TMI Blog2023 (9) TMI 1204X X X X Extracts X X X X X X X X Extracts X X X X ..... building or both, is less than the value adopted for stamp duty purposes, the value so adopted or assessed shall be deemed to be the full value of consideration f or the purposes of computing income under the head profits and gains of business or profession. In the present case, the undisputed facts are that the assessee, engaged in real estate business, has received a part consideration of certain mutually agreed sale price and issued allotment letters in lieu thereof towards sale of plots to various allottees. Assessee has received majority payment through banking channel in the earlier years much prior to the insertion of Section 43CA of the Act w.e.f 1-4-2014 i.e AY 2014-15. AO however, applied the provisions of section 43CA and substituted the sale consideration determined at the time of allotment of plots to various customers with the corresponding stamp duty valuation applicable for this year where agreement for sale of plot was executed for the purposes of transfer of plots. Assessee contends that where allotment were issued much prior to the financial year relevant to assessment year 2014-15 when the provisions of Section 43CA have become effective, there is no wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted merely to invoke and apply a prospective law of S. 43CA. Hence, in respect to appeal of the assessee, we find justifiable reason to reverse the action of the CIT(A) to the extent of additions confirmed for transaction with Hemlata - The action of the CIT(A) to this extent is thus set aside and reversed. Decided against revenue. - SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER For the Appellant : Shri C.S. Anand, Adv and Shri Ashok Aggarwal, Adv For the Respondent : Shri Kanv Bali, Sr.DR ORDER PER PRADIP KUMAR KEDIA, A.M.: The captioned Cross Appeals have been filed by the Assessee and the Revenue against the order of the Commissioner of Income Tax (Appeals)-XIX, New Delhi [ CIT(A) in short], dated 27.03.2019 arising from the assessment order dated 30.12.2017 passed by the Assessing Officer (AO) under Section 143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2015-16. 2. Both Revenue and the Assessee have challenged the first appellate order passed by the CIT(A) dated 27.03.2019 arising from assessment order dated 30.12.2017 passed under Section 143(3) of the Act. 3. The Grounds of appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring taxable income at Rs. 22,48,840/-. The return so filed was subjected to scrutiny assessment. As per the first paragraph of the assessment order, the assessee admittedly appeared before the Assessing Officer from time to time and furnished the relevant details/information/evidences. In the course of the assessment, the Assessing Officer inter alia noticed that the assessee has earned income from sale of plot to the tune of Rs. 2,35,74,920/-. On perusal of the sale deeds submitted by the assessee in this regard, the Assessing Officer observed that the assessee has sold various plots at a consideration which is lower than the circle rate/stamp duty rate prescribed by the State Government. The Assessing Officer invoked the provisions of Section 43CA of the Act and made an addition of Rs. 3,66,41,140/- towards difference between the circle rate and the actual sale consideration received towards sale of plots under its various plans/schemes. 6. Aggrieved by the additions so made, the assessee preferred appeal before the CIT(A). Before the CIT(A), the assessee filed detailed submissions and assailed the action of the AO to artificially assume the difference between the circle ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove were before the A.O. On the basis of examination in one case only, the Id. A.O. has hypothesized that cash must have been received for sale. Based upon my examination, I find that this is not the correct position. In almost all cases some amount (or rather the substantive amount or almost the entire consideration) has been received by cheque. However, for purposes of benefit of section 43CA(3), the limiting condition is prescribed in section 43CA(4). Accordingly, it is relevant to find out the instances where amount was received in cash only, on or before the date of agreement. It is only in such cases that benefit of provisions of section 43CA(3) is not available to an assessee. 7.2 I have examined the documents being allotment letter, sale deeds and other records. I have downloaded published circle rate which are available in public domain on the internet. I have required the appellant to provide details, which have been provided by the appellant vide letter dated 04.02. 2019 as follows:- Thus on the basis of aforesaid analysis, the following additions survive- Sr. No Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the date of agreement would be considered provided the amount of consideration or part thereof has been received by any mode other than cash on or before the date of agreement for transfer of the assets. 