Income Tax Appellate Tribunal - Raipur
Prithvi Developers, Jagdalpur, ... vs Deputy Commissioner Of Income ... on 24 June, 2024
आयकर अपील य अ धकरण यायपीठ "एक-सद य" मामला रायपुर म
IN THE INCOME TAX APPELLATE TRIBUNAL
RAIPUR BENCH "SMC", RAIPUR
ी रवीश सूद, या यक सद य के सम
BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER
आयकर अपील सं. / ITA No. 134/RPR/2024
नधारण वष / Assessment Year : 2015-16
M/s. Prithvi Developers
Lunkad Building, Jain Mandir Road
Jagdalpur, Dist. Bastar (C.G.)-494 001
PAN: AAHFP9570F
.......अपीलाथ / Appellant
बनाम / V/s.
The Deputy Commissioner of Income Tax-1(1),
Raipur (C.G.)
...... यथ / Respondent
Assessee by : Shri Ravi Agrawal, CA
Revenue by : Shri Satya Prakash Sharma, Sr. DR
सुनवाई क तार ख / Date of Hearing : 06.06.2024
घोषणा क तार ख / Date of Pronouncement : 24.06.2024
2
M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.)
ITA No. 134/RPR/2024
आदे श / ORDER
PER RAVISH SOOD, JM:
The present appeal filed by the assessee firm is directed against the order passed by the ADDL/JCIT(A)-5, Mumbai, dated 06.02.2024, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income-tax Act, 1961 (in short 'the Act') dated 28.12.2017 for the assessment year 2015-16. The assessee firm has assailed the impugned order on the following grounds of appeal:
"1) The order of CIT(A) is illegal, bad in law and void-ab-initio.
2) On facts and in the circumstances of the case and in law, CIT(A) has erred in confirming jurisdictional defect done while conducting assessment proceeding as during the course of assessment proceeding as per assessee's knowledge without following procedure prescribed u/s.127 of the Income-tax Act' 1961 case was transferred from jurisdiction DCIT-2(1), Raipur to non-jurisdictional ACIT-4(1), Raipur, who has passed the assessment order without issuing notice u/s.143(2).
3) Without prejudice to ground nos. 1 & 2, on facts and in the circumstances of the case and in law, CIT(A) has erred in confirming addition of Rs.13,00,000/-, being difference between "Actual Sale Consideration" and "Value adopted by Stamp Valuation Authority", made by the AO by invoking provisions of section 43CA. Thus, the assessee prays that the addition of Rs. 13,00,000/- be deleted.
4) Without prejudice to ground nos. 1 to 3, on facts and in the circumstances of the case and in law, CIT(A) has erred in confirming addition of Rs.4,30,000/- made by the AO by invoking provision of section 43CA by rejecting contention of the assessee that proviso to section 43CA(1) of the Act inserted w.e.f. 1.4.2021 is curative in nature and intended to remove an undue hardship to the assessee and accordingly, it should be given retrospective effect from 1st April, 2014 i.e. the date from which section 43CA of the Act was introduced.
5) The assessee reserves the right to add, amend, alter or withdraw any ground/grounds of appeal at the time of hearing."3
M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024
2. Succinctly stated, the assessee firm which is engaged in the business of builder and land developer had e-filed its return of income for A.Y.2015-16 on 30.09.2015 declaring an income of Rs.16,61,600/-. Subsequently, the case of the assessee firm was selected for limited scrutiny u/s. 143(2) of the Act.
3. During the course of the assessment proceedings, the A.O observed that the assessee firm had sold certain flats for a consideration lower than the value adopted by the Stamp Valuation Authority. In response, it was submitted by the assessee firm that it had executed an "agreement to sell" prior to the date of registration of the property. The assessee firm in order to buttress its aforesaid claim had also produced copy of agreement a/w. relevant documents. However, the aforesaid explanation of the assessee did not find favour with the A.O. The A.O by referring to the sale transaction of two properties worked out the difference between the sale consideration adopted by the assessee firm vis-à-vis fair market value/Govt. value of Rs.13,00,000/-, as under:
Particulars of Value as per Value taken as Difference Advance Money house/land detail stamp duty per ITR/Audit received by the sold during the authority report assessee FY 2014-15 Flat sold to 4930000/- 4500000/- 430000/- Cash of DR.Bhawanrwal Rs.10,00,000/-
Sharma, PAN- received on
AZUPS6584L 01.05.2014
Flat sold to 3870000/- 3000000/- 870000/- Cash of
Suresh Shukla, Rs.15,00,000/-
PAN-CLBPS1604Q received on
and Sunita 09.10.2013
Shukla,
CLTPS5207B
4
M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024 Total 13,00,000/-
The assessee firm on being queried as to why the aforesaid difference of Rs.13,00,000/- may not be added to its total income u/s. 43CA(4) of the Act, failed to come forth with a plausible explanation. Accordingly, the A.O vide his order passed u/s.143(3) of the Act dated 28.12.2017 after making the addition of Rs.13,00,000/- u/s. 43CA(4) of the Act, determined the income of the assessee firm at Rs.29,61,000/-.
