2023 (11) TMI 928 - AT - Income Tax

Addition u/s 43CA - agreement price is lower than the stamp duty value on the first date of payment made by purchaser by any other mode other than cash - HELD THAT - Assessee s sale price and market value does not exceed in this case more than 10% hence no addition against the transaction with Gaurav Samruddhi, Flat No. SAM/A/103 can be made. Same is the situation for Flat No. EXC/3/204, Serial No. 4, Table-2, Project Name Gaurav Excellency , No addition can be made The view of the High Court of Punjab Haryana in Chandani Bhuchar 2010 (1) TMI 731 - PUNJAB AND HARYANA HIGH COURT with respect to the deeming provision of section 50C of the Act is that onus of proof lies on the Department/Revenue to bring on record any evidence to the effect that higher amount of sale consideration had passed on to the seller from the buyer in addition to the amount of sale consideration recorded in the deed. The amount at which valuation has been done by the stamp authorities could not be taken as actual sale consideration and the value shown in the sale deed has to be accepted. The circle rates as stipulated u/s 50C of the Act cannot be sole concluding reason to hold that there is an understatement of sale consideration and adopt the valuation done for the purpose of stamp duty. In view of above discussions revenue has failed to discharge its burden of proof that higher amount of sale consideration had passed on to the seller from the buyer in addition to the amount of sale consideration recorded in the deed. On the other hand, it is also found that assessee also did not come forward with relevant documents which can help in establishing the fact that no cash payment element is involved to take the advantage of position as provided in section 43CA (3) r.w.s. 43CA (4) of the Act. In view of this, we store the matter back to the file of Jurisdictional AO for verification of balance transactions of Table-2 at Page No.6, i.e., at serial no. 1, 2, 3, 5, and 6. Ground Nos. 1, 2, 3, 4 and 5 are partly allowed for statistical purposes. Taxability of deemed rent u/s. 22 r.w.s. 23 of the Act. AO by deputing an Income Tax Inspector determined ALV as prescribed in section 23 of the Act for the purposes of section 22 - HELD THAT - As per this sub-section, any property which has been held as stock in trade and has not been let-out during the year, then the Annual Value of such property shall be taken as Nil up to a period of one year from the end of the financial year in which the certificate of completion of construction is obtained. The appellant has submitted that the said amendment is applicable w.e.f. A.Y. 2018-19 and therefore the income can be charged only from A.Y. 2018-19 onwards. CIT (A) and AO relied upon following case laws to substantiate their view on the taxability of deemed rent on unsold stock of flats hold by assessee as relying on ANSAL HOUSING CONSTRUCTION LIMITED VERSUS ASSISTANT COMMISSIONER OF INCOME TAX 2018 (1) TMI 805 - DELHI HIGH COURT , M/S ANSAL HOUSING AND CONSTRUCTION 2016 (11) TMI 208 - DELHI HIGH COURT and M/S. SANE DOSHI ENTERPRISES 2015 (4) TMI 882 - BOMBAY HIGH COURT - As assessee was liable to pay income tax on the annual letting value of unsold flats owned by it under the head 'income from house property' - Decided against assessee.

Summary

Issues Involved:
1. Addition under Section 43CA.
2. Applicability of Section 43CA on agreements before 01.04.2013.
3. Income offered for taxation in earlier years.
4. Rejection of property valuation and non-referral to valuation officer under Section 50C.
5. Additions without corroborative evidence.
6. Addition under Section 22 r.w.s 23 for deemed rent.

Summary:

1. Addition under Section 43CA:
The assessee contested the addition of Rs. 34,66,134/- under Section 43CA, arguing that the sale price did not exceed the stamp duty value by more than 10%. The Tribunal noted that the benefit conferred by the first proviso to Section 43CA(1) should be given retrospective effect, as per the Supreme Court ruling in CIT (Central)-I, New Delhi v. Vatika Township (P.) Ltd. Consequently, no addition could be made for transactions where the sale price did not exceed the stamp duty value by more than 10%.

2. Applicability of Section 43CA on Agreements Before 01.04.2013:
The assessee argued that Section 43CA should not apply to agreements entered before 01.04.2013. The Tribunal did not address this issue separately, focusing instead on the retrospective application of the benefit under the first proviso to Section 43CA(1).

3. Income Offered for Taxation in Earlier Years:
The Tribunal did not find merit in the assessee's argument that income from the flats had already been offered for taxation in earlier years, as the addition under Section 43CA was based on discrepancies between the sale price and the stamp duty value.

4. Rejection of Property Valuation and Non-Referral to Valuation Officer:
The assessee's valuation was rejected without referral to a valuation officer under Section 50C. The Tribunal remanded the matter back to the AO for verification, emphasizing that the AO must bring positive evidence to support the stamp duty valuation, as per the Punjab & Haryana High Court ruling in CIT vs. Chandani Bhuchar.

5. Additions Without Corroborative Evidence:
The Tribunal found that the revenue failed to discharge its burden of proof that higher sale consideration had passed to the seller. The matter was remanded back to the AO for further verification.

6. Addition under Section 22 r.w.s 23 for Deemed Rent:
The AO added Rs. 24,52,359/- as deemed rent for unsold flats under Section 22 r.w.s 23. The Tribunal upheld this addition, relying on the Delhi High Court ruling in CIT vs. Ansal Housing Finance & Leasing Co. Ltd., which stated that the annual letting value (ALV) method applies regardless of actual income received, based on ownership and not on whether the property is let out.

Conclusion:
The appeal was partly allowed for statistical purposes, with some issues remanded back to the AO for further verification and others upheld based on existing judicial precedents.