Section 43CA - Special provision for full value of consideration for transfer of assets other than capital assets in certain cases - Income Tax - Ready Reckoner - Income Tax

Section 43CA : Special provision for full value of consideration for transfer of assets other than capital assets in certain cases Section 43CA has been inserted w.e.f. from A.Y. 2014-15 as an anti-avoidance measure to provide that where the consideration for the transfer of an asset (other than capital assets). Where the sales consideration received or accruing on transfer of a stock in trade, being land or building or both, is less than the value assessed or assessable by the stamp valuation authority of a State Govt. for the purpose of payment of stamp duty, the value so assessed or assessable shall deemed to be the sale consideration. Where the assessee claims that the value so assessed or assessable exceeds the FMV of the property and the value so assessed or assessable has not been disputed in any appeal or revision before any authority/ court, the A.O may refer the valuation of the stock in trade to a Valuation Officer, Where value ascertained by Valuation officer: Exceeds the stamp duty value: Stamp duty value shall be taken as sales price. is lower than stamp duty value: Value ascertained by Valuation officer shall be taken as sales price. Note: Stamp duty value adopted/ assessed/ assessable by stamp duty authority shall be deemed to be full value of consideration for the purposes of computation of income under the head of Profit and gains of business or profession if the following condition is satisfied For the A.y. 2014-15 to 2018-19, If stamp duty value exceeds 100% of ale consideration. For the A.y. 2019-20 and 2020-21, If stamp duty value exceeds 105% of ale consideration. Form the A.y. 2021-22, If stamp duty value exceeds 110% of ale consideration. W.e.f. AY 2021-22 In order to boost the demand in real-estate sector and to enable real-estate developers to liquidate their unsold inventory at a lower rate to home buyers, the Finance Act, 2021 has increased the safe harbour threshold increase from 110% to 120% u/s 43CA of the Act, if the following conditions are satisfied :- (i) The transfer of residential unit takes place during the period from 12.11.2020 to 30.06.2021 . (ii) The transfer is by way of 1st time allotment of the residential unit to any person. (iii) The consideration received or accruing as a result of such transfer does not exceed ₹2 Crore. Where the date of agreement fixing the value of consideration for transfer of the asset and the date of registration of such transfer of asset are not the same , stamp duty value in respect of such transfer on the date of the agreement shall be taken as sales price. This shall apply only in a case where the amount of consideration or a part thereof has been received by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed on or before the date of agreement for transfer of the asset. Examples Example 1 Date of transfer of land/ building held as Stock-in-trade 01/09/2023 Actual Consideration ₹ 100 lakhs (₹10 lakhs received A/c payee as on 01/07/2023) Stamp duty value on the date of agreement ₹ 120 as on 01/07/2023 Stamp duty value on the date of registration ₹ 210 as on 01/09/2023 Full value of consideration ₹ 120 Remark As part of the consideration is received by a/c payee cheque on the date of agreement, Stamp duty value (SDV) on the date of agreement to be adopted as full value of consideration, since the SDV exceeds 110% of consideration i.e. ₹ 110 lakhs Example 2 Date of transfer of land/ building held as Stock-in-trade 01/09/2023 Actual Consideration ₹ 100 lakhs (₹10 lakhs received A/c payee as on 01/07/2023) Stamp duty value on the date of agreement ₹ 109 as on 01/07/2023 Stamp duty value on the date of registration ₹ 130 as on 01/09/2023 Full value of consideration ₹ 130 Remark SDV on the date of registration to be adopted as full value of consideration and such consideration i.e. ₹ 110 lakhs. since part of consideration is received by cash on the date of agreement, the SDV on the date of agreement cannot be considered vis-a-vis actual consideration. Example 3 Date of transfer of land/ building held as Stock-in-trade 31/01/2024 Actual Consideration ₹ 100 lakhs (₹10 lakhs received A/c payee as on 01/07/2023) Stamp duty value on the date of agreement ₹ 109 as on 01/07/2023 Stamp duty value on the date of registration ₹ 130 as on 31/01/2024 Full value of consideration ₹ 100 Remark Actual sale consideration would be the full value of consideration, since SDV on the date of agreement does not exceed 110% of actual consideration, SDV on the date of agreement can be consideration vis-a-vis actual consideration, since part of the consideration has been received by account payee cheque on the date of agreement. Example 4 Date of transfer of land/ building held as Stock-in-trade 31/03/2024 Actual Consideration ₹ 100 lakhs (Full amount received in cash on the date of registration) Stamp duty value on the date of agreement ₹ 120 as on 01/05/2023 Stamp duty value on the date of registration ₹ 130 as on 31/03/2024 Full value of consideration ₹ 130 Remark Stamp duty value of the date of registration would be the full value of consideration since the stamp duty value exceeds 110% of consideration i.e. ₹ 110 lakhs