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Showing contexts for: 43ca in Welfare Properties Pvt. Ltd., Mumbai vs Dcit 13(3)(1), Mumbai on 29 November, 2019Matching Fragments
P a g e |2 Welfare Properties P. Ltd. Vs. DCIT-13(3)(1)
1.ii. The Ld. CIT (A) did not appreciate that sub-section 1 of section 43CA is in parameteria with sec. 50(C)(1) of the Act except that sec.43CA(1) applies to stock-in-trade while section 50C(1) applies to sale of capital asset and, therefore, the principles laid down in the case of C.B. Gautam (supra) followed by Benches of ITAT throughout the country with regard to provisions of sec.50C of the Act applies with full force to sec.43CA of the Act which is the fact in the instant case.
2. Briefly stated, the assessee company which is engaged in the business of real estate activities, trading and development of properties had e-filed its return of income for A.Y. 2015- 16 on 30.09.2015, declaring its total income at Rs. 66,99,670/-. Return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec.143(2) of the Act.
3. During the course of the assessment proceedings, on a perusal of the „Tax Audit Report‟, it was observed by the A.O that the assessee company during the year under consideration had transferred Flats Nos. 401 & 402, 4th Floor, Vrindavan CHSL, Plot No.54, Church Road, Ville Parle (West), Mumbai, for a sale consideration of Rs.42,40,000/-. On a perusal of the records, it was observed by the A.O that the aforesaid sale consideration was lower than the value of Rs. 74,23,500/- that was adopted by the Sub-registrar, Government of Maharashtra. In the backdrop of the aforesaid facts, the A.O called upon the assessee to explain as to why the provisions of Sec. 43CA of the Act may not be invoked, and the value adopted by the stamp valuation authority for the purpose of payment of stamp duty may not be deemed as the full value of consideration received as a result of such transfer. In reply, it was submitted by the assessee, that the disclosure made by the auditors in "Item No. 17" of "Form No.3CD" was incorrect. It was the claim of the assessee, that „agreements‟ were registered in respect of the additional area purchased by the tenants besides the area to which they were entitled free of cost pursuant to the re-development agreement that was entered into by them with the society. In sum and substance, it was the claim of the assessee that the stamp duty value comprised of the cost of construction of the area which was agreed to be given free of P a g e |3 Welfare Properties P. Ltd. Vs. DCIT-13(3)(1) cost to the tenants, and also the cost of land, building and the construction cost of the additional area that was purchased by the said tenant. On the basis of his aforesaid claim, it was submitted by the assessee that as the sale consideration as per the "agreement" was only in respect of the additional area purchased by the tenants, therefore, what could be considered for the purpose of applying Sec. 43CA was the stamp duty value of such additional area, which as per the assessee worked out at Rs.46,88,350/- and not Rs.74,23,500/- that was wrongly reported in the "Form No. 3CD". As such, it was submitted by the assessee, that as the stamp duty value adopted for the additional area purchased by the tenants worked out at Rs. 46,88,350/-, therefore, considering the actual sale consideration of Rs. 42,40,000/-, the „deemed income‟ under Sec. .43CA worked out at Rs. 4,48,350/- [Rs.46,88,350/- (-) Rs.42,40,000/-]. At the same time, as the aforesaid difference worked out to 9.56% of the stamp duty value which was less than 15%, therefore, it was submitted by the assessee that the same in the backdrop of the judicial pronouncements was to be ignored and no addition was called for in its case. In sum and substance, it was the claim of the assessee that as the difference between the actual sale consideration received and the value adopted by the stamp valuation authority was less than 15%, therefore, no addition under Sec.43CA was called for in its case. Alternatively, it was submitted by the assessee, that if at all the deemed income of Rs.4,48,350/- was to be assessed, the same could be brought to tax only in the year when the revenue was recognised in respect of the aforesaid flats as per the method of accounting regularly followed by the assessee.
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 P a g e |6 Welfare Properties P. Ltd. Vs. DCIT-13(3)(1) 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 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 :
P a g e |7 Welfare Properties P. Ltd. Vs. DCIT-13(3)(1) 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 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.