S M Enclave Pvt. Ltd. Vs ITO (ITAT Kolkata)
Summary: The ITAT Kolkata allowed the appeal of S M Enclave Pvt. Ltd. and deleted the addition of ₹9,94,312/- made under section 50C of the Income Tax Act, 1961. The assessee had declared total income of ₹16,78,118/- for AY 2014-15 and disclosed short-term capital gains of ₹16,45,796/- and long-term capital gains of ₹26,592/- on sale of land. Since the stamp duty values were higher than the sale consideration, the Assessing Officer referred the matter to the DVO at the assessee’s request but completed the assessment without awaiting the valuation report, adopting the stamp duty value and making additions under section 50C. During appellate proceedings, the DVO valued the property at ₹1,26,93,188/-, resulting in a difference of ₹9,94,312/-, or 8.50%, compared with the assessee’s declared value. The Addl/JCIT(A) held that the applicable tolerance limit for the relevant period was 5% and restricted the addition to ₹9,94,312/-. Before the Tribunal, the assessee contended that the 10% tolerance limit introduced by the Finance Act, 2020 should apply retrospectively and relied upon various coordinate Bench decisions, including Maria Fernandes Cheryl, Chandra Prakash Jhunjhunwala, Joseph Mudaliar and other decisions. The Tribunal held that since the difference was only 8.5% and the amendment enhancing the tolerance margin to 10% had been held to be retrospective, the addition could not be sustained. The Tribunal accordingly directed the Assessing Officer to delete the addition and allowed Ground Nos. 1 and 2. Ground No. 3, being general in nature, required no separate adjudication.
