Stamp duty valuation on date of booking must be considered that shall have to be compared with actual sale consideration for section 43CA(3)

Assessee’s appeal allowed: MUMBAI ITAT

ShortOver view of the case:

Assessee, engaged in real estate development and re-development of old buildings, had filed its ITR, declaring income.

During assessment proceedings, assessee had furnished details of flats sold along with copies of agreement thereof before AO. On verification of sale agreement, AO compared stamp duty valuation of the flats sold with actual consideration and made addition u/s 43CA, being difference between stamp duty value on date of booking and actual sale consideration. Assessee’s appeal before CIT (A) was pending.

Meanwhile, PCIT, u/s 263, held AO’s order as erroneous and prejudicial to interest of revenue on ground that AO ought not to have taken stamp date value on date of booking of flats but should have taken it on date of actual registration of flats.

 Accordingly, PCIT directed AO to add differential sale consideration u/s 43CA. PCIT held that AO had incorrectly applied provisions of law u/s 43CA though relevant enquiries were made by AO. Aggrieved, assessee filed present appeal.

On Appeal, issue before ITAT & ruling waa as under:

Whether u/s 43CA(3), stamp duty valuation on date of booking must be considered that shall have to be compared with actual sale consideration

 ITAT held it as Yes

provisions of 43CA(3) clearly stated that stamp duty valuation on date of booking must be considered that shall have to be compared with actual sale consideration.

 In instant case, as AO had done this, it could be safely concluded that AO had taken a plausible view in the matter by applying provisions of the Act.

There was no incorrect application of law on AO’s part. Having brought on record time lag between date of booking and date of actual registration of the flats, PCIT ought not to have directed AO to take stamp duty valuation on date of registration of flats that was completely in contradiction of provisions of sec. 43CA(3).

PCIT was only trying to substitute his view in place of view already taken by AO. This could not be done by PCIT by invoking revisionary jurisdiction u/s 263.

A O had not committed any error in the order as he had apparently applied provisions of sec. 43CA(3). Hence, twin conditions required for invoking revisionary jurisdiction, i.e. order of AO should be erroneous and should be prejudicial to interest of revenue were not cumulatively satisfied in instant case.