TMI Blog2021 (8) TMI 1184X X X X Extracts X X X X X X X X Extracts X X X X ..... be allowed on the entire income including any income (if any) determined u/s 43CA - HELD THAT:- We find force in the submission of the Ld. AR that if the income/profits from the sale of flats, in question, falls in the eligibility project for claiming deduction 80IB(10) of the Act, then even if there is any enhancement in the income of the assessee by virtue of valuation made by the DVO, then the A.O after examination of this fact should give the benefit of the deduction under Chapter VI-A on the enhanced amount if any, in accordance to law. Taking into consideration the Tribunal s decision in the case of Radhika Sales Corporation [ 2018 (11) TMI 1788 - ITAT PUNE] we are of the opinion that the proviso explaining the tolerance limit has to be read retrospectively, therefore, if the difference between the declared value by the assessee and the value decided by the DVO is less than 10%, no addition is warranted. With the aforesaid observations, the issue raised by the assessee is disposed off and the A.O is directed to assess the income of the assessee as per the directions given. - I.T.A. No.1941/Kol/2019 - - - Dated:- 25-8-2021 - Shri P. M .Jagtap, Vice-President (KZ) And ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of transfer of immovable property at a price which is less than the value adopted for the purpose of payment of stamp duty in respect of such transfer. The assessee was requested to submit the details of the properties sold along with the stamp duty value applicable on them. In reply, the assessee submitted the details of the properties sold by it during the year. On perusal of the details submitted it is noticed that with regard to five(5) properties the assessee has shown sales consideration in its books of accounts at ₹ 1,77,90,600/-, however, the stamp duty value at the time of agreement was ₹ 2,32,79, 552/-. The assessee was requested to explain why the amount of ₹ 2,32,79,552/- should not be considered as full value of consideration and the differential amount of ₹ 54,88,952/- should not be added u/s 43CA of the Act. 3.2 The assessee could not furnish any cogent explanation regarding the applicability of section 43CA of the Act in its case. As per the provisions of section 43CA, where the consideration received or accrued as a result of transfer of land or building or both is less than the stamp duty value, the stamp duty value shall be adopted as f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther it has been stated that if the AO was not satisfied with the explanation offered then the case could have been referred by him to the DVO for valuation purposes. I have perused the submissions of the A/R of the appellant and the findings of the AO in the assessment order. In this case, it is undisputed that the properties have been sold by the assessee below the stamp duty valuation rate. It is further contended that if the AO was not satisfied with the explanation of the assessee then he could have referred the matter to the Valuation Cell. In this regard, the A/R of the appellant during the course of the appellate proceedings, was asked to file a copy of the letter which they had filed before the AO objecting to the adoption of the stamp duty rate as the full value of the consideration received by the assessee for computing the taxable income. The A/R was also asked to file a copy of the letter wherein the specific request had been made to the AO for referring the property to the Valuation Cell. However, the appellant has failed to produce the said letter regarding the objection to the adoption of sale consideration as per the section 43CA before the AO. The A/R of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Ld. AR, the A.O ignored the request made by the assessee for referring the issue to the DVO and without mentioning the same ( the aforesaid request for referring to DVO ) in the assessment order has passed the impugned addition which has been upheld by the Ld. CIT(A). In this context, the Ld. AR drew our attention to the Hon ble Calcutta High Court decision in the case of Sunil Kr. Agarwal vs. CIT in GA No.3686 of 2013 ITAT No.221 of 2013 vide judgment dt. 13.03.2014 wherein it was held that even if, the assessee does not make prayer to the A.O for referring the valuation to the DVO while disputing the valuation of the property made by the Stamp Duty Authority, then A.O being a quasi-judicial authority was duty bound to act fairly and suo-moto refer the matter to the DVO. Therefore, the Ld. AR submitted that the valuation of the flats in question should have been referred by the A.O/CIT(A) to the DVO. Per contra, the Ld. DR relied on the decision of the Ld. CIT(A) and does not want us to interfere in the impugned order passed by the Ld. CIT(A). 8. Therefore, the short question is whether the A.O ought to have acceded to the request of the assessee to refer the dispute in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n officer, contemplated under Section 50C, is required to avoid miscarriage of justice. The legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the District Sub Registrar for the purpose of stamp duty. The legislature has taken care to provide adequate machinery to give a fair treatment to the citizen/taxpayer. There is no reason why the machinery provided by the legislature should not be used and the benefit thereof should be refused. Even in a case where no such prayer is made by the learned advocate representing the assessee, who may not have been properly instructed in law, the assessing officer, discharging a quasi judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law. (emphasis given by us). 