SARVODAYA GRIH NIRMAN PVT LTD, PATNA V. ITO, WARD-2(2), PATNA

ITA 85/PAT/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2855 (ITAT-PATNA)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 15-10-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S SANNIGRAHI
• Keywords: Sale consideration of property below Jantri Value
• Section: 43CA; 143(3)

Judgement Text

ITA NO.85/PAT/2020 A.Y. 20 17-2018 SARVODAYA G RIH NIRMAN PVT. LTD. 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA-PATNA E-COURT, KOLKATA [VIRTUAL COURT HEARING] BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT(KOLKATA ZON E) I.T.A. NO. 85/PAT/2020 ASSESSMENT YEAR: 2017-2018 SARVODAYA GRIH NIRMAN PVT. LIMTIED,................ ...................APPELLANT L/001, BLOCK-B, OM NIRMALAYA APARTMEMNT, NAGESHWAR COLONY, BIHAR-800001 [PAN: AAGCS9922A] -VS.- INCOME TAX OFFICER,................................ ...............................RESPONDENT WARD-2(2), PATNA, BIHAR APPEARANCES BY: SHRI S. SANNIGRAHI, A.R., FOR THE APPELLANT SHRI AJAY KUMAR, JCIT, SR. D.R., FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : SEPTEMBER 09, 202 1 DATE OF PRONOUNCING THE ORDER : OCTOBER 08, 2021 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), PATNA-1 DATED 19.08.2020 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TAO THE ADD ITION OF RS.21,28,038/- MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) BY INVOKING THE PROVISIONS OF SECTION 43CA OF THE INCO ME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 31.03.2 018 DECLARING TOTAL INCOME OF RS.13,72,450/-. THE SAID RETURN WAS SELE CTED FOR SCRUTINY UNDER CASS TO EXAMINE THE ISSUE RELATING TO HIGH CL OSING STOCK AND INVESTMENT IN IMMOVABLE PROPERTIES. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICE R THAT THE ASSESSEE- ITA NO.85/PAT/2020 A.Y. 20 17-2018 SARVODAYA G RIH NIRMAN PVT. LTD. 2 COMPANY HAD SOLD/TRANSFERRED CERTAIN FLATS TO THE D IFFERENT CUSTOMERS FOR CERTAIN SALE CONSIDERATION, WHICH WAS LOWER THAN TH E STAMP DUTY VALUATION. HE, THEREFORE, REQUIRED THE ASSESSEE-COM PANY TO EXPLAIN AS TO WHY THE PROVISION OF SECTION 43CA SHOULD NOT BE INV OKED AND THE DIFFERENCE BETWEEN THE STAMP DUTY VALUE AND SALE CO NSIDERATION OF THE FLATS SOLD/TRANSFERRED DURING THE YEAR UNDER CONSID ERATION SHOULD BE ADDED TO ITS TOTAL INCOME. IN REPLY, IT WAS SUBMITT ED ON BEHALF OF THE ASSESSEE-COMPANY THAT THE SAID FLATS WERE AGREED TO BE SOLD TO THE RESPECTIVE BUYERS BY AGREEMENTS ENTERED INTO 8-9 YE ARS BACK AND SINCE THE SALE CONSIDERATION FOR THE SAME WAS AGREED IN P URSUANCE OF THE SAID AGREEMENTS IN 8-9 YEARS BACK, THE PROVISION OF SECT ION 43CA COULD NOT BE INVOKED TO MAKE ANY ADDITION WITH REFERENCE TO THE STAMP DUTY VALUATION PREVAILING IN THE YEAR UNDER CONSIDERATION WHEN FIN AL SALE DEEDS WERE REGISTERED. THE ASSESSING OFFICER, HOWEVER, OBSERVE D THAT THERE WAS A DIFFERENCE BETWEEN THE SALE CONSIDERATION AND STAMP DUTY VALUATION OF ATLEAST FOUR FLATS EVEN WITH DIFFERENCE TO THE DATE S OF AGREEMENTS TO SALE TO THE EXTENT OF RS.21,28,038/-. HE ACCORDINGLY MAD E AN ADDITION TO THAT EXTENT TO THE TOTAL INCOME OF THE ASSESSEE BY INVOK ING THE PROVISIONS OF SECTION 43CA IN THE ASSESSMENT COMPLETED UNDER SECT ION 143(3) VIDE AN ORDER DATED 27.12.2019. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3) OF THE ACT, AN APPEAL WAS PREFERRED BY THE A SSESSEE BEFORE THE LD. CIT(APPEALS) AND THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.21,28,038/- BY INVOKING THE PROVISION OF SECTION 43CA WAS CHALLENGED BY THE ASSESSEE BY CONTENDING, INTER ALIA, THAT THE PROVISION OF SECTION 43CA HAVING COME INTO OPERATION FROM 01.04.2014 WIT HOUT ANY RETROSPECTIVE APPLICATION, THERE WAS NO SCOPE TO DE TERMINE THE STAMP DUTY VALUE OF FLATS OF THE EARLIER PERIOD WHEN THE AGREEMENTS TO SALE WERE EXECUTED. IT WAS CONTENDED THAT THE PROVISIONS OF S ECTION 43CA WERE NOT IN THE STATUTE WHEN THE AGREEMENTS TO SALE THE FLAT S WERE ENTERED INTO ITA NO.85/PAT/2020 A.Y. 20 17-2018 SARVODAYA G RIH NIRMAN PVT. LTD. 3 AND, THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISION OF SECTION 43CA WAS NOT SUSTAINABLE. THE LD. CIT(APPEALS) DID NOT FIND MERIT IN THIS CONTENTION AS WELL AS THE OT HER CONTENTIONS RAISED BY THE ASSESSEE AND REJECTING THE SAME, HE PROCEEDE D TO CONFIRM THE ADDITION MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 43CA OF THE ACT. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE T RIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT EVEN THOUGH FINAL SALE DEEDS IN RESPECT OF THE RELEVANT FOUR FL ATS WERE EXECUTED AND REGISTERED DURING THE YEAR UNDER CONSIDERATION, THE SAID FLATS WERE AGREED TO BE SOLD ABOUT 8-9 YEARS BACK IN PURSUANCE OF THE AGREEMENTS ENTERED INTO BY THE ASSESSEE-COMPANY WITH THE RESPECTIVE BU YERS. IT IS ALSO OBSERVED THAT THIS POSITION CLEARLY BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER BY THE ASSESSEE-COMPANY WAS NOT DISPUTED BY THE ASSESSING OFFICER, BUT HE PROCEEDED TO MAKE THE ADDITION OF R S.21,28,038/- BY INVOKING THE PROVISION OF SECTION 43CA AS HE FOUND THAT THERE WAS A DIFFERENCE TO THAT EXTENT IN THE SALE CONSIDERATION OF THE FLATS AS SHOWN BY THE ASSESSEE-COMPANY AND THE STAMP DUTY VALUATION O F THE SAME AS ON THE DATE OF THE AGREEMENTS TO SALE ENTERED INTO EARLIER . IN THIS REGARD, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE SAI D AGREEMENTS TO SALE WHEREBY CONSIDERATION FOR THE FLATS WAS AGREED, HAD BEEN ENTERED INTO WITH THE RESPECTIVE BUYERS PRIOR TO 01.04.2014 AND SINCE THE PROVISION OF SECTION 43CA WAS INSERTED INTO THE STATUTE ONLY W.E .F. 01.04.2014, THE SAID PROVISION WAS NOT APPLICABLE IN THE CASE OF THE ASS ESSEE AND THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) BY INVOKING THE SAME IS NOT SUSTAINABLE. IN SUPPORT OF THIS CONTENTION, HE HAS RELIED ON THE DECISION OF JAIPUR BENCH OF ITAT IN T HE CASE OF INDEXONE TRADECONE (P) LIMITED REPORTED IN 172 ITD 396, WHER EIN THE ASSESSEE- COMPANY WAS ENGAGED IN THE BUSINESS OF DEVELOPING A ND CONSTRUCTING RESIDENTIAL/COMMERCIAL PROPERTIES AND HAD ENTERED I NTO AGREEMENTS TO ITA NO.85/PAT/2020 A.Y. 20 17-2018 SARVODAYA G RIH NIRMAN PVT. LTD. 4 SELL TWO FLATS IN THE YEAR 2007 AND HAD RECEIVED CE RTAIN AMOUNT OF SALE CONSIDERATION. SUBSEQUENTLY BALANCE SALE CONSIDERAT ION WAS RECEIVED DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEA R 2014-15 AND SALE DEED OF FLATS WERE EXECUTED AND REGISTERED IN THE N AME OF BUYERS. THE ASSESSING OFFICER NOTED THAT SALE CONSIDERATION DEC LARED BY THE ASSESSEE IN RESPECTIVE SALE DEEDS WAS LESS THAN THE VALUE AD OPTED BY STAMP DUTY AUTHORITY FOR THE PURPOSE OF CHARGING STAMP DUTY. H E, THEREFORE, INVOKED THE PROVISION OF SECTION 43CA AND ADDED THE DIFFERE NTIAL AMOUNT TO THE ASSESSEES TAXABLE INCOME. ON CONFIRMATION OF THE S AID ADDITION BY THE LD. CIT(APPEALS), THE MATTER WAS CARRIED BEFORE THE TRI BUNAL AND THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) BY INVOKING THE PROVISION OF SECTION 43CA WAS DELETED BY THE TRIBUNAL BY HOLDING THAT THE AGREEMENTS TO SALE THE TWO FLATS I N QUESTION HAVING BEEN ENTERED INTO MUCH PRIOR TO THE INTRODUCTION OF SECT ION 43CA IN THE STATUTE WITH EFFECT FROM 01.04.2014, THE SAID PROVISIONS WE RE NOT APPLICABLE IN THE CASE OF THE ASSESSEE. AS THE ISSUE INVOLVED IN THE PRESENT CASE AND ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THE CASE OF INDEXONE TRADECONE (P) LTD. (SUPRA) DECIDED BY THE JAIPUR BE NCH OF ITAT, I RESPECTFULLY FOLLOW THE SAID DECISION OF THE DIVISI ON BENCH OF ITAT, JAIPUR AND DELETE THE ADDITION MADE BY THE ASSESSING OFFIC ER AND CONFIRMED BY THE LD. CIT(APPEALS) BY INVOKING THE PROVISIONS OF SECTION 43CA AND ALLOW THIS APPEAL OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 08, 2 021. SD/- (P.M. JAGTAP) VICE-PRESI DENT (KZ) KOLKATA, THE 8 TH DAY OF OCTOBER, 2021 COPIES TO : (1) SARVODAYA GRIH NIRMAN PVT. LIMTIED, L/001, BLOCK-B, OM NIRMALAYA APARTMEMNT, NAGESHWAR COLONY, BIHAR-800001 ITA NO.85/PAT/2020 A.Y. 20 17-2018 SARVODAYA G RIH NIRMAN PVT. LTD. 5 (2) INCOME TAX OFFICER, WARD-2(2), PATNA, BIHAR (3) COMMISSIONER OF INCOME TAX (APPEALS), PATNA-1 , (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER SENIOR PRIVAT E SECRETARY/DDO INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.