4. Aggrieved the assessee firm carried the matter in appeal before the CIT(Appeals) but without success. For the sake of clarity, the observations of the CIT(Appeals) are culled out as under:
"4. Decision: I have gone through the facts of the case, the grounds of appeal, and the submissions made by the appellant in this case. Accordingly, grounds of appeal are adjudicated as under:
4.1. Ground No.1: In this ground appellant has challenged the jurisdiction and has contended that assessment order is bad in law, illegal and void ab initio. It has been submitted by the appellant that initially notices u/s 143(2) and 142(1) were issued by jurisdictional DCIT-2(1), Raipur. It has been further submitted that subsequently, on change of incumbent, notice was issued u/s 142(1) by non-jurisdictional ACIT-4(1), Raipur who also passed the assessment order in the case. The appellant also submitted that as per Notification No. 1/2014-15 dt 15.11.2014 jurisdiction over the case vested with DCIT-2(1), Raipur and that case was transferred without following the procedure laid down in section 127 of the Act. It has therefore requested to quash the assessment order passed u/s 143(3). It also quoted the decision in the case of West Bengal State Electricity Board vs DCIT (2005)278 ITR 218(Cal) wherein it is observed that it is an admitted proposition that no jurisdiction can be conferred by default or any agreement and a decision without jurisdiction is nullity.5
M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024 The contention of the appellant are considered. It will be apposite to refer here the provisions of section 124(3) of the Act which reads as under-
84 [Jurisdiction of Assessing Officers.
85 124. (1) Where by virtue of any direction or order issued under sub- section (1) or sub-section (2) of section 120, the Assessing Officer has been vested with jurisdiction over any area, within the limits of such area, he shall have jurisdiction--
(a) in respect of any person carrying on a business or profession, if the place at which he carries on his business or profession is situate within the area, or where his business or profession is carried on in more places than one, if the principal place of his business or profession is situate within the area, and
(b) in respect of any other person residing within the area.
(2) Where a question arises under this section as to whether an Assessing Officer has jurisdiction to assess any person, the question shall be determined by the Director General or the Chief Commissioner or the Commissioner; or where the question is one relating to areas within the jurisdiction of different Director Generals or Chief Commissioners or Commissioners, by the Directors General or Chief Commissioners or Commissioners concerned or, if they are not in agreement, by the Board or by such Director General or Chief Commissioner or Commissioner as the Board may, by notification in the Official Gazette, specify.
(3) No person shall be entitled to call in question the jurisdiction of an Assessing Officer--
(a) where he has made a return under sub-section (1) of section 139, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or after the completion of the assessment, whichever is earlier;
(b) where he has made no such return, after the expiry of the time allowed by the notice under sub-section (1) of section 142 or under section 148 for the making of the return or by the notice under the first proviso to section 144 to show cause why the assessment should not be completed to the best of the judgment of the Assessing Officer, whichever is earlier.
(4) Subject to the provisions of sub-section (3), where an assessee calls in question the jurisdiction of an Assessing Officer, then the Assessing Officer shall, if not satisfied with the correctness of the claim, 6 M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024 refer the matter for determination under sub-section (2) before the assessment is made.
(5) Notwithstanding anything contained in this section or in any direction or order issued under section 120, every Assessing Officer shall have all the powers conferred by or under this Act on an Assessing Officer in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction by virtue of the directions or orders issued under sub-section (1) or sub-section (2) of section 120.] As per subsection 3(a) the appellant was required to raise the objection within one month from the date of issue of notice u/s 142(1) or before the assessment is passed, which ever is earlier. The appellant has not furnished any evidence as to whether it has challenged the jurisdiction by the specified time. In fact in its submission dated 8.05.2023 it has been submitted that no obligation would be cast upon the assessee to call in question Ls jurisdiction as per the mandate of subsection 124(3).
From the above it is clear that appellant was aware of the provisions of section 124 and has not challenged the jurisdiction before the AO within the prescribed time. Hence the appellant cannot raise this plea during the appellate proceeding. It may be apposite to refer here the decision of Hon'ble High Court of Delhi in the case of Abhishek jain vs ITO ward 55(1), New Delhi in WP No. 11844 (civil) of 2016 dated 1.6.2018, wherein it is held that appellant cannot challenge the jurisdiction after one month form date on which he was served the notice. Similar is the decision of Hon'ble Delhi High Court in the case of CIT V/s Shyam Sunder Infrastructure P Ltd in ITA No. 236 of 2015 dated4.02.2015 wherein it is held as under-
"In the present case, there is no dispute that the reassessment notice was issued by the AO on 22.03.2010; upon its receipt, the assessee reiterated its earlier return on 21.04.2010. Since its response led to objections as to the jurisdiction, it lost the capacity to urge the ground by virtue of the provision under Section 124(3)(a)."
In view of above, the contention of the appellant that assessment order is bad in law is rejected. This ground of appeal is hence dismissed.
4.2 Ground No.2 This ground of appeal is regarding the additions made of Rs. 13,00,000/- made u/s 43CA. In the order, the AO has made the addition of Rs.13,00,000/- , being difference between sale consideration and value adopted by stamp valuation authority in respect of sales made to Dr. Bhawarlal Sharma and Smt. Sunita Shukla. It has been contended by the appellant that the first payment in cash were made in FY 2014-15 from Dr. Bhawarlal Sharma and in FY 2013-14 from Smt. Sunita Shukla. Further the appellant has sold the unfinished houses to above persons and that there is no distinction before the stamp duty authority between finished and unfinished house for determination of 7 M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024 stamp charges. The appellant further submitted that the proviso to section 43CA(1) has been inserted form 1.04.2021which provides for safe harbour of 10% between sale consideration and stamp value is curative in nature and hence should be given a retrospective effect. The appellant also cited the decision of Hon'ble ITAT Pune in the case of Sai Bhargavanath Infra vs ACIT in ITA No. 1332/Pune/2019 dated 17.08.2022 in support of its contention.