13. In the present case, where the date of agreement to sell in respect of the two flats is 9.4.2007, which is much prior to the financial year relevant to assessment year 2014-15 when the provisions of section 43CA have become effective, there is no way the assessee would have foreseen these provisions at the time of entering into the agreement to sell that it has to receive the consideration only by any mode other than cash. At the relevant point in time when it had entered into agreement to sell, there was no such requirement of receiving the whole of the consideration in mode other than cash. Therefore, in order to make the provisions of sub-section (4) workable, in our view, the provisions of sub-section (4) would be applicable in respect of agreement to sell for transfer of an asset which has been executed on or after 1 st April, 2013 and thus, not applicable in the instant case. The matter is accordingly remanded back to the file of the ld CIT(A) to determine the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue and assessee are in appeal before the Tribunal as per their respective cross appeals. 9. With reference to revenue appeal, the ld. DR for the Revenue supported the action of the Assessing Officer and submitted that the provisions of Section 43CA inserted by Finance Act, 2013, the Assessing Officer has merely adopted the circle rate instead of agreement rate/allotment rate in tune with Section 43CA of the Act. The Ld. DR thus submitted that where the circle rate is in excess of the actual sale consideration, the actual sale consideration is required to be substituted by the deeming provisions of S. 43CA in force and the no fault could be found with the action of AO. 10. As regards appeal of the assessee on the addition of Rs. 16,31,225/- in the case of Hemlata as confirmed by the CIT(A), the ld. DR relied upon the averments made in the first appellate order and submitted that the law under Section 43CA has been correctly applied for this allottee. 11. The ld. counsel for the assessee, on the other hand, strongly relied upon the submissions made before the CIT(A) and the findings thereon by the CIT(A). The Ld. Counsel submitted that the payments were received and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Year 2014-15 onwards corresponding to previous year 2013-14. On a broader reckoning, section 43CA [w.e.f. 1-4-2014] of the Income-tax Act create deeming fiction as regards full value of consideration received on transfer of asset, being immovable property. Consequently, where the consideration for the transfer of an asset (other than a capital asset), being land or building or both, is less than the value adopted for stamp duty purposes, the value so adopted or assessed shall be deemed to be the full value of consideration for the purposes of computing income under the head profits and gains of business or profession. 15.1 In the case under consideration, the applicability of S. 43CA has been subject matter of controversy. In the present case, the undisputed facts are that the assessee, engaged in real estate business, has received a part consideration of certain mutually agreed sale price and issued allotment letters in lieu thereof towards sale of plots to various allottees. The Assessee has received majority payment through banking channel in the earlier years much prior to the insertion of Section 43CA of the Act w.e.f 1-4-2014 i.e AY 2014-15. The AO however, applied th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e when the allotment letter were issued there was no such requirement of receiving the whole of the consideration in the mode other than cash. In fact, as stated, the assessee has received majority payment by cheque in the earlier years from various allottees, except in the case of an allottee namely Hemlata where a part of the consideration of Rs. 37500/- was received in cash on 08/12/2006. 15.4 The issue is squarely covered in favour of the assessee by hosts of the judgments including Index One Trade Con P. Ltd. (supra). 16. On appraisal of the factual analysis carried out by the CIT(A) and applicable legal position thereon, we see no perceptible error in the findings rendered by the CIT(A) on first principles that the circle rate on the date of agreement can not be substituted for agreed and actual sale consideration determined in terms of allotment letter whereby the contractual obligations to transfer the plots had already been fastened on the assessee in the earlier years, much prior to insertion of s. 43CA. The relief thus granted by the CIT(A) is in tune with the schematic interpretation of S. 43CA and thus deserves to hold the field. Hence, We decline to interfe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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