviso to section 50C(1) is curative in nature, even though it is stated to be prospective, but it relates back to the date when the statutory provision of section 50C was made effective i.e. 01.04.2003. Even, the subsequent amendment to the aforesaid proviso by the Finance Act, 2020 enhancing tolerance band from 5% to 10% would be effective w.e.f. 01.04.2003. Similar view has been taken in the case of Amrapali Cinema Vs. ACIT (supra) following the decision rendered in the case of Maria Fernandes Cheryl 2021 (1) TMI 620 - ITAT MUMBAI . We find merit in the submissions made by ld. AR - no hesitation in holding that in the instant case, since the difference between the sale consideration declared by the assessee and the stamp duty value is 5.8% (approx), the consideration declared by the assessee should not be disturbed as the variation is within tolerance band of 10%. Consequently, the AO is directed to delete the addition. - Decided in favour of assessee.

Summary

Issues:
- Addition under section 56(2)(vii)(b) of the Income Tax Act, 1961.

Analysis:
The appeal before the Appellate Tribunal ITAT Mumbai concerned the addition of ?15,17,800 made under section 56(2)(vii)(b) of the Income Tax Act, 1961 for the Assessment Year 2014-15. The primary contention of the assessee was against the difference between the stamp duty value and the total consideration declared for the purchase of a plot of land. The Assessing Officer had determined the market value of the property based on the stamp duty rate, resulting in the addition. The assessee argued that the variation between the declared consideration and the stamp duty value was only 5.82%, falling within the tolerance limit allowed by the 3rd proviso to section 50C. The Tribunal referred to precedents and held that the 3rd proviso to section 50C is curative in nature, allowing for variations within the permitted limits without invoking anti-avoidance provisions. The Tribunal emphasized that the amendment enhancing the tolerance band to 10% was also retrospective from the introduction of section 50C in 2003. Consequently, the Tribunal directed the deletion of the addition as the declared consideration fell within the tolerance band.

The Departmental Representative defended the impugned order, arguing that the benefit of the 3rd proviso inserted by the Finance Act, 2018 would not apply to the assessee for the relevant assessment year. However, the Tribunal, after considering the arguments from both sides and examining the orders of the authorities below, focused on determining whether the assessee was eligible for the benefit of the 3rd proviso to section 50C(1) as amended by the Finance Act, 2018 and 2020. The Tribunal noted that the difference between the declared consideration and the stamp duty value was approximately 5.8%. Relying on previous decisions, the Tribunal concluded that the assessee should not be penalized as the variation was within the tolerance band of 10%. Therefore, the Tribunal set aside the findings of the CIT(A) and allowed the appeal of the assessee, directing the deletion of the addition. The Tribunal emphasized the retrospective nature of the amendments to section 50C, holding that they relate back to the introduction of the related statutory provision in 2003. The Tribunal rejected the plea to provide relief as a special case, emphasizing the importance of equal treatment under the law and consistency in judicial decisions.