The contention of the appellant that advance money was received in earlier year in these two cases has no relevance as the said advance has been received in cash and hence it is contrary to the provisions of section 43 CA (4) which reads as "(4) The provisions of sub-section (3) shall apply only in a case where the amount of consideration or a part thereof has been received by any mode other than cash on or before the date of agreement for transfer of the asset". It has been admitted by the appellant that for determination of stamp charges, there is no distinction between the finished and unfinished house before the Sub registrar for determination of stamp charge. AO has disposed this contention that there is no provision for treatment of such adjustment in the Income Tax Act with regards to determination of price of incomplete property. Further, the provisions of section 43CA, being deeming provision the AO has correctly applied the same. The assessee's contention that proviso to section 43CA(1) amended from 1.04.2021 are curative in nature and hence are applicable retrospectively lacks relevance as the safe harbour of 10% has been inserted from 1.04.2021. The decision Hon'ble Pune tribunal, which is not a jurisdictional tribunal, in the case of Sai Bhargavanath Infra is considered.
It may be mentioned here that the Finance Act 2020 specifically enhancing the variation from 5% to 10% states that the enhanced variation will be effective from 1.4.2021. The relevant amendments and explanatory notes are reproduced below for ready reference :
The Finance Act 2018 inserted Second proviso to section 50C as under:
Amendment of section 50C.
"In section 50C of the Income-tax Act, in sub-section (1), after the second proviso, the following proviso shall be inserted with effect from the 1st day of April, 2019, namely:-- "Provided also that where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and five per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of section 48, be deemed to be the full value of the consideration.".8
M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024 The amendment to Section 50C is explained in Circular 8 of 2018 titled Explanatory Notes to the provisions of The Finance Act 2018 as under :
16. Rationalization of section 43CA, section SOC and section 56 16.1 Before amendment by the Act, for computing income from business profits (section 43CA), capital gains (section SOC) and other sources (section 56) arising out of transactions in immovable property, the higher of sale consideration or stamp duty value was adopted. The difference was taxed as income both in the hands of the purchaser and the seller.
16.2 It has been pointed out that the variation between stamp duty value and actual consideration received can occur in respect of similar properties in the same area because of a variety of factors, including shape of the plot or location.
16.3 In order to minimize hardship in case of genuine transactions in the real estate sector, section 43CA, section 50C and section 56 of the Income-tax Act have been amended to provide that no adjustments shall be made in a case where the variation between stamp duty value and the sale consideration is not more than five per cent of the sale consideration.
16.4 Applicability: These amendments take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years.
Explanatory Notes to Finance Act 2020 "Increase in safe harbour limit of 5 per cent. under section 43CA, 50C and 56 of the Act to 10 per cent.
Section 43CA of the Act, inter alia, provides that where the consideration declared to be received or accruing as a result of the transfer of land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (i.e. "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall for the purpose of computing profits and gains from transfer of such assets, be deemed to be the full value of consideration. The said section also provide that where the value adopted or assessed or assessable by the authority for the purpose of payment of stamp duty does not exceed one hundred and five per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration.
9M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024 Section 50C of the Act provides that where the consideration declared to be received or accruing as a result of the transfer of land or building or both, is less than the value adopted or assessed or assessable by stamp valuation authority for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall be deemed to be the full value of the consideration and capital gains shall be computed on the basis of such consideration under section 48 of the Act. The said section also provides that where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and five per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of section 48, be deemed to be the full value of the consideration.
Clause (x) of sub-section (2) of section 56 of the Act, inter alia, provides that where any person receives, in any previous year, from any person or persons on or after 1st April, 2017, any immovable property, for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration shall be charged to tax under the head "income from other sources". It also provide that where the assessee receives any immovable property for a consideration and the stamp duty value of such property exceeds five per cent of the consideration or fifty thousand rupees, whichever is higher, the stamp duty value of such property as exceeds such consideration shall be charged to tax under the head "Income from other sources".
Thus, the present provisions of section 43CA, 50C and 56 of the Act provide for safe harbour of five per cent.
Representations have been received in this regard requesting that the said safe harbour of five per cent may be increased.
It is, therefore, proposed to increase the limit to ten per cent.
This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-22 and subsequent assessment years".
Thus, for the year under consideration the safe harbour limit of 10% was not applicable as the proviso is applicable prospectively. Nowhere in the section or the explanatory note it is mentioned that this amendment has retrospective operation. As the transaction under consideration pertains to AY 2015-16 and hence the amendment brought w.e.f.1.4.2021 is not applicable to the case of the appellant. In view of the provisions of statute, the contention raised by the appellant cannot be accepted. This ground of appeal is hence dismissed.
In the result the appeal is dismissed."
10M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024
5. The assessee firm being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before me.
6. I have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and material available on record as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions.
