Mahinder Pal, Chandigarh V. ACIT, C-2(1), Chandigarh

ITA 1184/CHANDI/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8347 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 03-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Fair market value
• Section: 56(2)(vii)(b); 43CA; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘B’, CHANDIGARH BEFORE SMT.DIVA SINGH, JUDICIAL MEMBER AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER ITA No. 1184/Chd/2019 (Assessment Year: 2015-16) Mahinder Pal, # 360, Industrial Area, Phase-1, Chandigarh बनाम The ACIT Circle 2(1), Chandigarh थायी लेखा सं./PAN NO: AGMPP4284B नधा रती क ओर से/Assessee by : Shri Raman Seth, CA राज व क ओर से/ Revenue by : Dr. Ranjeet Kaur, Sr. DR स ु नवाई क तार ख/Date of Hearing: 20/06/2022 उदघोषणा क तार ख/Date of Pronouncement: 12/07/2022 आदेश/ORDER Per Vikram Singh Yadav, Accountant Member: This is an appeal filed by the assessee against the order of the Ld. CIT(A)-1, Chandigarh dated 27/06/2019 pertaining to A.Y. 2015-16 wherein the sole ground of appeal relates to the sustenance of addition of Rs. 7,38,746/- under section 56(2)(vii)(b) of the Act. 2. Briefly the facts of the case are that during the year under consideration, the assessee has purchased a property situated at SCO No. 63, Sector- 46C, Chandigarh for a consideration of Rs. 3,18,00,000/- whereas the value adopted by the stamp duty authority has been determined at Rs. 3,25,38,746/- and accordingly a show cause notice was issued to the assessee during the course of assessment proceeding as to why the difference of Rs. 7,38,746/- should not be brought to tax under section 56(2)(vii)(b) of the Act. In response, the assessee filed his submissions which were considered but not found acceptable to the AO and the addition of Rs. 7,38,746/- was made under section 56(2)(vii)(b) of the Act. 3. Being aggrieved the assessee carried the matter in appeal before the Ld. CIT(A) who has since confirmed the said addition made by the AO and against said findings, the assessee is in appeal before us. 4. During the course of hearing the Ld. AR submitted that no addition should be made under section 56(2)(vii)(b) of the Act where the difference between the FMV 2 of the property and the actual consideration is less than 5% of the actual consideration. It was submitted that in the instant case the difference is only 2.32%. Our reference was drawn to the submission made by the assessee before the Ld. CIT(A) which form part of the impugned order at para 4.1. It was submitted that an identical issue has arisen before the Mumbai Bench of the Tribunal in case of Joseph Mudaliar Vs. DCIT, CC-4(3), Mumbai 130 taxmann.com 250 wherein it has been held that the third proviso inserted by the Finance Act 2018 to Section 50C(1) with effect from 01/04/2019 is curative in nature and same would apply retrospectively. It was further held in the said decision that where the difference between the agreement value and Stamp Duty Value (SDV) of the property is less than 10%, no addition under section 56(2)(vii)(b) of the Act was to be made keeping in view the third proviso to Section 50C(1) and provisions of section 56(2)(x) of the Act. 5. Per contra, the Ld. DR submitted that the amendment brought in by the Finance Act 2018 is prospective in nature and it shall take effect from 01/04/2019 which will apply to A.Y. 2019-20 and subsequent Assessment years and our reference was also drawn to the CBDT Circular No. 08/2018 dt. 26/12/2018. 6. We have heard the rival contentions and perused the material available on the record. The undisputed fact emerges from the record are that the assessee has purchased a property and the difference in value of the property as declared in the sale agreement and as determined by the stamp duty authority is less than 2.32% of the sale consideration. Further we find that the identical issue has been discussed at length by the Coordinate Mumbai Benches of the Tribunal in case of Joseph Mudaliar Vs. DCIT, CC-4(3), Mumbai (supra) wherein the matter as to whether the third proviso of section 50C(1) providing exception in case of difference in value is less than 10% would be applicable to section 56(2)(vii)(b) has been discussed at length including the amendment brought in by the Finance Act 2018 and it has been held that section 56(2)(vii)(b) has to be harmoniously construed alongwith sections 50C, 56(2)(x) and 43CA and the exceptions provided in the later three provisions have to be read into section 56(2)(vii)(b)(ii) to provide true meaning to the intention of the legislature and it has been held that the assessee would be eligible to get the benefit of 10% margin difference in the valuation between the value determined by the stamp duty authority and the declared sale consideration and 3 the amendment brought in by the Finance Act 2018 is curative in nature and same should apply retrospectively. 7. We therefore find that the facts of the present case are pari-materia and given the difference only of 2.32% of the sale consideration, the assessee would be eligible for the benefit of the third proviso and no addition deserves to be made in the hands of the assessee. In the light of the same and following the decision of Coordinate Mumbai Benches of the Tribunal, the addition so made by the AO and sustained by the Ld. CIT(A) is hereby directed to be deleted. 8. In the result, appeal of the assessee is allowed. Order pronounced on 12/07/2022. Sd/- Sd/- (DIVA SINGH) (VIKRAM SINGH YADAV) याय क सद य/Judicial Member लेखा सद य/Accountant Member Dated: 12/07/2022 AG आदेश क % त&ल'प अ*े'षत/ Copy of the order forwarded to : 1. अपीलाथ+/ The Appellant 2. %,यथ+/ The Respondent 3. आयकर आय ु -त/ CIT 4. आयकर आय ु -त (अपील)/ The CIT(A) 5. 'वभागीय % त न0ध, आयकर अपील य आ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड फाईल/ Guard File