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2013 (8) TMI 557 - AT - Income TaxApplication of section 50C and 43CA of the Income Tax Act - stamp duty valuation – Held that:- On a circumspection of sub-section (1) of section 43CA, it becomes manifest that the provisions for substituting stamp value for the actual sale consideration on transfer of the land, building or both, which were earlier restricted to the capital asset' under head "Capital gains" have now been extended to other than a capital assets' under the head "Profits and gains of business or profession" as well. The reference to the words "other than a capital asset" and the placement of section 43CA in Chapter IV-D indicate that the stamp value in respect of building or land or both sold by a person engaged in such business shall be substituted with the actual consideration received as a result of transfer, if the latter is lower than the former. The insertion of this provision by the Finance Act, 2013 with effect from 01.04.2014 makes it abundantly clear that the mandate of section 43CA shall apply only with effect from assessment year 2014-2015 and not before that. As the assessee in the present case is engaged in the business of selling of flats after construction, the income from which is chargeable under the head "Profits and gains of business or profession", the provisions of section 43CA cannot apply to substitute the actual sale consideration with the stamp value in the previous year relevant to assessment year 2009-2010 under consideration - Invoking the provisions of section 50C for sustaining the addition, has no legal legs to stand on – Decided in favor of Assessee. Application of section 56(2)(vii)(b)(ii) read with section 50C of the Income Tax Act – Commissioner(Appeals) sustained the addition at ₹ 8,53,79,819 by holding that market value of flats ought to have been considered instead of the actual sale consideration – Held that:- Both the above provisions are inapplicable on the facts and circumstances prevailing in the present appeal – Assessing officer did not bring any material on record to show that the assessee in fact received higher price than declared. Under such circumstances, the action of the authorities of the Income Tax in this regard cannot be justified. Valuation of Closing stock - Addition of ₹ 13,44,81,944 on account of lower valuation of closing stock - Assessing Officer found total area of unsold flats at 31,414 sq.ft., the value of which was shown in the balance sheet at ₹ 2.03 crore. This gave rate of ₹ 647 per sq.ft. On the perusal of the profit and loss account, the Assessing Officer observed that the cost of construction was at ₹ 4928 per sq.ft. - The assessee was required to handover tenements having area of 225 sq.ft. each aggregating to 1797 sq.mtrs in the project - Vide letter dated 24.12.2012, MHADA directed the assessee to surrender the surplus Built up area admeasuring 1797.25 sq.mtr.' either in same building or in any other building in same ward only - Assessee was under obligation to hand over 1797 sq.mtrs. of built up area to MHADA as can be seen from that letter following interference by the Hon'ble Bombay High Court that both the assessee and MHADA agreed that the assessee would "surrender the surplus built up area admeasuring 1797.25m2" – Held that:- Obligation to handover the built up area admeasuring 1797.25 sq.mtr. was on the assessee from the very beginning. At the end of the year, the built up area to such an extent could not have been considered as the assessee's stock in trade - Cost of 1797 sq. mtrs. be treated as Super built up area' and in that way, the addition deserves to be deleted – Matter restored to the file of A.O. for working out the value of the remaining closing stock – Decided in favor of Assessee.
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