Gaurav Investments Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that no addition under section 43CA of the Income Tax Act warranted due to difference between stamp duty value and sale consideration is less than tolerance band of 10% as per proviso to section 43CA. Also held that amendment providing tolerance band of 10% is retrospective in nature.
Facts- Post completion of scrutiny assessment, AO reopened the assessment and made an addition of Rs. 4,46,63,000/-under section 43CA of the Income Tax Act. CIT(A) upheld the AO’s finding that the proviso to section 43CA containing the tolerance band for the difference between the stamp duty value and sale consideration is not applicable to the assessee. But the CIT(A) gave relief to the assessee by considering the valuation of both the properties as per the DVO report whereby the addition was reduced to Rs. 77,80,000/-. Being aggrieved, the present appeal is filed.
Conclusion- Held that the proviso containing the tolerance band is inserted in order to minimize hardship in case of genuine transactions in the real estate sector. When the reason behind the introduction of the proviso is read with the ratio laid down by the judicial precedence as discussed here in above on the retrospective applicability of beneficial provision, we have no hesitation in holding that the tolerance band of 10% is applicable in assessee’s case for AY 2017-18. In assessee’s case the difference between the DVO valuation that is considered for making addition under section 43CA and the sale consideration is less than the tolerance band as per the proviso to the said section (refer table extracted in the earlier part of this order). Accordingly we hold that in assessee’s case no addition under section 43CA of the Act is warranted for the year under consideration.
