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TMI Blog2023 (12) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 properties vide separate 18 registered sale deeds. The Assessing Officer noted that the assessee did not disclose the sale value of one property vide deed no. I- 0605055487/2014 registered on 21.07.2014 of the sale value of Rs. 12,05,200/-. The Assessing Officer further noted that the total stamp duty value of all the properties sold was at Rs. 4,96,06,660/-. The total sale consideration mentioned in the sale deed of 18 properties was Rs. 3,19,55,150/-. However, the assessee had shown in its books of account a total sale consideration received of Rs. 3,00,32,750/- only. The Assessing Officer tabulated the figures of the sale consideration, stamp duty value and the difference between the sale consideration and stamp duty value in respect of 18 properties as under: Sl. No. Deed No. Sale value/ consideration value Stamp duty value Difference 1 1-060503596/2014 Registered on 21.05.2014 27,36,300 29,96,900 2,60,600 2 1-060503610/2014 Registered on 21.05.2014 27,14,800 28,50,540 1,35,740 3 1-060503616/2014 Registered on 21.05.2014 14,70,000 16,17,000 1,47,000 4 1-060504999/2014 Registered on 04.07.2014 25,19,000 26,33,500 1,14,500 5 1-060505483/2014 Registere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n agreed as per the agreement of sale was fair and reasonable as on the date of agreement and therefore the value as may be taken by the Stamp Valuation Authority was not applicable. 4. For that the provisions of Sec. 43CA introduced from1.4.2014 were not applicable in the case of the assessee since all the agreements was entered into before the said date. 5. For that on the facts and circumstances of the case, the Ld. CIT(A) erred in confirming the addition made by A.O for Rs. 12,05,200/- when no sale consideration was received by the assessee or accrued to the assessee in respect of the transfer of the property." 4. Ground No. 1 is general in nature. 5. Ground Nos. 2 to 4: Assessee, vide these grounds, has contested the application of section 43CA of the Income Tax Act. We have heard the rival contentions and gone through the record. At the outset, the ld. counsel for the assessee has invited our attention to the provisions of section 43CA of the Act which have been inserted by Finance Act 2013 w.e.f. 01.04.2014. The relevant provisions of section 43CA of the Act are reproduced as under: "Special provision for full value of consideration for transfer of assets other th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here the amount of consideration or a part thereof has been received by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account 85 [or through such other electronic mode as may be prescribed] on or before the date of agreement for transfer of the asset. [Explanation - For the purposes of this section, "residential unit" means an independent housing unit with separate facilities for living, cooking and sanitary requirement, distinctly separated from other residential units within the building, which is directly accessible from an outer door or through an interior door in a shared hallway and not by walking through the living space of another household.] 6. A perusal of the above provisions of section 43CA of the Act would reveal that the said section has been inserted to check the suppressed sales in relation to the stock-in-trade of immovable properties. It has been provided that the stamp duty value of the property on the date of sale would be treated as the deemed sale value of the property and if the sale value shown in the sale deed is less than the stamp duty value then the difference is to be added u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, even otherwise no addition was warranted in view of the 1st Proviso to section 43CA(1) of the Act. The ld. AR has also relied upon the chart in respect of properties sold by the assessee and has further submitted that in fact the total properties sold were 19 properties and not 18 properties. However, two properties were sold by the land owners and not by the assessee. The assessee had sole only 17 properties. 9. The ld. DR, on the other hand, has relied upon the findings of the lower authorities. 