AO didn’t adequately considered the evidence in the form of allotment letter and the timing of the agreements: ITAT, Mumbai deleted addition U/s 43CA
Income Tax Appellate Tribunal, Mumbai in the case of Arihant Associates (ITA No. 702/Mum/2024) highlights the importance of accurately applying tax provisions related to real estate transactions.
The appeal concerns the assessment year 2017-18, where Arihant Associates, engaged in real estate, faced disallowance under Section 43CA of the Income Tax Act for the sale of flats at values lower than the stamp duty values.
By recognizing the significance of the agreement date in determining the stamp duty value, the ruling provides clarity on how Section 43CA should be interpreted in similar cases.
This case serves as a reminder of the complexities in tax law and the need for thorough documentation in real estate transactions.
Let us have a Short Overview of the Case:
1. The Assessing Officer (AO) identified discrepancies in the sale values of several flats compared to their stamp duty values. Specifically, for Flat No. C-1103, the AO added ₹ 50,15,000 to the income based on the difference between the stamp duty value and the agreement value.
2. The AO questioned the genuineness of the transaction, citing contradictions in the dates of allotment and the agreement.
3. CIT(A) Findings:
The Commissioner of Income Tax (Appeals) upheld the AO’s decision, stating that the stamp duty value should be considered as the deemed sale consideration.
4. Tribunal on Application of Section 43CA:
The Tribunal analyzed Section 43CA, which stipulates that if the sale consideration is less than the stamp duty value, the stamp duty value should be deemed the full value for tax purposes.
The Tribunal emphasized that the date of the agreement should be considered for determining the applicable stamp duty value, not just the registration date.
The ITAT, found that the AO had not adequately considered the evidence provided by the assessee, including the allotment letter and the timing of the agreements.
5. ITAT Final Decision:
The Tribunal ruled that the stamp duty value as of the date of the agreement (April 30, 2011) should be used for calculating the income from the sale of Flat No. C-1103.
It directed the AO to compute the profits and gains accordingly, allowing the appeal for statistical purposes.
The copy of the order is as under:
