Spenta Enterprises Vs ACIT (ITAT Mumbai)
Section 43CA Inapplicable to Pre-2013 Allotment Agreements and 5% Value Difference: ITAT Mumbai
The ITAT Mumbai considered the assessee’s appeal against the order of the CIT(A) for Assessment Year 2014-15 concerning additions made under Section 43CA of the Income-tax Act. The assessee, engaged in the business of builders, developers and realtors, challenged the addition on the ground that the shops had been allotted under letters dated 06.09.2009 and 27.12.2012, prior to the introduction of Section 43CA with effect from 01.04.2013. The assessee also contended that the Ready Reckoner rates related to ready possession shops, whereas the shops sold were under construction, and that the difference between the Ready Reckoner value and the sale consideration in respect of the two disputed shops was less than 5%.
During assessment, the Assessing Officer examined the allotment letters, buyers’ ledger accounts, bank statements evidencing receipt of payments, and market value as on the date of the first payment. Accepting the assessee’s explanation for all but two shops, the Assessing Officer adopted the Ready Reckoner value as on the date of the first payment and made an addition of ₹8,26,329 in respect of Shop Nos. 408 and 509.
The CIT(A) upheld the addition, holding that the sale was completed only upon registration during the relevant assessment year and that Section 43CA was therefore applicable.
