Sec. 43CA applicable even if agreement for sale was entered prior to date when said section came into force: ITAT

Case details: Spytech Buildcon v. ACIT - [2021] 129 taxmann.com 175 (Jaipur - Trib.)

Judiciary and Counsel Details

• • Sandeep Gosain, Judicial Member and Vikram Singh Yadav, Accountant Member.      
  • Rohan Sogani and Rajeev Sogani, (CA’s) for the Appellant. 
  • Smt. Monisha Choudhary, (JCIT) for the Respondent.

Assessee firm was engaged in the real estate business. It filed a return of income. During assessment proceedings, it was seen that assessee firm sold three flats. These flats were sold for a value less than value as per stamp valuation authority. The date of agreements and registration were not the same. Assessing Officer (AO) proposed to make additions under Section 43CA on the differential amount of consideration. Assessee contended that Section 43CA was not in the statute book when the agreement of sale was entered. Thus, Section 43CA was not applicable as assessee had already entered into the agreement. However, AO did not accept assessee’s contention and made additions under Section 43CA. On appeal, the CIT(A) upheld the order passed by AO.

ITAT held

On further appeal, Jaipur ITAT held that legislature has specifically provided the remedy for a situation where the property is sold by an agreement, and subsequently, a sale deed is executed. Thus, in case of any difference in date of registration and date of the agreement, then the value assessable by the Stamp Duty Authority in respect of such transfer on the date of the agreement shall be taken. Thus, once the provisions have taken care of such a situation, their applicability cannot be questioned based on the mere existence of the prior agreement.

Further, the transfer under section 43CA is recognized only when a registered document is executed. Since the transfer through sale deed is made during the previous year for which the provisions of section 43CA are applicable, merely because an agreement has taken place before 01-04-2013 would not take away the transaction from the ambit of the provisions of section 43CA.

Case Review

• • Spytech Realtors (P.) Ltd. v. Asstt. CIT [IT Appeal No. 254 (JP) of 2019, dated 2-1-2020] (para 8) followed.
  • Indexone Tradecone (P) Ltd. v. Dy. CIT [2018] 97 taxmann.com 174/172 ITD 396 (JP-Trib) (para 8)
  • CIT v. Shimbhu Mehra [2016]65 taxmann.com 142/236 Taxman 561 (All) (para 8)
  • Bajrang Lal Naredi v. ITO [IT Appeal No. 327 (Ran) of 2018, dated 2-1-2020] (para 8)
  • Maria Fernandes Cheryl v. ITO, (International Taxation) [2021] 123 taxmann.com 252/187 ITD 738 (Mum-Trib) (para 8) distinguished.

List of Cases Referred to

• • Indexone Tradecone (P) Ltd. v. Dy. CIT [2018] 97 taxmann.com 174/172 ITD 396 (JP-Trib) (para 6)
  • CIT v. Shimbhu Mehra [2016] 65 taxmann.com 142/236 Taxman 561 (All) (para 6)
  • Bajrang Lal Naredi v. ITO [IT Appeal No. 327 (Ran) of 2018, dated 2-1-2020] (para 6)
  • Maria Fernandes Cheryl v. ITO, (International Taxation) [2021] 123 taxmann.com 252/187 ITD 738 (Mum-Trib) (para 6)
  • Spytech Realtors (P.) Ltd. v. Asstt. CIT [IT Appeal No. 254 (JP) of 2019, dated 2-1-2020] (para 8).