9. Therefore in the light of the aforesaid facts and circumstances of the case and relying on the decision of the Hon'ble High Court in Sumit Kr. Agarwal, supra, we set aside the order of the Ld. CIT(A) and remand the matter back to the AO with a direction to refer the valuation of flats to DVO for determination of the fair market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Tribunal in the case of Radhika Sales Corporation vs. Addl. CIT in ITA No.1474/PUN/2016 for A.Y 2011-12 decided on 16.11.2018 wherein the Tribunal held that if the difference in the value declared by the assessee and the value determined by the DVO is less than 10%, then no addition may be made by holding as under: 5. Similar issue had come up before the Tribunal in the case of Radhika Sales Corporation (supra). The Tribunal deleted the addition by observing as under: 5. We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. The solitary issue raised in the appeal by the assessee is against the addition of ₹ 10,38,000/- on account of difference in Long Term Capital Gain declared by the assessee and computed by the Assessing Officer after considering the DVO s valuation report. It is an undisputed fact that the assessee has disclosed sale consideration of the land as ₹ 1,10,00,000/-. During the scrutiny assessment proceedings reference was made to DVO for the valuation of property. The DVO vide report dated 30-12-2013 determined the fair market value of the property as ₹ 1,2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 160/pn/2000 and relied on by the learned counsel for the assessee had dismissed the appeal filed by the Revenue where the CIT(A) had deleted the unexplained investment in house construction on the ground that the difference between the figure shown by the assessee and the figure of the DVO is hardly 10 percent. 15. Similarly, we find that the Pune Bench of the Tribunal in the case of ITO V/s. Kaaddu Jayghosh Appasaheb, vide ITA No.441/PN/2004 for the asst. yr 1992-1993 and relied on by the learned counsel for the assessee following the decision of the J K High Court in the case of Honest Group of Hotels (P) Ltd. V/s CIT (2002) 177 CTR (J K) 232 had held that when the margin between the value as given by the assessee and the Departmental valuer was less than 10 per cent , the different is liable to be ignored and the addition made by the A.O cannot be sustained. 16. Since in the instant case such difference is less than 10 per cent and considering the fact that valuation is always a matter of estimation where some degree of difference bound to occur, we are of the considered opinion that the A.O. in the instant case is not justified in substituting the sale consideration a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inserted by the Finance Act 2018 to sub-section (1) to section 50C of the Act. The said tolerance limit band was enhanced from 5% to 10% by the Finance Act 2020 w.e.f. 01/4/2021. The Tribunal in the case of Maria Fernandes Cheryl vs. ITO (International Taxation) reported as 123 taxmann.com 252 (Mumbai) after considering various decision and the CBDT Circular No. 8 of 2018 dated 26-12-2018 held, that the amendment is retrospective in nature and relates back to the date of insertion of statutory section to the Act. The relevant extract of the observations made by the Bench reads as under: 7. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplementing this enhancement of tolerance band or safe harbour provision. The reasons assigned by the CBDT, i.e., the variation between stamp duty value and actual consideration received can occur in respect of similar properties in the same area because of a variety of factors, including the shape of the plot or location, was as much valid in 2003 as it is in 2021. There is no variation in the material facts in this respect in 2021 vis- -vis the material facts in 2003. What holds good in 2021 was also good in 2003. If variations up to 10% need to be tolerated and need not be probed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g land or building or both. Whereas, provisions of section 50C operates where the consideration received or accrues as a result of transfer of a capital asset being land or building or both. Both the sections induce deeming fiction to substitute actual sale consideration with notional value of asset based on Stamp Duty valuation. Further, a perusal of Circular 8 of 2018 (supra) would show that identical reasons have been given in Para 16 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, I 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. 15. In the light of the submission of the assessee on this aspect, and taking into consideration the Tribunal s decision in the case of Radhika Sales Corporation (Supra), we are of the opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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