7. Shri Ravi Agrawal, Ld. Authorized Representative (for short 'AR') for the assessee firm at the threshold submitted that as the Ld. Sr. DR had provided a copy of order u/s. 127(1) of the Act dated 25.09.2017 which reveals that the case of the assessee firm was transferred on 25.09.2017 from ACIT, Circle-2(1), Raipur to ACIT, Circle-4(1), Raipur, therefore, he does not press his contention qua the validity of the jurisdiction assumed by the A.O, i.e. ACIT, Circle-4(1), Raipur for framing of the impugned assessment. Thus, the Grounds of appeal No. 1 & 2 raised by the assessee are dismissed as not pressed.
8. Adverting to the merits of the case, the Ld. AR submitted that as regards the 1st property, i.e. flat sold by the assessee firm to Dr. Bhawanrlal Sharma (PAN:
AZUPS6584L) for Rs.45,00,000/- vis-à-vis the value adopted by the Stamp Valuation Authority at Rs.49,30,000/-, the variance of Rs.4,30,000/- would be covered by the "1st proviso" to Section 43CA of the Act. The Ld. AR had drawn my attention to the "1st proviso" to Section 43CA of the Act which contemplates that a tolerance limit of 5% difference between the value adopted by the stamp valuation 11 M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024 authority and the actual consideration received or accruing as a result of transfer of the asset (other than a capital asset). The Ld. AR on being queried that the "1st proviso" to Section 43CA had been made available on the statute vide the Finance Act, 2018 w.e.f. 01.04.2019, i.e., from A.Y.2019-20, submitted that the same would have retroactive application. The Ld. AR in support of his aforesaid contention had pressed into service the order of ITAT, Pune in the case of Sai Bhargavanath Infra Vs. ACIT, Circle-6, ITA No.1332/PUN/2019 dated 17.08.2022 and order of the ITAT, Mumbai in the case of M/s. Faber Construction Vs. ACIT-21(1), ITA No.198/Mum/2019 dated 12.03.2020. The Ld. AR drawing support from the aforesaid orders submitted that as the "1st proviso" to Section 43CA(1) of the Act would be retrospectively applicable, therefore, considering the aforesaid tolerance limit of 5% between the actual sale consideration vis-à-vis the value adopted by the stamp valuation authority, the sale transaction of the 1st property, i.e. flat sold to Dr. Bhawanrlal Sharma (PAN: AZUPS6584L) by the assessee would be saved from the applicability of Section 43CA(1) of the Act.
9. Per contra, the Ld. Sr. Departmental Representative (for short 'DR') relied on the orders of the lower authorities. It was submitted by the Ld. DR that as the legislature in all its wisdom had made available the "1st proviso" to Section 43CA of the Act vide the Finance Act, 2018 w.e.f. 01.04.2019, A.Y.2019-20, therefore, the same would inescapably be applicable from A.Y.2019-20 onwards. The Ld. DR submitted that as the case of the assessee firm pertains to a period much prior to the aforesaid amendment, therefore, the same would not carry its case any further.
12M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024
10. I have thoughtfully considered the contentions of the Ld. AR qua the issue in hand, i.e. applicability of the "1st proviso" to Section 43CA of the Act. Although, at the first blush the contention of the Ld. AR was found to be very convincing but the same cannot be accepted. In fact, the "Division Bench" of the Tribunal, Mumbai in the case of Welfare Properties P. Ltd. Vs. DCIT-13(3)(1), Mumbai, ITA No.4934/Mum/2018, A.Y. 2015-16, dated 29.11.2019 (authored by me) had an occasion to deal with the aforesaid issue, i.e., applicability of the "1st proviso" to Section 43CA(1) of the Act and had after exhaustive deliberations concluded that the "1st proviso" to Section 43CA of the Act made available vide the Finance Act, 2018 w.e.f. 01.04.2019 would be applicable prospectively w.e.f. A.Y.2019-2020.
The Tribunal after referring to "Explanatory Notes to the provisions of the Finance Act, 2018 [Circular No.8/2018, dated the 26th of December, 2018"] had held as under:
"8. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements relied upon by them. After deliberating at length on the contentions advanced by the ld. A.R, we are unable to persuade ourselves to subscribe to the same. It is the claim of the ld. A.R, that as the difference between the value adopted by the stamp valuation authority and the actual sale consideration received by the assessee on the transfer of the aforesaid property works out to 9.56% i.e less than 15%, therefore, no addition of the impugned difference of Rs.4,48,350/- was called for in the hands of the assessee. In support of his aforesaid contention, the ld. A.R had relied on certain judicial pronouncements to which we would hereinafter refer. Before adverting any further, it would be relevant to cull out the provisions of Sec. 43CA as were available on the statute during the year under consideration, and read as under:
"[Special provision for full value of consideration for transfer of assets other than capital assets in certain cases.13
M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024 43CA. (1). Where the consideration received or accruing as a result of the transfer by an assessee of an asset (other than a capital asset), being land or building or both, is less than the value adopted or assessed or assessable by a authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration received or accruing as a result of such transfer.
(2). The provisions of sub-section (2) and sub-section (3) of section 50C shall, so far as may be, apply in relation to determination of the value adopted or assessed or assessable under sub-section (1).
(3). 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 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 agreement.
