Bansal Land Developers Vs ITO (ITAT Pune)
ITAT Pune held that provisions of section 43CA of the Income Tax Act doesn’t apply when the market value (Govt. value) is more than the agreed value as on the date of booking and market value has gone up during long gap between the date of booking and the date of sale.
Facts- The assessee is a partnership firm engaged in business as builders and developers and follows the Percentage completion method. During the course of assessment proceedings the Assessing Officer noted that the assessee has hold 50 units / flats held as stock-in-trade, out of which 12 flats were sold for a consideration less than the market value. Therefore, applying the provisions of section 43CA, the Assessing Officer made addition of Rs.38,69,867/- being the difference between the market value and the agreement value. CIT(A) upheld the addition. Being aggrieved, the present appeal is filed.
Conclusion- Held that in all the 12 cases the market value (Govt. value) is more than the agreed value as on the date of booking. Since there is a long gap between the date of booking and the date of sale, therefore, the market price (Govt. value) has gone up. Merely because the Auditor has mentioned in the audit report that the assessee has sold certain flats which is less than the market value (Govt. value), the same cannot be the basis for addition without looking to the clear provisions of the Act. As mentioned earlier, the Assessing Officer himself has reproduced the details filed by the assessee in the body of the assessment order which clearly shows the gap between the date of booking and the date of agreement.
