AO Can’t Question Valuation Done by Stamp Duty Authority While Invoking Provisions of Section 43CA | ITAT

Case Details: Sharnam Realities (P.) Ltd v. PCIT - [2024] 161 taxmann.com 437 (Ahmedabad-ITAT)

Judiciary and Counsel Details

• • Smt. Annapurna Gupta, Accountant Member & T.R. Senthil Kumar, Judicial Member
  • Tushar Hemani, AR & Parimalsinh B. Parmar, AR for the Applicant.
  • Akhilendra Pratap Yadav, CIT-DR for the Respondent.

Facts of the Case

The assessee, a company engaged in the construction of commercial and residential properties, filed its return of income for the relevant assessment year. The Assessing Officer (AO) processed the return of income under section 143(1) of the Act.

Subsequently, the Principal Commissioner of Income Tax (PCIT) exercised his powers under section 263 and contended that the AO failed to make proper inquiries regarding the sale of properties. Specifically, the AO did not examine the sale of godowns/offices/shops undertaken by the assessee during the year from the perspective of section 43CA.

The matter reached the Ahmedabad Tribunal.

ITAT Held

The Tribunal held that the power of the AO under section 43CA is limited to substituting the actual consideration with the stamp duty value if the latter exceeds the former. The AO cannot question the property valuation adopted by the stamp valuation authority.

In the instant case, the assessee furnished the details of all 27 properties to the PCIT. It was clearly pointed out that the stamp duty value never exceeded the actual sale consideration. Thus, the PCIT could not demonstrate even a single instance of the sale of property inviting invocation of section 43CA.

Therefore, the Tribunal held that the PCIT failed to make out a case of any error in the order of the AO warranting the exercise of revisionary powers under section 263.

List of Cases Reviewed

• • Gestetner Duplicators (P.) Ltd. v. CIT [1979] 1 Taxman 1/117 ITR 1 (SC) (para 23)
  • Nitin P. Shah alias Modi v. Dy. CIT [2005] 146 Taxman 536/276 ITR 411 (Guj.) (para 23);
  • Agricultural Produce Market Committee v. ITO [2011] 15 taxmann.com 170/[2012] 204 Taxman 22 (Mag.)/[2013] 335 ITR 384 (Guj.) (para 23)
  • ITO v. E-Infochips Ltd. [2009] 124 TTJ 176 (Ahd.) (para 23)
  • ITO v. Gujarat Information Technology Fund [2011] 11 taxmann.com 206/45 SOT 529 (Ahd. – Trib.) (URO) (para 23)
  • Pr. CIT v. BA Research India Ltd. [2016] 70 taxmann.com 268/240 Taxman 443 (Guj.) (para 23)
  • CIT v. Quintiles Research (India) (P.) Ltd. [2020] 121 taxmann.com 241/[2021] 276 Taxman 10/[2020] 429 ITR 4 (Kar.) (para 23) followed.

List of Cases Referred to

• • Gestetner Duplicator (P.) Ltd. v. CIT [1979] 1 Taxman 1/117 ITR 1 (SC) (para 15)
  • Nitin P. Shah Alias Modi v. Dy. CIT [2005] 146 Taxman 536/276 ITR 411 (Guj.) (para 15),
  • Agricultural Produce Market Committee v. ITO [2011] 15 taxmann.com 170/[2012] 204 Taxman 22 (Mag.)/[2013] 355 ITR 384 (Guj.) (para 15)
  • ITO v. E-Infochips Ltd. [2009] 124 TTJ 176 (Ahd.) (para 15)
  • ITO v. Gujarat Information Technology Fund [2011] 11 taxmann.com 206/45 SOT 529 (Ahd. – Trib.) (URO) (para 15)
  • Pr. CIT v. BA Rescarch India Ltd. [2016] 70 taxmann.com 268/240 Taxman 443 (Guj.) (para 15)
  • CIT v. Quintiles Research (India) (P.) Ltd. [2020] 121 taxmann.com 241/[2021] 276 Taxman 10/[2020] 429 ITR 4 (Kar.) (para 15).