(4). The provisions of sub-section (3) shall apply only in a case where the amount of consideration or a part thereof has been received 43a [by any mode other than cash] on or before the date of agreement for transfer of the asset.] In this regard, we may herein observe, that vide the Finance Act, 2018, w.e.f 01.04.2019, the legislature in all its wisdom has inserted a proviso to sub-section (1) of Sec.43CA, which reads as under:
"Provided that where the value adopted or assessed or assessable by the authority for the purpose of payment of stamp duty does not exceed one hundred and five per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration." On a perusal of the aforesaid statutory provision i.e Sec.43CA, we find, that no tolerance limit of 15% between the value adopted by the stamp valuation authority and the actual sale consideration received on the transfer of the asset (other than a capital asset) being land or building or both, was therein contemplated. On the contrary, a plain reading of the aforesaid statutory provision revealed, that if the consideration received or accruing as a result of the transfer by the assessee of an asset (other than a capital asset), being land or building or both, was less than the value adopted or assessed or assessable by an authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, then the value so adopted or assessed or assessable was mandatorily to be deemed as the full value of the consideration received or accruing as a result of such transfer, for the purposes of computing profits and gains from transfer of 14 M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024 such asset. In fact, a perusal of the proviso made available in sub-section (1) of Sec.43CA, vide the "Finance Act, 2018", w.e.f 01.04.2019, therein reveals that the legislature had for the very first time provided for a tolerance limit of 5% difference between the value adopted by the stamp valuation authority and the actual consideration received or accruing as a result of transfer of the asset (other than a capital asset). Our aforesaid view, that prior to incorporation of the 'proviso' to sub-section (1) of Sec.
43CA, vide the "Finance Act, 2018, w.e.f 01.04.2019, there was no tolerance limit envisaged in Sec.43CA, as regards the difference between the value adopted by the stamp valuation authority and the actual sale consideration received by the assessee on the transfer of the asset (other than a capital asset), is fortified from a perusal of the "Explanatory Notes" to the provisions of the "Finance Act, 2018", which reads as under :
"Explanatory Notes to the provisions of the Finance Act, 2018 [Circular No. /2018, dated the 26th Of December, 2018]
16. Rationalization of section 43CA, section 50C and section 56 16.1 Before amendment by the Act, for computing income from business profits (section 43CA), capital gains (section 50C) and other sources (section 56) arising out of transactions in immovable property, the higher of sale consideration or stamp duty value was adopted. The difference was taxed as income both in the hands of the purchaser and the seller.
16.2 It has been pointed out that the variation between stamp duty value and actual consideration received can occur in respect of similar properties in the same area because of a variety of factors, including shape of the plot or location.
16.3 In order to minimize hardship in case of genuine transactions in the real estate sector, section 43CA, section 50C and section 56 of the Income-tax Act have been amended to provide that no adjustments shall be made in a case where the variation between stamp duty value and the sale consideration is not more than five per cent of the sale consideration.
16.4 Applicability; These amendments take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years."
9. Accordingly, In our considered view, there is no substance in the claim of the assessee that as per the pre-amended provision of Sec.43CA, in case the difference between the value adopted by the stamp valuation authority and the actual sale consideration was less than 15%, then the same was to be ignored and no addition on the said count was called for in the hands of the assessee. As per the doctrine of statutory interpretation, no word howsoever meaningful it may so appear can be allowed to be read into a statutory provision unless the same had 15 M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024 specifically been therein provided for. As observed by us hereinabove, it is only vide the Finance Act, 2018, w.e.f 01.04.2019, that as per the 'proviso' incorporated in Sec. 43CA(1) that the legislature in all its wisdom had provided for a tolerance limit of 5% as regards the difference between the value adopted by the stamp valuation authority and the actual consideration received or accruing as a result of transfer of the asset (other than a capital asset). As such, it is only w.e.f 01.04.2019, if the value adopted or assessed or assessable by the stamp valuation authority for the purpose of payment of stamp duty does not exceed one hundred and five per cent of the consideration received or accruing as a result of the transfer of the asset (other than a capital asset), then the consideration so received or accruing as a result of the transfer, for the purposes of computing the profits and gains from transfer of such asset, was to be deemed to be the full value of consideration. Accordingly, as long as the difference between the value adopted by the stamp valuation authority and the actual consideration received or accrued to the assessee on the transfer of the asset (other than a capital asset) is not in excess of five percent, then such difference is to be ignored and the profits and gains on transfer of the asset has to be worked out on the basis of the actual consideration received or accruing to the assessee. In case, the aforesaid claim of the assessee that if the difference between the value adopted by the stamp valuation authority and the actual consideration received or accruing as a result of transfer of the asset (other than a capital asset) does not exceed 15%, then no addition would be called for under Sec.43CA is accepted, then we are afraid that the same would render the aforesaid „proviso‟ to Sec. 43CA(1) as had specifically been made available on the statute vide the Finance Act, 2018 w.e.f A.Y. 2019-20 would be rendered as meaningless.
