KAVYA MIRA REALTY, MUMBAI V. THE ACIT 19 (2), MUMBAI

ITA 1694/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8367 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2014-2015
• Appeal Filed On: 20-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATI
• Keywords: Sale consideration of property below Jantri Value
• Section: 43CA; 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H, BENCH MUM BAI BEFORE SHRI G. MANJUNATHA, ACCOUNTANT MEMBER & SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.1694/MUM/2019 ( ASSESSMENT YEAR: 2014-15 ) KAVYA MIRA REALTY 99C, SITARAM GHADIGAOKAR MARG, TULSIWADI, TARDEO MUMBAI-400 034 VS. ACIT-19(2) ROOM NO.207, 2 ND FLOOR MATRU MANDIR TARDEO MUMBAI-400 007 PAN/GIR NO. A A KFK0038J APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI SATISH R. MODY, AR REVENUE BY SHRI R.BHOOPATI, DR DATE OF HEARING 05/03 /2020 DATE OF PRONOUNCEME NT 20/05 /2020 / O R D E R PER G.MANJUNATHA (A.M) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST, THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)51, MUMBAI, DATED 28/09/2018 AND IT PERTAINS TO ASSESSMENT YEAR 2014-15 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -51 ERRED IN CONFIRMING THE ADDITION MADE BY LEARNED ASST. COMMI SSIONER OF INCOME- TAX. CIRCLE-19(2). MUMBAI OF RS. 4,78,000/- U/S. 50 C OF THE I.T. ACT. 1961 BEING DIFFERENCE IN VALUE OF SALE OF FLATS BELOW TH E MARKET VALUE TAKEN BY AN AUTHORITY OF A STATE GOVERNMENT FOR THE PURPOSE OF STAMP DUTY AT PREVAILING MARKET RATE AT THE TIME OF REGISTRATION OF PROPERTY WITHOUT APPRECIATING THE FACT WHEN THE PROPERTY WAS BOOKED BY THE BUYER AND THE STAMP AUTHORITY RATE AS ON DATE OF BOOKING OF PROPE RTY SHOULD HAVE BEEN COMPARED WITH THE AGREEMENT PRICE AS PER PROVISION OF SEC. 43CA OF THE I.T.ACT, 1961. ITA NO.1694/MUM/2019 KAVYA MIRA REALTY 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS ENGAGED IN THE BUSINESS OF BUILDER AND DEVELOPER, FILED ITS RE TURN OF INCOME FOR AY 2014-15 ON 29/11/2014, DECLARING TOTAL INCOME AT RS.61,53,740/-. THE CASE WAS SELECTED FOR SCRUTINY AND DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, THE LD. AO NOTICED THAT DUR ING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SOLD FLAT NO. B/903 IN KAVYA RESIDENCY BUILDING TO SHRI JOSEPH ALEX. THE ASSESEE HAS ALSO SOLD ONE MORE FLAT NO.A/907 IN KAVYA RESIDENCY BUILDING TO SHRI CHUHARAMAL A LUDHANI AND RAHUL C LUDHANI. THE LD. A O, FURTHER NOTED THAT READY RECKONER RATE OF BOTH FLATS AS O N THE DATE OF REGISTRATION IS MORE THAN THE SALE CONSIDERATION RE CEIVED FOR SALE OF FLATS AND ACCORDINGLY, CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY, THE PROVISIONS OF SECTION 43CA OF THE I.T.ACT, 1961 SHOULD NOT BE INVOKED TO BRING TO TAX THE DIFFERENCE BETWEEN SAL E CONSIDERATION RECEIVED FOR SALE OF PROPERTY AND GUIDANCE VALUE OF THE PROPERTY AS ON THE DATE OF REGISTRATION. IN RESPONSE TO NOTICE, THE ASSESSEE SUBMITTED THAT IT HAS AGREED TO SELL THE PROPERTY I