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2. Succinctly stated, the assessee company which is engaged in real estate business had e-filed its return of income for A.Y.2017-18 on 24.03.2018, declaring an income of Rs.55,41,240/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act.

3. During the course of the assessment proceedings, it was observed by the A.O that the assessee company had debited in its profit & loss account an amount of Rs.2,24,25,380/- under the head "sale registration charges". On being queried about the nature of the aforesaid expenses, it was stated by the assessee that the same were the expenses which were incurred towards stamp duty and registration fees in some instances of sale in order to promote its sales. However, the A.O did not find favour with the explanation of the assessee as regards the allowability of ACIT, Central Circle-1 Vs. M/s. Mahavir Infracon Pvt. Ltd. its aforesaid claim for deduction of registration charges. The A.O was of the view that as it was an obligation of the purchaser to pay stamp duty and registration fees in order to strengthen his title as regards the property purchased, therefore, the claim for deduction of the same as an expenditure by the assessee was totally unjustifiable as there was no obligation cast upon it to have incurred the same. Alternatively, it was observed by the A.O that even if the assessee as a seller pursuant to a mutual agreement with the purchaser had in order to promote its sales incurred the stamp duty and registration charges, then the same would bring the sale value of the property below the value adopted by the Stamp Valuation Authority. Considering the aforesaid facts, the A.O was of the view that as the assessee had carried out the sales exactly at the same value as was adopted by the Stamp Valuation Authority for the purpose of payment of stamp duty, therefore, offering of discounts by him, i.e., incurring of stamp duty and registration fees would bring the sale consideration below the value determined by the Stamp Valuation authority and would trigger the provisions of Section 43CA of the Act. Accordingly, the A.O on the basis of his aforesaid deliberations, made an addition of Rs.2,24,25,380/- towards sale consideration of the property sold by the assessee as a trader by invoking the provisions of Section 43CA of the Act.

4. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals). The CIT(Appeals) after making necessary verifications observed that the assessee appellant had incurred stamp duty charges, which fact was not only ACIT, Central Circle-1 Vs. M/s. Mahavir Infracon Pvt. Ltd. discernible from the e-stamps purchased but was also found mentioned in the registered sale deeds. Referring to the triggering of the provisions of Section 43CA of the Act by the A.O, the CIT(Appeals) was of the view that as the assessee had sold all the properties and units at the market value determined by the stamp valuation authority, and, in lieu thereof, had received full sale consideration as mentioned in the registered sale deeds, therefore, the provisions of Section 43CA of the Act were not applicable in its case. Rebutting the observations of the A.O that the stamp duty and registration fees were compulsorily to be paid by the purchaser, it was observed by the CIT(Appeals) that as per Section 29 of the Indian Stamp Act, 1899, it was only in the absence of any agreement to the contrary that the expenses in relation to stamp duty payable on transfer of asset was to be borne by the buyer. It was, thus, observed by the CIT(Appeals) that now when the registered sale deeds clearly made a mention that the liability for payment of stamp duty and registration fees was to be borne by the seller i.e. the assessee, therefore, no liability for making payments towards the said expenses could be fastened on the purchaser. Alternatively, it was observed by the CIT(Appeals) that even otherwise as per the amendment made available on the statute vide the Finance Act, 2019 which was applicable w.e.f. A.Y.2014-15, a variation upto 10% between actual consideration and the value adopted for stamp duty purpose was to be ignored within the meaning of Section 43CA of the Act. Therefore, considering the fact that the were difference in the present case varied ACIT, Central Circle-1 Vs. M/s. Mahavir Infracon Pvt. Ltd. between 5% to 7%, the CIT(Appeals) was of the view that no addition on the said count could have been made in the hands of the assessee. On the basis of his aforesaid observations the CIT(Appeals) vacated the addition of Rs.2,24,25,380/- made by the A.O.

4.1.2 It is interesting to mention here that the AO has also invoked provisions of section 43CA of the Act. For ready reference the relevant provision al. the Act is reproduced as under:-

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 any 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: 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 ACIT, Central Circle-1 Vs. M/s. Mahavir Infracon Pvt. Ltd.

9. On the basis of our aforesaid observations, we are of a strong conviction that the A.O had grossly erred in law and facts of the case in declining the assessee's claim for deduction of stamp duty and registration expenses, which being in the nature of an expenditure having been incurred wholly and exclusively ACIT, Central Circle-1 Vs. M/s. Mahavir Infracon Pvt. Ltd. for the purpose of its business were clearly allowable as a deduction within the meaning of Section 37(1) of the Act. Apart from that, we concur with the view taken by the CIT(Appeals) that the A.O misconceiving the scope and gamut of the provisions of Section 43CA of the Act had wrongly applied the same to the case of the present assessee before us. We, say so, for the reason that as the assessee had sold the properties/units at the market value determined by the Stamp Valuation Authority and had received the sale consideration as mentioned in the registered sale deed, therefore, the provisions of Section 43CA of the Act by no means could have been invoked in its case. Also, as the A.O had failed to point out a single instance wherein the sale consideration received on the sale of the properties/units by the assessee was lower than the value adopted or assessed or assessable by any authority of the state government for the purpose of payment of stamp duty in respect of transfer of the same, therefore, there was no justification for him to have triggered the provisions of Section 43CA of the Act.