10. We shall now advert to the claim of the ld. A.R, that as the difference between the stamp duty value and the actual consideration received as a result of transfer of the aforesaid property under consideration in percentage terms works out to 9.56%, therefore, as per the judicial pronouncements relied upon by him no addition was called for in the hands of the assessee. We are unable to persuade ourselves to subscribe to the reliance placed by the ld. A.R on the various judicial pronouncements, which we find are distinguishable on facts. As regards the judgment of the Hon'ble Supreme Court in the case of C.B. Gautam Vs. Union of India & Ors. 1993 (1) SCC 78, we find that as the said judgement was rendered in context of the scope and gamut of the provisions of Chapter XX-C of the Act, therefore, the same would not assist the case of the assessee before us. In fact, we find that in the aforesaid judgment the Hon'ble Apex Court had observed that the right of pre-emptive purchase has to be exercised by the appropriate authority only if the fair market value was found to be at least 15% more than the apparent consideration. In our considered view, as the aforesaid judgment had been rendered by the Hon'ble Apex Court in a different context, therefore, the same being distinguishable as against the issue 16 M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024 involved in the case before us, we decline to accept the support drawn by the ld. A.R from the said judicial pronouncement. As regards the remaining orders of the co-ordinate benches of the Tribunal that have been relied upon by the ld. A.R, we find that neither of the said orders were rendered in specific context of Sec. 43CA. Alternatively, we may herein observe, that in neither of the aforesaid orders the co-ordinate benches of the Tribunal had before them the „proviso' to Sec.43CA(1) that has been made available on the statute vide the Finance Act, 2018, w.e.f 01.04.2019. As observed by us hereinabove, as a tolerance limit of 5% between the value adopted by the stamp valuation authority and the actual consideration received or accruing as a result of transfer of the asset (other than a capital asset), had been made available on the statute only vide the Finance Act, 2018 w.e.f A.Y. 01.04.2019, therefore, it would be absolutely incorrect to infer that prior to the aforesaid amendment a tolerance limit of 15% was already available and/or inbuilt in the said statutory provision. In our considered view, if that would have been so, then there would have been no requirement for incorporation of the "proviso" to Sec. 43CA (1) of the Act. On the basis of our aforesaid observations, we are of the considered view, that the contention of the ld. A.R that as the difference of Rs. 4,48,350/- between the value adopted by the stamp valuation authority and the actual consideration received as a result of transfer of the aforesaid property works out to 9.56%, i.e less than 15%, therefore, the same was to be ignored and no addition was called for in the hands of the assessee, does not merit acceptance and is resultantly rejected. We thus in terms of our aforesaid observations, finding no infirmity in sustaining of the addition of Rs.4,48,350/- by the CIT(A), uphold his order.
11. Resultantly, the appeal filed by the assessee is dismissed."
11. At this stage, I am reminded of the judgment of the Hon'ble Supreme Court in the case of Shree Choudhary Transport Co. Vs. Income Tax Officer (2020) 426 ITR 289 (SC) wherein the following substantial question of law was raised before the Apex Court:
"3. As to whether sub-clause (ia) of Section 40(a) of the Act, as inserted by the Finance (No.2) Act, 2004 with effect from 01.04.2005, is applicable only from the financial year 2005-2006 and, hence, is not applicable to the present case relating to the financial year 2004-2005; and, at any rate, whole of the rigour of this provision cannot be applied to the present case?"17
M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024 The Hon'ble Apex Court had after exhaustively deliberating on the aforesaid issue observed that unlike the amendment to Section 40(a)(ia) of the Act as was made available on the statute by way of insertion of the "1st Proviso" vide the Finance Act, 2010, which being curative in nature was required to be given retrospectively operation i.e. from the date of insertion of the said statutory provision i.e. w.e.f.
01.04.2005, it was preposterous to draw an analogy from the same for arriving at a similar view qua the amendment made to Section 40(a)(ia) of the Act vide Finance (No.2) Act, 2014 wherein the disallowance under the said statutory provision was scaled down to 30% of the sum applicable. To sum up, it was observed by the Hon'ble Apex Court that the benefit of the amendment made available in Section 40(a)(ia) of the Act vide Finance (No.2) Act 2014 was available on the statute w.e.f.
01.04.2015 and not prior thereto. For the sake of clarity the relevant observations of the Hon'ble Apex Court are culled out as under:
"19. In yet another alternative attempt, learned counsel for the appellant has argued that by way of Finance (No.2) Act, 2014, disallowance under Section 40(a)(ia) has been limited to 30% of the sum payable and the said amendment deserves to be held retrospective in operation. This line of argument has been grafted with reference to the decision in Calcutta Export Company (supra) wherein, another amendment of Section 40(a)(ia) by the Finance Act of 2010 was held by this Court to be retrospective in operation. The submission so made is not only baseless but is bereft of any logic. Neither the amendment made by the Finance (No.2) Act, 2014 could be stretched anterior the date of its substitution so as to reach the assessment year 2005-2006 nor the said decision in Calcutta Export Company has any correlation with the case at hand or with the amendment made by the Finance (No.2) Act of 2014.