N THE YEAR 2010 AND AS PER READY RECKONER RATE, THE MARKET VALUE OF THE PROPERTY AS ON THE DATE OF AGREEMENT BETWEEN THE PARTIES IS LESS THAN THE SALE CONSIDERATION RECEIVED FOR SALE OF FLATS, THEREFORE , THE PROVISIONS OF SECTION 43CA CANNOT BE INVOKED TO TAX DIFFERENCE B ETWEEN AGREED SALE CONSIDERATION AND GUIDANCE VALUE OF THE PROPER TY. THE LD. AO WAS NOT CONVINCED WITH THE EXPLANATION FURNISHED BY THE ASSESSEE AND ACCORDING TO HIM, ANY DIFFERENCE BETWEEN READY RECKONER VALUE AND AGREED CONSIDERATION FOR TRANSFER PROPERTY NEED S TO BE TAXED, AS PER PROVISIONS OF SECTION 43CA OF THE I.T.ACT, 1961 AND ACCORDINGLY, MADE ADDITIONS OF RS.4,78,000/- BEING DIFFERENCE BE TWEEN SALE CONSIDERATION RECEIVED FOR SALE OF TWO FLATS AND R EADY RECKONER VALUE OF FLATS AS ON THE DATE OF REGISTRATION. ITA NO.1694/MUM/2019 KAVYA MIRA REALTY 3 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A), THE ASSESSEE HAS FILED DETAILED WRITTEN SUBMISSIONS ON THE ISSUE , WHICH HAS BEEN REPRODUCED AT PARA 5.1 ON PAGES 2 TO 7 OF LD.CIT(A) ORDER. THE SUM AND SUBSTANCE OF ARGUMENTS OF THE ASSESSEE BEFORE T HE LD.CIT(A) ARE THAT THE PROVISIONS OF SECTION 43CA OF THE I.T. ACT, 1961 CANNOT BE INVOKED IN THE GIVEN FACTS AND CIRCUMSTANCES OF THIS CASE, BECAUSE THE READY RECKONER VALUE OF THE FLATS, WHEN SOLD IN THE YEAR 2010 IS LESS THAN THE AMOUNT OF CONSIDERATION RECEI VED FOR SALE OF PROPERTIES AND IF, THE DATE OF AGREEMENT FIXING THE VALUE OF CONSIDERATION FOR TRANSFER OF THE ASSET AND THE REG ISTRATION OF SUCH TRANSFER OF ASSET ARE NOT THE SAME, THE VALUE OF T HE ASSET FOR THE PURPOSE OF STAMP DUTY, AS ON THE DATE OF AGREEMENT SHOULD BE CONSIDERED. THE LD.CIT(A) AFTER CONSIDERING RELEVAN T SUBMISSIONS OF THE ASSESSEE AND ALSO, BY TAKEN NOTE OF PROVISIONS OF SECTION 43CA OF THE I.T.ACT, 1961 HELD THAT ALTHOUGH, THE ASSESS EE CLAIMS TO HAVE SOLD THE PROPERTIES IN THE YEAR 2010 BY A LETTER OF ALLOTMENT, BUT THE SAME CANNOT BE CONSIDERED AS AGREEMENT OF SALE SO A S TO GIVE THE BENEFIT OF PROVISIONS OF SECTION 43CA OF THE I.T.AC T, 1961. THEREFORE, HE OPINED THAT THERE IS NO REASONS TO INTERFERE WIT H THE FINDINGS RECORDED BY THE LD. AO, WHILE MAKING ADDITIONS TOWA RDS DIFFERENCE IN VALUE OF THE PROPERTY, AS PER AGREEMENT OF SALE AND , AS PER READY RECKONER VALUE OF THE PROPERTIES AS ON THE DATE OF REGISTRATION. THE RELEVANT FINDINGS OF THE LD.CIT(A) ORDER ARE AS UND ER;- 5.4 THE CONTENTIONS OF THE ASSESSEE HAVE BEEN DUL Y CONSIDERED. SUB- SECTION 3 & 4 TO SEC. 43CA ARE BEING REPRODUCED FOR READY REFERENCE:- (3) WHERE THE DATE OF AGREEMENT FIXING THE VALUE OF CONSIDERATION FOR TRANSFER OF THE ASSET AND THE DATE OF REGISTRAT ION OF SUCH ITA NO.1694/MUM/2019 KAVYA MIRA REALTY 4 TRANSFER OF ASSET ARE NOT THE SAME, THE VALUE REFER RED TO IN SUB- SECTION (1) MAY BE TAKEN AS THE VALUE ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER ON THE DATE OF THE AGR EEMENT. (4) THE PROVISIONS OF SUB-SECTION (3) SHALL APPLY O NLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION OR A PART THEREOF HAS BEEN RECEIVED BY ANY MODE OTHER THAN CASH ON OR BEFORE T HE DATE OF AGREEMENT FOR TRANSFER OF THE ASSET. 