Saggar Parimmal Vs ITO (ITAT Mumbai)
Amendment in Tolerance Limit Pursuant to Section 50C/56(2)(x) is Curative in Nature: ITAT Mumbai
In the case of Saggar Parimal vs. ITO Mumbai & Ketan Kumar Sagar vs. ITO Mumbai, both the assessees being co-owners jointly purchased a residential flat in AY 18-19. Provisions of sec 56(2)(x) were invoked since difference between stamp duty value & declared value of property worked out to 6.56% which exceeded 5% of consideration resulting in an addition by AO. This tolerance limit was introduced by Finance Act, 2018, w.e.f. 01.04.2019 & was subsequently enhanced to 10% by Finance Act 2020, w.e.f. 01.04.2021.
Based on the 2020 amendment, assessee argued that 10% tolerance limit should be considered by relying on rulings of ITAT-Mumbai in ACIT vs. Sunil B Dalal & Shri Ashutosh Sinha vs. ITO that the amendment in question was curative in nature & was applicable retrospectively.
Tribunal noted that the Supreme Court in CIT vs. Alom Enterprises Ltd. had held that once a statutory amendment is being made to remove an undue hardship to the assessee or to remove an apparent incongruity, such an amendment has to be treated as effective from the date on which the law, containing such an undue hardship or incongruity, was introduced. Tribunal further noted that in case of Maria Fernandes Cheryl vs. ITO, ITAT-Mumbai had held that such an amendment applies retrospectively from introduction of section 50C i.e. 01.04.2003. Thus the Tribunal ruled that, 10% tolerance limit is applicable to AY 18-19 as well.