19.1. By the amendment brought about in the year 2014, the legislature reduced the extent of disallowance under Section 40(a)(ia) of the Act and limited it to 30% of the sum payable. On the other hand, by the Finance Act of 2010, which was considered in the case of Calcutta Export Company (supra), the proviso to Section 40(a)(ia) of the Act was amended so as to provide relief to a bonafide assessee who could not make deposit of deducted tax within prescribed time. In fact, even before 18 M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024 the year 2010, the said proviso was amended by the Finance Act 2008 and that amendment of the year 2008 was provided retrospective operation by the legislature itself. For ready reference, we may reproduce in juxtaposition the main part of Section 40(a) (ia) of the Act as it would read after the amendments of 2008, 2010 and 2014 respectively, as under13:-
(i) After the amendment by Finance Act, 2008 "40. Amounts not deductible. -
Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession",-
(a) in the case of any assessee-
*** *** *** (ia) any interest, commission or brokerage, rent, royalty 14, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid,-
(A) in a case where the tax was deductible and was so deducted during the last month of the previous year, on or before the due date specified in sub-section (1) of section 139; or (B) in any other case, on or before the last day of the previous year:
Provided that where in respect of any such sum, tax has been deducted in any subsequent year or, has been deducted - (A) during the last month of the previous year but paid after the said due date; or (B) during any other month of the previous year but paid after the end of the said previous year, 13 The Explanation part of the provision is omitted, for being not relevant for the present purpose.
14. The expressions "rent, royalty" were inserted in the year 2006. such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.
*** *** ***"
(ii) After the amendment by Finance Act, 2010 "40. Amounts not deductible. -
Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession",-
(a) in the case of any assessee-
*** *** *** (ia) any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work 19 M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024 (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in sub-section (1) of section 139:
Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid:
*** *** ***"
(iii) After the amendment by Finance (No.2) Act, 2014 "40. Amounts not deductible. - Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession",-
(a) in the case of any assessee-
*** *** *** (ia) thirty per cent. of any sum payable to a resident, on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in sub-section (1) of section 139:
Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, thirty per cent. of such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid15:
Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section (1) of section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso.16 *** *** ***" 19.2. The aforesaid amendment by the Finance (No.2) Act of 2014 was specifically made applicable w.e.f. 01.04.2015 and clearly represents the will of the legislature as to what is to be deducted or what percentage of deduction is not to be allowed for a particular eventuality, from the assessment year 2015-2016.
19.3. On the other hand, in the case of Calcutta Export Company (supra), this Court noticed the aforesaid two amendments to Section 40(a)(ia) of the Act by the Finance Act, 2008 and by the Finance Act, 2010, which were intended to deal with procedural hardship likely to be faced by the bonafide tax payer, who had deducted tax at source but could not make deposit within the prescribed time so as 20 M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024 to claim deduction. In paragraph 17 of judgment in Calcutta Export Company, this Court took note of the case of genuine hardship, particularly of the assessees who had deducted tax at source in the 15 This proviso was substituted in the year 2008 and again in the year 2010; and then, was amended by the Finance (No. 2) Act, 2014.
16. This proviso was inserted by Act No. 23 of 2012 last month of previous year;
and observed in paragraph 18 that the said amendment of the year 2008 was brought about with a view to mitigate such hardship. After reproducing the said amendment of the year 2008 and after noticing its retrospective operation, this Court delved into the position obtaining after 2008, where still remained one class of assessees who could not claim deduction for the TDS amount in the previous year in which the tax was deducted and who could claim benefit of such deduction in the next year only; and, after finding that the amendment of the year 2010 was intended to remedy this position, held that the said amendment, being curative in nature, is required to be given retrospective operation that is, from the date of insertion of Section 40(a)(ia).
19.4. Learned counsel for the appellant has only referred to the concluding part of the decision in Calcutta Export Company but, a look at the entire synthesis by this Court, of the reasons for the amendments of 2008 and 2010, makes it clear as to why this Court held that the amendment of the year 2010 would be retrospective in operation. We may usefully reproduce the relevant discussion and exposition of this Court in Calcutta Export Company as under:- (at pp. 663-666 of ITR):-
"19. The above amendments made by the Finance Act, 2008 thus provided that no disallowance under section 40(a)(ia) of the Income-tax Act shall be made in respect of the expenditure incurred in the month of March if the tax deducted at source on such expenditure has been paid before the due date of filing of the return. It is important to mention here that the amendment was given retrospective operation from the date of April 1,2005, i.e., from the very date of substitution of the provision.
20. Therefore, the assesses were, after the said amendment in 2008, classified in two categories namely: one, those who have deducted that tax during the last month of the previous year and two, those who have deducted the tax in the remaining eleven months of the previous year. It was provided that in the case of assessees falling under the first category, no disallowance under section 40(a)(ia) of the Income-tax Act shall be made if the tax deducted by them during the last month of the previous year has been paid on or before the last day of filing of return in accordance with the provisions of section 139(1) of the Income-tax Act for the said previous year. In case, the assessees are falling under the second category, no disallowance under section 40(a)(ia) of Income-tax Act where the tax was deducted before the last month of the previous year and the same was credited to the Government before the expiry of the previous year. The net effect is that the assessee could not claim deduction for the TDS amount in the previous year in 21 M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024 which the tax was deducted and the benefit of such deductions can be claimed in the next year only.
21. The amendment though has addressed the concerns of the assesses falling in the first category but with regard to the case falling in the second category, it was still resulting into unintended consequences and causing grave and genuine hardships to the assesses who had substantially complied with the relevant TDS provisions by deducting the tax at source and by paying the same to the credit of the Government before the due date of filing of their returns under section 139(1) of the Income-tax Act. The disability to claim deductions on account of such lately credited sum of TDS in assessment of the previous year in which it was deducted, was detrimental to the small traders who may not be in a position to bear the burden of such disallowance in the present assessment year.
