TMI Blog2021 (8) TMI 1037X X X X Extracts X X X X X X X X Extracts X X X X ..... TP Adjustment - direction of the ld. CIT(A) to treat Marg Limited as a comparable company - HELD THAT:- We find from the Annual report of this company, there is no separate segmental information available regarding the stream of income from projects/operations. Since the income from the stream of leasing is also a part of the income from projects and no separate segmental details qua the income from projects stream are available, we are unable to approve the inclusion of this company in the list of comparables. Overturning the impugned order, we direct to exclude it from the list of comparables. Disallowance u/s. 43CA - HELD THAT:- Where the difference between the stamp value and sale consideration is up to ten per cent, such a difference is liable to be ignored and cannot be brought within the ken of section 43CA(1). Adverting to the facts of the instant case, we find that the difference between the stamp value and the sale consideration is 7.24%. Such a difference, being less than 10%, is liable to be ignored in terms of the amended proviso to section 43CA of the Act. We, therefore, direct to delete the addition sustained in the first appeal. Interest on debentures/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounting. The assessee applied the Comparable Uncontrolled Price (CUP) method to demonstrate that the international transaction and the SDT were at ALP. The TPO observed that the assessee, in fact, availed funds from its related concerns as share capital but wrongly classified them as debentures/CCDs for claiming interest deduction. Relying on his decision for the A.Y. 2013-14, the TPO finally held that such financing by the related concerns was a shareholders' activity. He, thus recharacterized the transactions of issue of debentures/CCDs to those of issue of equity shares and held that no interest payment was called for. That is how, he determined Nil ALP of the transactions and accordingly proposed transfer pricing adjustment of ₹ 18,12,37,000/-. The AO made such an addition, which came to be deleted by the ld. CIT(A), who also directed the TPO to verify certain facts regarding the ALP determination of the interest on debentures/CCDs paid by the assessee at 17.5% and restrict the addition to 1.13% in a certain eventuality. Both the sides have come up in their respective appeals before the Tribunal. 4. We have heard both the sides through virtual court and gone thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record, we find that there is no dispute on any other issue of the ALP determination of these transactions except the direction of the ld. CIT(A) for including Marg Ltd. in the list of comparables. He held that this company is in the business of real estate that includes both residential and commercial sector . We find from the Annual report of this company, a copy of which has been placed at page 229 onwards of the paper book, that it is engaged in Port business, Real estate residential, Real estate commercial apart from Others. Standalone financial statements from the Real estate business are available. 'Income from operations' has been shown at ₹ 168.18 crore, whose bifurcation has been given in Note. 20, which includes 'Income from projects/operations' at ₹ 154.83 crore and 'Income from leasing' at ₹ 13.35 crore. There is no separate segmental information available regarding the stream of income from projects/operations. Since the income from the stream of leasing is also a part of the income from projects and no separate segmental details qua the income from projects stream are available, we are unable to approve the inclusion of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01-04-2019 providing that: 'where the value adopted or assessed or assessable by the authority for the purpose of payment of stamp duty does not exceed one hundred and five per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration'. It is palpable that the rigor of section 43CA has been slackened by the first proviso inserted by the Finance Act, 2018 providing that where the stamp value does not exceed by 5% of the agreed sale consideration, only the transacted value should be considered as full value of consideration. The Memorandum explaining the provisions of Finance Bill, 2018, at the time of insertion of the first proviso, reads as under: Rationalization of section 43CA, section 50C and section 56. At present, while taxing income from capital gains (section 50C), business profits (section 43CA) and other sources (section 56) arising out of transactions in immovable property, the sale consideration or stamp duty value, whichever is hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective.' 16. When we examine the prescription of the proviso in the backdrop of the memorandum explaining the provisions read in conjunction with Vatika Township Pvt. Ltd. (supra), it becomes graphically clear that the insertion of the proviso, which has been provided to mitigate the hardship in the case of genuine real estate transactions, should be held as retrospective. Here is a provision which has been inserted to confer a benefit on some persons (where the difference in two values is less than 5%) but without inflicting a corresponding detriment on some other person or on the public generally and the legislator's object is clearly to confer such benefit. It would be a clear case of travesty of the provision, if in two parallel cases before the Tribunal involving such issue - one for the A.Y. 2015-16 as is the case under consideration and another for the A.Y. 2019-20 - the benefit of proviso is conferred in the case for the A.Y. 2019-20 and is denied in the other case for the A.Y. 2015-16. That is the raison d'etre for tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resentations were made to the Government. Realizing the difficulty, the Parliament stepped in and enhanced the safe harbour limit from 5% to 10% in the first proviso to section 43CA. Even though this amendment has been made effective from 01-04-2021 and has been stated to apply in relation to assessment year 2021-2022 onwards, but the same being a beneficial provision aimed at mitigating hardship to the assessees making genuine sale transactions at a rate in variance with the stamp value, the same has also to be held as retrospective in the light of the Constitution Bench judgment of the Hon'ble Supreme Court in Vatika Township (supra). 19. In the light of the above discussion, it gets vivid that where the difference between the stamp value and sale consideration is up to ten per cent, such a difference is liable to be ignored and cannot be brought within the ken of section 43CA(1). Adverting to the facts of the instant case, we find that the difference between the stamp value and the sale consideration is 7.24%. Such a difference, being less than 10%, is liable to be ignored in terms of the amended proviso to section 43CA of the Act. We, therefore, direct to delete the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5/-. In that case, the differential amount of ₹ 25/- (₹ 100 minus ₹ 75) is required to be added back proportionately to the total income as and when the corresponding amount of the work-in-progress is reversed on the sale of flats/plots etc. We, therefore, overturn the impugned order on this score and hold that the amount of capitalized interest on debentures/CCDs to the work in progress for the assessment year 2013-14, as is in excess of its ALP freshly determined by the AO/TPO, should be disallowed proportionately in the years in which the work-in-progress containing the amount of such interest standing as on 31-03-2013, is reversed on the sale of flats/plots. 22. The assessee raised an additional ground seeking deduction of Education Cess and Secondary and Higher Secondary Cess amounting to ₹ 26,66,359/- while computing the total income of the assessee company. 23. This ground is similar to the additional ground raised for the assessment year 2014-15 wherein a direction has been given to the AO for ascertaining the correct amount of education cess and then allowing a deduction for it, after allowing opportunity of hearing to the assessee. Same view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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