5.5 THE RELEVANT PROVISIONS OF SEC. 43CA STIPULA TE THAT IF THE DATE OF AGREEMENT IS PRIOR TO THE DATE OF ITS REGISTRATION AND IF SOME CONSIDERATION OR PART THEREOF HAS BEEN PAID BY MODE OTHER THAN CA SH, THEN THE STAMP DUTY VALUE OF THE PROPERTY AS ON THE DATE OF SALE A GREEMENT IS TO BE APPLIED. IT IS NOTED THAT IN THESE RELEVANT PROVISI ONS, THERE IS NO MENTION THAT THE DATE OF ALLOTMENT ALSO HAS TO BE CONSIDERE D. THE ALLOTMENT LETTER AND 'THE SALE AGREEMENT ARE TWO SEPARATE DOCUMENTS AND CANNOT BE CONSIDERED TO MEAN ONE AND THE SAME. THEREFORE, THE CONTENTION OF THE ASSESSEE THAT THE STAMP DUTY VALUE OF THE SAID TWO FLATS ON THE DATES OF ALLOTMENT LETTERS SHOULD HAVE BEEN APPLIED BY THE A O, IS NOT CORRECT. THE ASSESSEE WANTS THE STAMP DUTY VALUE AS ON THE DATES OF ALLOTMENTS TO BE CONSIDERED SINCE, THE DATES OF ALLOTMENTS ARE MUCH PRIOR TO THE DATES OF SALE AGREEMENTS WHEN THE STAMP DUTY VALUE OF THE SA ID TWO FLATS WAS LOWER THAN THE VALUE AS PER THE SAID 2 SALE AGREEME NTS. 5.6 IT IS FURTHER OBSERVED THAT THE OFFER LETTER FOR ALLOTMENT IN RESPECT OF MR. JOSEPH ALEX IS DATED 22.09.2012 WHEREAS THE ACT UAL ALLOTMENT IS DATED 03.06.2010 WHICH IS SURPRISING SINCE NORMALLY THE OFFER OF ALLOTMENT IS ALWAYS PRIOR TO THE ACTUAL ALLOTMENT. SIMILARLY, THE OFFER LETTER FOR ALLOTMENT IN RESPECT OF SHRI CHUHARMAL A. LUDHANI I S DATED 15.07.2010 WHICH AGAIN IS SUBSEQUENT TO THE ACTUAL ALLOTMENT D ATED 20.05.2010. MOREOVER, IT IS ALSO OBSERVED THAT THE SAID ALLOTME NTS DATED 03.06.2010 AND 20.05.2010 HAVE ONLY BEEN SIGNED BY THE BUYERS AND NOT BY THE ASSESSEE, THEREFORE, THESE ALLOTMENTS CANNOT BE TER MED AS SALE AGREEMENTS BETWEEN THE ASSESSEE AND THE SAID BUYERS FOR FIXING THE VALUE OF CONSIDERATION FOR TRANSFER OF THE PROPERTY . 5.7 THE ASSESSEE HAS ALSO ARGUED THAT DURING THE R ELEVANT YEAR NO SATES HAVE BEEN BOOKED SINCE, THE POSSESSION OF THE SAID TWO FLATS WAS NOT GIVEN AND THE PROJECT WAS UNDER CONSTRUCTION AND TH EREFORE, THE PROVISIONS OF SEC. 43CA CANNOT BE INVOKED FOR THE R ELEVANT YEAR. ON THIS CONTENTION, IT IS NOTED THAT THE PROVISIONS OF SEC. 43CA COME INTO FORCE AT THE TIME OF REGISTRATION OF THE SALE AGREEMENT. IF AT THE TIME OF REGISTRATION OF THE SALE AGREEMENT, THE STAMP DUTY VALUE OF THE PROPERTY IS FOUND TO BE MORE THAN THE AMOUNT AS PER THE SALE AGREEMENT, THE N THE STAMP DUTY VALUE OF THE PROPERTY IS TO BE ADOPTED FOR THE PURP OSES OF COMPUTING PROFITS AND GAINS FROM TRANSFER OF SUCH ASSET. IN T HE INSTANT CASE, IT IS OBSERVED THAT AT THE TIME OF REGISTRATION OF THE SA ID TWO SALE AGREEMENTS DURING THE RELEVANT YEAR, THE STAMP DUTY VALUES OF THE SAID TWO FLATS WAS FOUND TO BE MORE THAN THE VALUES AS PER THE SALE AG REEMENTS AND THEREFORE, THE AO HAS RIGHTLY PROCEEDED TO ADD THE DIFFERENCE U/S. 43CA. HOWEVER, THE VALUE AS PER THE SALE AGREEMENT WILL B E CONSIDERED FOR ITA NO.1694/MUM/2019 KAVYA MIRA REALTY 5 TAXATION IN THE RELEVANT YEAR WHEN THE SALE IS BOOK ED AS PER THE SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE. 5.8 IN VIEW OF THE AFORESAID DISCUSSION, NO INFIRMI TY IS FOUND IN THE ACTION OF THE AO IN MAKING AN ADDITION OF RS. 4,78,000/-. ACCORDINGLY, THIS GROUND OF APPEAL IS DISMISSED. 5. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE L D.CIT(A) HAS ERRED IN CONFIRMING THE ADDITIONS MADE BY THE LD. A O U/S 50C OF THE I.T.ACT, 1961, BEING DIFFERENCE IN VALUE OF SALE OF FLATS BELOW THE MARKET VALUE TAKEN BY AN AUTHORITY OF A STATE GOVER NMENT FOR THE PURPOSE OF STAMP DUTY AT PREVAILING MARKET RATE AT THE TIME OF REGISTRATION OF PROPERTY WITHOUT APPRECIATING THE F ACT THAT WHEN, THE PROPERTY BOOKED BY THE BUYER AND THE STAMP AUTHORIT Y RATE AS ON THE DATE OF BOOKING OF PROPERTY SHOULD HAVE BEEN COMPA RED WITH THE AGREEMENT PRICE, AS PER PROVISIONS OF SECTION 43CA OF THE I.T.ACT, 1961. 6. THE LD. DR, ON THE OTHER HAND STRONGLY SUPPORTIN G ORDER OF THE LD.CIT(A) SUBMITTED THAT WHERE, THERE IS DIFFERENC E BETWEEN SALE CONSIDERATION AND READY RECKONER VALUE OF THE PROPE RTY, THEN THE DIFFERENCE SHOULD BE BROUGHT TO TAX U/S 43CA OF THE I.T.ACT, 1961 AND ACCORDINGLY, THE LD. AO, AS WELL AS THE LD.CIT(A) H AVE BROUGHT OUT CLEAR FACTS TO THE EFFECT THAT THE SALE CONSIDERATI ON RECEIVED FOR SALE OF FLATS IS LESS THAN THE READY RECKONER RATE FIXED FOR PAYMENT OF STAMP DUTY AND ACCORDINGLY, DIFFERENCE NEEDS TO BE TAXED. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. THE ASSESSEE HAS SOLD TWO FLATS TO ONE MR.JOSPEH ALEX O N 03/06/2010 AND THE OTHER ONE TO MR.CHUHARAMAL A LUDHANI ON 20 /05/2010 BY WAY OF A LETTER OF ALLOTMENT. THE ASSESSEE HAS ENTE RED INTO SALE ITA NO.1694/MUM/2019 KAVYA MIRA REALTY 6 AGREEMENT AND REGISTERED THE SAME ON 26/06/2013 AND 31/12/2013 RESPECTIVELY FOR BOTH FLATS AND READY RECKONER RATE AS PER STAMP DUTY AUTHORITY WAS HIGHER THAN THE SALE CONSIDERATION RE CEIVED FOR SALE OF FLATS. THEREFORE, THE LD. AO HAS MADE ADDITIONS TOW ARDS DIFFERENCE BEING SALE CONSIDERATION RECEIVED FROM TWO FLATS AN D READY RECKONER RATE OF TWO FLATS AS ON THE DATE OF REGISTRATION. I N THIS FACTUAL BACK GROUND, IF YOU EXAMINE THE CASE OF THE ASSESSEE, IN LIGHT OF PROVISIONS OF SECTION 43CA OF THE I.T.ACT, 1961, ON E HAS TO SEE WHETHER, THE LD. AO WAS RIGHT IN MAKING ADDITIONS T OWARDS DIFFERENCE IN SALE CONSIDERATION AND READY RECKONER RATE. THE PROVISIONS OF SECTION 43CA OF THE I.T.ACT, 1961 DEALS WITH A CASE S, WHERE THE DATE OF AGREEMENT FIXING THE VALUE OF CONSIDERATION FOR TRANSFER OF THE ASSET AND THE DATE OF REGISTRATION OF SUCH TRANSFER OF ASSET ARE NOT THE SAME, THE VALUE REFERRED TO IN SUB- SECTION (1 ) MAY TAKEN, AS THE VALUE ASSESSABLE BY THE ANY AUTHORITY OF A STATE GO VERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY, IN RESPECT OF SU CH TRANSFER ON THE DATE OF THE AGREEMENT. THE