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Showing contexts for: 43ca in Dcit, Central Circle - 2(1), Nagpur vs Khare And Tarkunde Infrastructure ... on 21 April, 2026Matching Fragments
2. The sole issue raised by the Revenue in this appeal is, Ld.CIT(A) is not correct in deleting the addition of Rs. 5,56,72,000/- made by the Ld. Assessing Officer (AO) u/s. 43CA of the Act.
3. Facts of the case in brief are that assessee is company, engaged in the business of civil construction and development of infrastructure projects. It filed its e-return of income for A.Y. 2016-17 furnished on 17.10.2016 declaring total income of Rs. 18,32,36,180/-. Case was selected for scrutiny through CASS and statutory notices u/s. 143(2) & 142(1) of the Act were issued and served upon the assessee. In response to the notices issued, assessee made submissions and on perusal of the documents so submitted, Ld. AO noticed that during the assessee sold Transferable Developmental Rights (TDRs) of Rs. 6,51,63,000/-, but the market value was of Rs.12,08,35,000/- Ld. AO further observed that assessee has not computed income on TDRs under the provisions of section 43CA of the (Khare and Tarkunde Infrastructure Pvt. Ltd.) Act. Therefore, show-cause notice dated 25.12.2018 was issued to the assessee. In response thereto, assessee stated that provisions of section 43CA are not applicable in the case of transfer of any intangible assets like TDR, tenancy right or development right in the ordinary course of business of the assessee who is engaged in the business of builders and developers. The explanation submitted by the assessee did not find favour with the Ld. AO, who calculated the sale consideration of TDRs on fair market value and the difference amount of Rs. 5,56,72,000/- (12,08,35,000 - 6,51,63,000) added to the total income of the assessee u/s. 43CA of the Act.
4. Assailing the above order of Ld. AO, assessee preferred appeal before the Ld. CIT(A), who after considering the submissions of the assessee allowed this ground of appeal holding that addition made by the Ld. AO u/s. 43CA is not sustainable as TDRs do not fall within the ambit of the section. The legislative intent behind section 43CA was to curb the undervaluation of tangible immovable property transactions and applying it to TDR sales would be an incorrect (Khare and Tarkunde Infrastructure Pvt. Ltd.) interpretation of the provision as TDR is an intangible immovable property and directed the Ld. AO to delete the addition of Rs. 5,56,72,000/-. Aggrieved, Revenue is in appeal before this Tribunal.
5. Ld. Departmental Representative (DR) strongly relied upon the assessment order and submitted that Ld. AO has rightly invoked the provisions of section 43CA of the Act. It was argued that assessee has transferred valuable rights in immovable property in the form of TDRs at a consideration significantly lower than the stamp duty value/market value. Therefore, the difference was rightly brought to tax to prevent undervaluation of transactions. The Ld. DR contended that TDRs are intrinsically linked to land and building and hence fall within the scope of "land or building or both" as envisaged under section 43CA. Accordingly, the order of the Ld. CIT(A) deleting the addition was erroneous and deserves to be set aside. Ld. DR placed reliance on the following case laws:-
iv) Arif Akhatar Hussain vs. ITO [2011] 45 SOT 257 (Mumbai)
v) ACIT vs. Dattani Development [2016] 72 taxmann.com 330 (Mumbai - Trib.)
6. Per contra, learned counsel for the assessee supported the order of the Ld. CIT(A) and reiterated that section 43CA applies only to transfer of tangible immovable property being land or building or both, and not to intangible rights such as TDRs. It was submitted that TDR is a development right and not land or building per se. He further submitted that the legislature has consciously used specific terminology in section 43CA, and the same cannot be extended to cover intangible rights by interpretation. It was also argued that various judicial precedents have consistently held that TDRs are distinct from land/building and fall outside the ambit of section 43CA. Therefore, the Ld. CIT(A) has correctly deleted (Khare and Tarkunde Infrastructure Pvt. Ltd.) the addition. He placed reliance, to support his contentions, on the following judgments:-