2023 (4) TMI 526 - AT - Income Tax

Addition u/s. 56(2)(vii)(c) - difference between guideline value and consideration paid for purchase of property - HELD THAT - As per the provisions of section 56(2)(vii)(c) of the Act, if difference between consideration paid for purchase of property and guideline value of said property, then said difference should be treated as income of the assessee for the relevant assessment year. In this case, there is no dispute with regard to the fact that there is a difference between guideline value of the property and consideration paid for purchase of said property, because the registration authority has levied an additional stamp duty while registering the property.AO has made addition being difference between guideline value and consideration paid for purchase of property. There is no error in the reasons given by the AO to make additions towards difference in value of property u/s. 56(2)(vii)(c) of the Act. Alternate plea of the assessee that, the difference between guideline value and consideration paid for property is less than the tolerance band fixed by virtue of amendment to Section 50C by the Finance Act, 2020 and thus, no addition can be made u/s. 56(2)(vii)(c) - We find that, the amendment brought to Section 50C by the Finance Act, 2018 and further amendment by Finance Act, 2020 is held to be retrospective in nature, as held in the case of Maria Fernades Cheryl 2021 (1) TMI 620 - ITAT MUMBAI - Thus by virtue of said amendment to section 50C of the Act, if difference between guideline value and consideration paid for purchase of property is less than the tolerance band, then said difference cannot be considered as deemed consideration in the hands of the seller and consequently the provisions of section 56(2)(vii)(c) of the Act cannot be invoked in the hands of the buyer. Since, difference between guideline value and consideration paid for purchase of property in the present case is less than tolerance band, we are of the considered view that no addition can be made u/s. 56(2)(vii)(c) - Thus, we direct the AO to delete addition made towards difference in value of property u/s. 56(2)(vii)(c) TDS u/s 194A - processing charges (upfront fee) paid for taking loan from bank - disallowance of certain expenditure u/s. 40(a)(ia) for non deduction of TDS - AO was disallowed 30% of interest on other payment u/s. 40(a)(ia) - HELD THAT - We find that the tax auditor has quantified interest on other payments which is subjected to TDS to the relevant facts in its tax auditor report issued in Form No.3CD for the impugned assessment year. Assessee could not file any correctable evidence to justify his arguments that impugned payment does not comes under the preview of provisions of Section 194 - Although, assessee, tried to make out the case that part of said amount is processing charges paid to bank for availing loans. Since, the assessee could not justify the payments without deduction of tax with necessary evidence and also fails to obtain the certificate from the Auditor to the effect what was quantified under relevant Form No.3CD, includes processing fees paid to banks of which provisions of Section 194A has no application. We are of the considered view that, there is no merit in the reasons given by the Ld. CIT(A) to sustain addition made towards disallowance of expenditure u/s. 40(a)(ia) of the Act. Thus , we are inclined to uphold the findings of the Ld. CIT(A) and reject ground taken by the assessee.

Summary

Issues involved:
The appeal filed by the assessee against the order passed by the Commissioner of Income Tax (Appeals)-19, Chennai, dated 26.08.2022 pertaining to assessment year 2016-17.

Condonation of Delay:
The assessee filed a petition for condonation of delay of 11 days in filing the appeal, citing reasons of attending a religious function in hometown and returning late due to unforeseen circumstances. The Tribunal considered the reasons as reasonable cause for condonation of delay and admitted the appeal for adjudication.

Grounds of Appeal:
The assessee raised multiple grounds of appeal challenging the additions made by the assessing officer, including the difference between guideline value and consideration paid for property, disallowance under section 40(a)(ia) for non-deduction of TDS, and other related issues.

Addition under Section 56(2)(vii)(c):
The first issue addressed by the Tribunal was the addition of Rs. 8,25,000 under section 56(2)(vii)(c) for the difference between guideline value and consideration paid for property. The Tribunal upheld the assessing officer's addition based on the additional stamp duty paid by the assessee, as there was a clear difference between the guideline value and consideration paid.

Retrospective Amendment to Section 50C:
The Tribunal considered the retrospective nature of the amendment to Section 50C by the Finance Act, 2018 and 2020, which impacted the tolerance band for differences in property values. As the difference in this case fell within the tolerance band, the Tribunal directed the assessing officer to delete the addition made under section 56(2)(vii)(c) of the Act.

Disallowance under Section 40(a)(ia):
The Tribunal also addressed the disallowance of expenditure under section 40(a)(ia) for non-deduction of TDS on certain payments. Despite the assessee's arguments regarding the nature of the payments, the Tribunal upheld the disallowance as the assessee failed to provide sufficient evidence to justify the non-deduction of TDS.

Decision:
After considering all arguments and evidence, the Tribunal dismissed the appeal filed by the assessee, upholding the additions made by the assessing officer and the decision of the Commissioner of Income Tax (Appeals).

Separate Judgement:
The order was pronounced by Shri G. Manjunatha, Accountant Member, on 24th March 2023 at Chennai.