Lodha Developers Limited Vs DCIT (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai, decided the assessee’s appeal and the Revenue’s cross-appeal arising from the order of the Commissioner of Income Tax (Appeals) [CIT(A)] for Assessment Year (AY) 2014-15. The issues related to the applicability of Section 43CA, deduction of interest under Section 36(1)(iii), and allowability of foreign exchange loss.
In the assessee’s appeal, the dispute concerned an addition of Rs. 2,05,97,289 made under Section 43CA of the Income-tax Act. The assessee submitted that two flats in its “World View” project had been booked during Financial Year 2011-12, when booking amounts of Rs. 9,00,000 each were received from the purchasers. Although the agreements were registered subsequently during AY 2014-15, the assessee contended that the booking date and allotment letters constituted the relevant dates of the transaction. Bank statements, agreements, allotment letters and evidence of receipt of booking amounts in FY 2011-12 were produced in support of this claim.
The Revenue argued that since the registration of the flats took place during the relevant assessment year and the stamp duty valuation exceeded the agreement value, the difference of Rs. 2,05,97,289 was taxable under Section 43CA.
The Tribunal examined the records and noted that the booking amounts had been received on 24 August 2011 and that the flats had been allotted and agreements executed during AY 2012-13. Relying on judicial precedents referred to in the order, the Tribunal held that Section 43CA, introduced with effect from 1 April 2014, did not apply to transactions initiated before its introduction. Accordingly, the addition of Rs. 2,05,97,289 under Section 43CA was deleted and the assessee’s appeal on this issue was allowed.