PROVISIONS OF SUB S ECTION (4) PROVIDES FOR A CASES, WHERE THE AMOUNT OF CONSIDERA TION OR PART THEREON HAS BEEN RECEIVED BY ANY MODE, OTHER THAN C ASH ON OR BEFORE THE DATE OF AGREEMENT FOR TRANSFER OF THE AS SET, THEN THE PROVISIONS OF SUB-SECTION (3) SHALL APPLY AND ACCOR DINGLY, THE AGREED SALE CONSIDERATION AND READY RECKONER VALUE OF THE PROPERTY SHOULD BE COMPARED AS ON THE DATE OF THE AGREEMENT. IN TH IS CASE, ON PERUSAL OF DETAILS AVAILABLE ON RECORD, WE FIND THA T THE ASSESSEE HAS AGREED TO SELL TWO FLATS IN THE YEAR 2010 AND HAS C OLLECTED BOOKING ADVANCE BY CHEQUES. THE ASSESSEE HAS ALSO, COLLECTE D SUBSTANTIAL AMOUNT OF SALE CONSIDERATION BEFORE THE DATE OF REG ISTRATION OF SALE AGREEMENT IN THE YEAR 2013. THEREFORE, AS PER THE P ROVISIONS OF SUB- SECTION (4), FOR THE PURPOSE OF COMPARISON OF AGRE ED CONSIDERATION ITA NO.1694/MUM/2019 KAVYA MIRA REALTY 7 AND READY RECKONER RATE, THE READY RECKONER RATE AS ON THE DATE OF AGREEMENT SHOULD BE CONSIDERED. IN THIS CASE, THE ASSESSEE HAS AGREED TO SELL THE FLATS BY WAY OF A BOOKING AND HA S COLLECTED ADVANCE AMOUNT. FURTHER, WHETHER BOOKING FORM IS CO NSIDERED TO BE AN AGREEMENT FOR SALE OR NOT IS TO BE EXAMINED, IN LIGHT OF PREVAILING PRACTICE, IN LINE OF THE BUSINESS. IT IS AN ADMITTE D FACT THAT THE FLATS HAVE BEEN AGREED TO SELL BY WAY OF A BOOKING AND LE TTER OF ALLOTMENT AND RATE WILL BE AGREED AS ON THE DATE OF BOOKING. THEREFORE, ONCE THERE IS RELEVANT DOCUMENTS ARE WITH THE ASSESEE TO DEMONSTRATE THAT IT HAS AGREED TO SELL THE PROPERTY FOR A SPECI FIED CONSIDERATION AND HAS COLLECTED ADVANCE AMOUNT, THEN FOR THE PURP OSE OF SECTION 43CA OF THE I.T.ACT, 1961, THE PROVISIONS OF SUB-SE CTION (3) HAS TO BE CONSIDERED AND ACCORDINGLY, THE READY RECKONER RATE , IN RESPECT OF SUCH TRANSFER SHALL BE CONSIDERED AS ON THE DATE OF THE AGREEMENT. IN THIS CASE, THE AGREEMENT FOR SALE OF PROPERTY WA S EXECUTED IN THE YEAR 2010 ALTHOUGH, THE SAME HAS BEEN REGISTERED IN THE YEAR 2013 AND AS PER THE READY RECKONER RATE AS ON THE DATE O F AGREEMENT, THERE IS NO DIFFERENCE BETWEEN CONSIDERATION RECEIV ED FOR SALE OF PROPERTY AND READY RECKONER RATE FOR THE PURPOSE OF PAYMENT OF STAMP DUTY. THEREFORE, NO ADDITION COULD BE MADE ON THE BASIS OF READY RECKONER RATE AT THE TIME OF REGISTRATION OF SALE AGREEMENT. ACCORDINGLY, WE ARE OF THE CONSIDERED VIEW THAT THE LD. AO, AS WELL AS THE LD.CIT(A) WERE ERRED IN MAKING ADDITIONS TOW ARDS DIFFERENCE BETWEEN SALE CONSIDERATION RECEIVED FOR SALE OF FLA TS AND READY RECKONER RATE OF THE FLATS, AS ON THE DATE OF REGIS TRATION OF SALE AGREEMENT. HENCE, WE DIRECT THE LD. AO TO DELETE AD DITIONS MADE U/S 43CA /50C OF THE I.T.ACT, 1961. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ITA NO.1694/MUM/2019 KAVYA MIRA REALTY 8 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20/05 /2020 SD/- (RAVISH SOOD) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 20/05/2020 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//