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2022 (11) TMI 1289 - AT - Income TaxAddition u/s 43CA - substantial difference between the market value and the agreement value in respect of some immovable property sold - assessee-company entered into this transaction of cancellation of earlier purchase transactions - HELD THAT:- Sec. 43CA is applicable in the case of transfer of property in addition to other ingredients of the section. In this case what we observed assessee-company inadvertently entered into a transaction of purchase of agricultural land, which was void ab-initio. It means assessee was never a lawful owner of the said agricultural land as mentioned supra. When assessee is not an owner of any asset, there can’t be any question of transferring the same to someone else whether provisions of sec 43CA is complied with or not will be a secondary issue. In this case assessee-company simply rectified its earlier mistake to safe-guard the financial interest of the company and to come out an unlawful transaction entered earlier. For ready reference we are reproducing herein below the relevant provisions of Maharashtra Tenancy and Agricultural Lands Act 1948 along with relevant provision of contract Act and Transfer of Property Act. In view of the above action of AO in applying sec 43CA On the given facts of case was unlawful. AO and Ld. CIT(A) committed a mistake by ignoring the facts of the case and provisions of other civil laws applicable in the present case. In our considered opinion assessee being party of cancellation deed, do not tantamount to entering the transaction of sale /transfer. In absence of element of transfer sec 43CA can’t be applied. We therefore direct the AO to delete the addition to be deleted with consequential reliefs. Appeal filed by the assessee is allowed.
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