22. In order to remedy this position and to remove hardships which were being caused to the assessees belonging to such second category, amendments have been made in the provisions of section 40(a) (ia) by the Finance Act, 2010.
*** *** ***
24. Thus, the Finance Act, 2010 further relaxed the rigors of section 40(a)(ia) of the Income-tax Act to provide that all TDS made during the previous year can be deposited with the Government by the due date of filing the return of income. The idea was to allow additional time to the deductors to deposit the TDS so made. However, the Memorandum Explaining the Provisions of the Finance Bill, 2010 expressly mentioned as follows: "This amendment is proposed to take effect retrospectively from April 1, 2010 and will, accordingly, apply in relation to the assessment year 2010-11 and subsequent years."
25. The controversy surrounding the above amendment was whether the amendment being curative in nature should be applied retrospectively, i.e., from the date of insertion of the provisions of section 40(a)(ia) or to be applicable from the date of enforcement.
*** *** ***
27. A proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section, is required to be read into the section to give the section a reasonable interpretation and requires to be treated as retrospective in operation so that a reasonable interpretation can be given to the section as a whole.
28. The purpose of the amendment made by the Finance Act, 2010 is to solve the anomalies that the insertion of section 40(a)(ia) was causing to the bona fide tax payer. The amendment, even if not given operation retrospectively, may not materially be of consequence to the Revenue when the tax rates are stable and uniform or in cases of big assessees having substantial turnover and equally huge 22 M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024 expenses and necessary cushion to absorb the effect. However, marginal and medium taxpayers, who work at low gross product rate and when expenditure which becomes the subject matter of an order under section 40(a)(ia) is substantial, can suffer severe adverse consequences if the amendment made in 2010 is not given retrospective operation, i.e., from the date of substitution of the provision. Transferring or shifting expenses to a subsequent year, in such cases, will not wipe out the adverse effect and the financial stress. Such could not be the intention of the Legislature. Hence, the amendment made by the Finance Act, 2010 being curative in nature is required to be given retrospective operation, i.e., from the date of insertion of the said provision." 19.5. A bare look at the extraction aforesaid makes it clear that what this Court has held as regards "retrospective operation" is that the amendment of the year 2010, being curative in nature, would be applicable from the date of insertion of the provision in question i.e., sub-clause (ia) of Section 40(a) of the Act. This being the position, it is difficult to find any substance in the argument that the principles adopted by this Court in the case of Calcutta Export Company (supra) dealing with curative amendment, relating more to the procedural aspects concerning deposit of the deducted TDS, be applied to the amendment of the substantive provision by the Finance (No.2) Act, 2014. 19.6. We may in the passing observe that the assessee-appellant was either labouring under the mistaken impression that he was not required to deduct TDS or under the mistaken belief that the methodology of splitting a single payment into parts below Rs. 20,000/- would provide him escape from the rigour of the provisions of the Act providing for disallowance. In either event, the appellant had not been a bonafide assessee who had made the deduction and deposited it subsequently. Obviously, the appellant could not have derived the benefits that were otherwise available by the curative amendments of 2008 and 2010. Having defaulted at every stage, the attempt on the part of assessee-appellant to seek some succor in the amendment of Section 40(a)(ia) of the Act by the Finance (No.2) Act, 2014 could only be rejected as entirely baseless, rather preposterous. 19.7. Hence, Question No.3 is also answered in the negative, i.e., against the assessee-appellant and in favour of the revenue."
On the basis of an analogy that can safely be drawn from the aforesaid judgment of the Hon'ble Apex Court in the case of Shree Choudhary Transport Co. Vs. ITO (supra), I am of the view that the amendment of the "1st proviso" to Section 43CA of the Act as had been made available on the statute vide the Finance Act, 2018 w.e.f. 01.04.2019 would be applicable prospectively w.e.f. A.Y.2019-2020 onwards, and, thus, the same would not be applicable to the case of the present assessee before me. Accordingly, I, finding no infirmity in the view taken by the CIT(Appeals) who had rightly sustained the disallowance made by the A.O, uphold the same.
23M/s. Prithvi Developers Vs. DCIT-1(1), Raipur (C.G.) ITA No. 134/RPR/2024 Thus, the Grounds of appeal No. 3 & 4 raised by the assessee firm are dismissed in terms of the aforesaid observations.
12. Ground of appeal No.5 being general in nature is dismissed as not pressed.
13. In the result, the appeal of the assessee firm is dismissed in terms of the aforesaid observations.
Order pronounced in open court on 24th day of June, 2024.
Sd/-
(रवीश सद ू /RAVISH SOOD) या यक सद य/JUDICIAL MEMBER रायपुर/ RAIPUR ; दनांक / Dated : 24th June, 2024.
SB
आदे श क त ल प अ े षत / Copy of the Order forwarded to :
1. अपीलाथ / The Appellant.
2. यथ / The Respondent.
3. The CIT(Appeals)-1, Raipur (C.G)
4. The Pr. CIT-1, Raipur (C.G)
5. वभागीय त न ध, आयकर अपील य अ धकरण,रायपुर बच,
रायपरु / DR, ITAT, Raipur Bench, Raipur.
6. गाड फ़ाइल / Guard File.
आदे शानुसार / BY ORDER,
// True Copy //
Senior Private Secretary
आयकर अपील य अ धकरण, रायपुर / ITAT, Raipur.