10. We have considered the rival submissions and gone through the record. Before proceeding further, it will be appropriate to first reproduce the chart of sale of properties relied upon by ld. counsel for the assessee as under: SI. No. Name F/ No Area Sale value Avg Rate Dt of agmt Dt of booking booking amount Dt of Registry Stamp duty value Avgs tampt duty value Diff Deed no. 1 Rajarshi Basu & Swagata Das 402 1303 2,736,300 2,100.00 16/10/2012 14/8/2012 60,000 19/5/2014 2,996,900 2300 260,600 60503596 2 Ramkrishna Saha 202 1234 - - 13/6/2012 - 19/5/2014 2,850,540 2310 2,850,540 60503610 Sale deed was executed by Landlord from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,081,000 49,607,160 19,574,410 11. We have also gone through the copies of the sale agreement placed at page 97 to 322 along with copy of ledger account of the sellers. A perusal of the above chart and read with copies of the sale agreement would reveal that in almost of the cases, the booking of the flat was made in the year 2012 or in the year 2013, whereas, the sale deeds were effected in F.Y 2014-15. Further, the assessee has also placed on file the ledger account in respect of each of the party showing the receipts of payments of the parties along with date and amount. A perusal of the ledger of each of the party in the accounts of the assessee would reveal that in each case, certain payment/instalment has been paid by cheque before the execution of the sale deed in pursuance of the terms of agreement of sale affected in the FY 2012-13 and 2013-14, as the case may be. In almost every case, the flat was booked much prior to the date of actual sale and some of the instalments were paid by cheque in pursuance to the respective agreement to sale but much before the date of execution of the sale deed. The purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sec. 43CA. The provisions of Sec. 43CA has been inserted by the legislatures only with effect from 01st April, 2014 and the same would not apply to any such agreements as entered into by the assessee in earlier years as held by Hon'ble Bombay High Court in Pr. CIT V/s Swananda Properties (P.) Ltd. {2019 111 taxmann.com 94 (Bombay) dated 09/09/2019}. The Hon'ble Court declined to admit the question of law as raised by the revenue with following observations: - Re. Question (b) 12. The Respondent- Assessee is a Developer. He is in the business of real estate development. The flats sold by the Respondent- assessee are stock-in-trade. The CIT (A) by his order passed the best judgment assessment and noted that the sale consideration of twelve flats in the project has been suppressed. According to him, the market rate nearest to that date is Rs. 8,992/- per sq.ft. and, thus, reassessed the sale of each of the twelve flats. This basis of the nearest market rate is not found in his order. Therefore, on this basis itself the assessment is bad. In any case, Mr. Sharma, the learned Counsel for the Revenue submits that the market rate is the stamp duty rate of registration. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve view that section 50C of the Act has no application to value stock in trade is also a view taken by Allahabad High Court in Commissioner of Income Tax v. Ken Construction and Colonizers (P.) Ltd. (2012) 208 Taxman 478/20 taxman.com 381. Similarly the Madras High Court in CIT v. Thiruvengadam Investments (P.) Ltd. (2010) 320 ITR 345 has also held that section 50C of the Act cannot be invoked to arrive at full consideration of sale of business asset. We see no reason not to adopt the views of the above two High Courts to the present facts." (Emphasis Supplied) Therefore, section 43CA cannot be made applicable to the facts of the present case. By the plain language of this provision it is not retrospective. Thus, there is no statutory provision based on which the stamp duty valuation could have been made a basis in the present case. 14. The Division Bench of this Court in the case of Zain Constructions v. ITO [2019] 107 taxmann.com 300/265 Taxman 82 (Mag.) has conclusively decided the issue as under: "8. In our opinion, the entire approach of the Assessing Officer is wholly incorrect. As is well known, Section 50C of the Act would enable the Revenue to bring to tax by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can make, out of his trading activity. Income on which he can be taxed is only the income he has earned. So also recently, the Supreme Court in the case of S.A. Builders v. CIT [2007] 158 Taxman 74/288 ITR 1 has observed that no businessman can be compelled to maximize his profits. Therefore, in view of the above, this question as proposed also does not give rise to any substantial question of law. Thus not entertained. 18. The appeal is dismissed. The Hon'ble Court has held that the provisions of Sec.43CA would not have retrospective application and accordingly, do not apply to agreement executed prior to its introduction. The ratio of this decision is squarely applicable to the case of the assessee. Therefore, the impugned additions could not be sustained in the eyes of law on this point alone. We order so. Consequently, the other arguments made by the assessee has become merely academic in nature." 11.1. It has been categorically held in the aforesaid decision of the Tribunal while placing reliance on the decision of the Hon'ble Bombay High Court in the case of PCIT vs. Swananda Properties (P) Ltd. (supra) that since the provisions to section 43CA have been introduc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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