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TMI Blog2021 (8) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... nal value of asset based on Stamp Duty valuation. A perusal of Circular 8 of 2018 (supra) would show that identical reasons have been given for Rationalization of Sections 43CA and 50C . The proviso has been inserted and subsequently tolerance band limit has been enhanced to mitigate hardship of genuine transactions in the real estate sector. Ergo, in the light of reasoning given for insertion of the proviso and exposition by the Tribunal for retrospective application of the said proviso, have no hesitation in holding that the proviso to sub-section (1) to section 43CA and the subsequent amendment thereto relates back to the date on which the said section was made effective i.e. 01/4/2014. Assessing Officer is directed to delete the addition u/s 43CA - Decided in favour of assessee. - ITA NO.5752/MUM/2019 - - - Dated:- 2-7-2021 - Shri Vikas Awasthy, Judicial Member For the Appellant : Shri Bhadresh Joshi For the Respondent : Ms. Smita Verma ORDER This appeal by the assessee is directed against the order Commissioner of Income Tax (Appeals)-24 Mumbai [in short 'the CIT(A) ] dated 03/06/2019 for the assessment year 2016-17. 2. Shri Bhad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, no leverage of percentage difference should be allowed to the assessee. The ld. DR contended that the benefit of difference in value disclosed and Stamp Value can be given to the assessee in accordance with proviso to sub-section (1) to section 43CA inserted by the Finance Act, 2018, w.e.f. 01/4/2019. The benefit of newly inserted proviso will not be available to the assessee in the impugned assessment year. The Assessing Officer has already granted due relief to the assessee u/s 154 of the Act after receipt of DVO s report. Now, the addition u/s43CA of the Act stands at ₹ 6,81,500/-. 4. Both sides heard, orders of authorities below examined. The solitary issue assailed by the assessee is addition made u/s 43CA of the Act in respect of difference between agreement value of the flats and market value determined by the DVO. The value of flats as per assessee, Stamp Duty Value and value as determined by the DVO are tabulated herein under: Sr. No. Flat No. Agreement value (in Rs.) Stamp Duty Value (in Rs.) Fair Market Value as determined by DVO (in Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Commissioner of Income Tax (supra) has held as under: 8. We find merit in the submission of Ld. A.R. The difference between the fair market value determined by the DVO and actual sale consideration is ₹ 7,14,530/- i.e slightly more than 2 per cent of the sale consideration. The co-ordinate Bench of the Tribunal in the case of Rahul Construction V/s. DCIT (supra) has held that where difference between the sale consideration declared by the assessee and fair market value as determined by the DVO u/s 50C is less than 10 percent, the Assessing Officer was not justified in substituting the value determined for sale consideration disclosed by the assessee. The Co-ordinate Bench after considering the provisions of Section 50C of the Act and the provision of section 23A and 24(5) of the Wealth Tax Act held as under :- 13. A combined reading of the above provisions shows that the valuation adopted by the DVO is subject to appeal and the same is not final. In the instant case we find that as Aagainst the value of ₹ 28,73,000/- adopted by the stamp valuation authorities, the DVO has determined the FMV on the date of transfer at ₹ 20,55,000/- . This itself s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that difference between the cost of construction shown by the assessee and as determined by the Assessing Officer being less than 15 per cent, the same is to be ignored for the purposes of addition. The Hon ble Delhi High Court in the case of CIT V/s. Sadna Gupta 352 ITA 595 held that unless and until there was some other evidence to indicate that extra consideration had flowed in transaction for purchase of property, report of DVO could not form basis of any addition on part of revenue. In absence of any evidence no reliance could be placed on the report of DVO for making addition. 10. Thus, in view of the fact that the difference between sale consideration and the market value determined by the DVO is not substantial and is approximately little over 2 per cent of the actual sale consideration, we find no reason for rejecting actual sale consideration mentioned in the Sale Deed for determining long term capital gain. Accordingly, the ground No.1 raised in appeal by the assessee is allowed. The Assessing Officer is directed to adopt actual sale consideration as mentioned in the Sale Deed as a fair market value for determining the long term capital gain. 6. In the lig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The insertion of the third proviso to Section 50C(1) provides for this tolerance band with respect to a certain degree of variations between the stamp duty valuation and the stated consideration of an immovable property. In other words, as long as the variations are within the permissible limits, the anti-avoidance provisions of Section 50C do not come into play. As we have noted earlier, the CBDT itself accepts that there could be various bonafide reasons explaining the small variations between the sale consideration of immovable property as disclosed by the assessee vis- -vis the stamp duty valuation for the said immovable property. Obviously, therefore, disturbing the actual sale consideration, for the purpose of computing capital gains, and adopting a notional figure, for that purpose, will not be justified in such cases. On a conceptual note, an estimation of market price is an estimation nevertheless, even if by a statutory authority like the stamp duty valuation authority, and such a valuation can never be elevated to the status of such a precise computation which admits no variations. The rigour of Section 50C(1) was thus relaxed, and very thoughtfully so, to take th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d further, under section 50C, in 2021, there were no good reasons to probe such variations, under section 50C, in the earlier periods as well. We are, therefore, satisfied that the amendment in the scheme of Section 50 C(1), by inserting the third proviso thereto and by enhancing the tolerance band for variations between the stated sale consideration vis- -vis stamp duty valuation to 10%, are curative in nature, and, therefore, these provisions, even though stated to be prospective, must be held to relate back to the date when the related statutory provision of Section 50C, i.e. 1st April 2003. In plain words, what is means is that even if the valuation of a property, for the purpose of stamp duty valuation, is 10% more than the stated sale consideration, the stated sale consideration will be accepted at the face value and the anti-avoidance provisions under section 50C will not be invoked. 8. Once legislature very graciously accepts, by introducing the legal amendments in question, that there were lacunas in the provisions of section 50C in the sense that even in the cases of genuine variations between the stated consideration and the stamp duty valuation, anti-avoidance pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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