Harish Hari Gandhi Vs ACIT (ITAT Mumbai)
Section 43CA Relief for Marginal Variations: ITAT Mumbai Applies 10% Tolerance Retrospectively and Orders DVO Reference
The Mumbai Bench “E” of the ITAT partly allowed the appeal of Harish Hari Gandhi (AY 2017-18) and granted substantial relief from additions made under section 43CA on sale of flats by a real-estate developer.
The Assessing Officer had made an addition of ₹18.57 lakh on the ground that the agreement value of three flats (Nos. 705, 502 and B-703) was lower than the stamp-duty value. The CIT(A) confirmed the addition by holding that the tolerance band under section 43CA (10%) was prospective and not applicable to AY 2017-18.
The ITAT reversed this view in part and held that:
- In respect of Flat Nos. 705 and 502, the difference between the stamp-duty value and agreement value was within 10%, and therefore no addition under section 43CA was warranted.
- The Tribunal followed coordinate bench decisions in Gaurav Investment v. DCIT and DCIT v. Amardeep Constructions, holding that the tolerance limit under section 43CA is curative and beneficial in nature, introduced to mitigate genuine hardship, and hence applicable retrospectively even for AY 2017-18.
With respect to Flat No. B-703, where the variation exceeded the tolerance limit, the Tribunal noted that the assessee had specifically requested reference to the DVO, but the AO made the addition without considering this request. Holding this to be contrary to law, the ITAT set aside the addition for this flat and remanded the matter to the AO, with a direction to obtain and consider the DVO’s valuation after granting proper opportunity to the assessee.
Accordingly, the additions relating to Flat Nos. 705 and 502 were deleted, and the issue relating to Flat No. B-703 was restored to the AO for fresh adjudication. The appeal was thus partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
