Case Law Details
ACIT Vs Mahavir Infracon Pvt. Ltd. (ITAT Raipur)
Admittedly, it is a matter of fact borne from record that the assessee company which is engaged in the business as that of a developer, had in order to promote its sales incurred expenses towards stamp duty and registration fees with respect to the properties sold by him in the course of its business. We find on a perusal of the order of the CIT(Appeals) that the assessee’s claim of having incurred stamp duty and registration charges was duly verified by him and found to be correct. Apart from that, the Ld. AR in the course of the hearing of the appeal had taken us through the complete details of stamp duty and registration expenses aggregating to an amount of Rs.2,24,25,380/- that were incurred by the assessee in the course of its business. In sum and substance, it is a matter of an admitted fact that the stamp duty and registration expenses on the sale of properties were borne by the assessee company.
We have given a thoughtful consideration and are persuaded to subscribe to the view taken by the CIT (Appeals) that the claim for deduction of the stamp duty and registration charges by the assessee company were duly allowable as a deduction in its hand. In our considered view, the aforesaid expenses incurred by the assessee company being in the nature of an expenditure that was incurred wholly and exclusively for the purpose of its business would clearly fall within the realm of Section 37 of the Act. Also, we concur with the view taken by the CIT(Appeals) that the claim of the aforesaid amount as an expenditure by the assessee company which in turn was guided by its business prudence could not have been stretched for concluding that the same would scale down the sale consideration below the value determined by the Stamp Valuation Authority and thus, would be in contravention of the provisions of Section 43CA of the Act. We, say so, for the reason that as observed by the CIT(Appeals), and, rightly so, as the assessee company had sold all the properties/units at the market value determined by the Stamp Valuation Authority, and had received the entire amount of sale consideration as mentioned in the said sale deeds, therefore, there could be no occasion for triggering provisions of Section 43CA of the Act. In so far the observations of the A.O that the obligation to meet out the stamp duty and registration charges was cast upon the purchaser of the property, we are unable to accept the same. We, say so, for the reason that as per Section 29 of the Indian Stamp Act, 1899 it is only in absence of any agreement to the contrary that the expenses in relation to stamp duty payable on transfer of asset is to be borne by the buyer. Now in the case before us, as it is clearly mentioned in the registered sale deed that the stamp duty and registration fees had been borne by the buyer, therefore, no liability for making the said payments could by any means be fastened on the purchaser.
On the basis of our aforesaid observations, we are of a strong conviction that the A.O had grossly erred in law and facts of the case in declining the assessee’s claim for deduction of stamp duty and registration expenses, which being in the nature of an expenditure having been incurred wholly and exclusively for the purpose of its business were clearly allowable as a deduction within the meaning of Section 37(1) of the Act. Apart from that, we concur with the view taken by the CIT(Appeals) that the A.O misconceiving the scope and gamut of the provisions of Section 43CA of the Act had wrongly applied the same to the case of the present assessee before us. We, say so, for the reason that as the assessee had sold the properties/units at the market value determined by the Stamp Valuation Authority and had received the sale consideration as mentioned in the registered sale deed, therefore, the provisions of Section 43CA of the Act by no means could have been invoked in its case. Also, as the A.O had failed to point out a single instance wherein the sale consideration received on the sale of the properties/units by the assessee was lower than the value adopted or assessed or assessable by any authority of the state government for the purpose of payment of stamp duty in respect of transfer of the same, therefore, there was no justification for him to have triggered the provisions of Section 43CA of the Act.
Alternatively, we are also in agreement with the CIT(Appeals) that even otherwise, now when the valuation towards actual sale consideration and the value adopted for stamp duty in the present case varies between 5% to 7%, i.e., within the tolerance limit of upto 10%, therefore, pursuant to the amendment made available on the statute vide Finance Act, 2019 that is applicable w.e.f. A.Y.2014-15, no adverse inferences could have been drawn u/s.43CA of the Act.
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