Special provisions for full value of consideration for transfer of assets other than capital assets in certain cases [Section 43CA]

Section 43CA inserted by the Finance Act, 2013, with effect from 01.04.2014 (i.e. with effect from Assessment year 2014-15) which provides that where the consideration received or accruing as a result of the transfer by an assessee of an asset (other than a capital asset), being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer (also known as circle rate), then in that case circle rate shall be taken as full value of consideration for the purpose of computing profits and gains from transfer of such asset.

The said section also provides that where the date of agreement fixing the value of consideration for transfer and the date of registration are not the same, the stamp duty value on the date of the agreement shall be taken (if the amount of consideration or a part thereof has been received by any mode other than cash on or before the date of agreement).

Background

Section 50 was inserted by the Finance Act, 2002, with effect from 01.04.2003 under Chapter-IV of the Act, which deals with computation of capital gains arising from the sale of capital asset. This provision was enacted to check the proliferation of black money in property transactions by deeming the value assessed or assessable by the Stamp Valuation Authority as the full value of consideration received/accrued on sale of a capital asset, being land or building or both. The provision applied to land or building or both held as a capital asset by the assessee and not to cases, where such assets held as stock-in-trade. To extend the ambit of deeming fiction to such cases, where such assets are held as stock-in-trade, the Finance Act, 2013, with effect from 01.04.2014 (from assessment year 2014-15) has inserted section 43CA to cover sale of immovable property held as stock-in-trade.

According to section 43CA, if the consideration received by an assessee on transfer of immovable property is less than the stamp duty value, then, the value so adopted or assessed or assessable shall be deemed to be the full value of consideration for the purposes of computing income under the head “Profits & Gains of Business or Profession”.

Text of section 43CA

^[1][ 43CA Special provision for full value of consideration for transfer of assets other than capital assets in certain cases

 (1) Where the consideration received or accruing as a result of the transfer by an assessee of an asset (other than a capital asset), being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration received or accruing as a result of such transfer :

^[2][PROVIDED that where the value adopted or assessed or assessable by the authority for the purpose of payment of stamp duty does not exceed one hundred and ^[3][ten] per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration.]

^[4][PROVIDED FURTHER that in case of transfer of an asset, being a residential unit, the provisions of this proviso shall have the effect as if for the words “one hundred and ten per cent.”, the words “one hundred and twenty per cent.” had been substituted, if the following conditions are satisfied, namely:—

(i)    the transfer of such residential unit takes place during the period beginning from the 12th day of November, 2020 and ending on the 30th day of June, 2021;

(ii)  such transfer is by way of first time allotment of the residential unit to any person; and

(iii) the consideration received or accruing as a result of such transfer does not exceed two crore rupees.]

(2) The provisions of section 50C(2) and (3) shall, so far as may be, apply in relation to determination of the value adopted or assessed or assessable under sub-section 43CA(1).

(3) Where the date of agreement fixing the value of consideration for transfer of the asset and the date of registration of such transfer of asset are not the same, the value referred to in sub-section 43CA(1) may be taken as the value assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer on the date of the agreement.

(4) The provisions of section 43CA(3) shall apply only in a case where the amount of consideration or a part thereof has been received ^[5][by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account] ^[6][or through such other electronic mode as may be prescribed1 on or before the date of agreement for transfer of the asset]

^[7][Explanation. - For the purposes of this section, “residential unit” means an independent housing unit with separate facilities for living, cooking and sanitary requirement, distinctly separated from other residential units within the building, which is directly accessible from an outer door or through an interior door in a shared hallway and not by walking through the living space of another household.]

KEY NOTE:

1. Inserted by Finance Act, 2013, with effect from 01.04.201 4.

2. Inserted by Finance Act, 2018, with effect from 01.04.2019.

3. Substituted for “jive” by Finance Act, 2020, with effect from 01.04.2021.

4. Inserted by the Finance Act, 2021, with effect from 01.04.2021.

5. Substituted for the existing words “by any mode other than cash” by the

Finance Act, 2018, with effect from 01.04.2019.

6. Inserted by the Finance (No. 2) Act, 2019, with effect from 01.04.2020.

7. Inserted by the Finance Act, 2022,  with effect from 01.04.2021.

 

Other electronic modes [Rule GABBA]

^[1][GABBA. The following shall be the other electronic modes for the purposes of clause (d)of first proviso to section 13A, clause (f)of sub-section (8)o f section 35AD, sub-section (3), sub-section (3A), proviso to sub-section (3A) and subsection (4) of section 40A, second proviso to clause (1) of Section 43, sub-section (4) of section 43CA, proviso to sub-section (1) of section 44AD, second proviso to sub-section (1) of section 50C, second proviso to sub-clause (b) of clause (x) of sub-section (2) of section 56, clause (b) of first proviso of clause (i) of Explanation to section 80JJAA, section 269SS, section 269ST and section 269T, namely:—

(a) Credit Card;

(b) Debit Card;

(c) Net Banking;

(d) IMPS (Immediate Payment Service);

(e) UPI (Unified Payment Interface);

(f) RTGS (Real Time Gross Settlement);

(g) NEFT (National Electronic Funds Transfer); and

(h) BHIM (Bharat Interface for Money) Aadhaar Pay;]

KEY NOTE

1. Inserted by the IT (Third Amendment) Rules, 2020, with retrospective effect from 01.09.2019.

 

Sale value of consideration [Proviso to Section 43CA(1)]

 

Assessment year	Deemed to be full value of consideration
Upto Assessment years 2018-19	Where sale value of a land or building or both, is less than stamp duty value, then stamp duty value will be deemed to be full value of consideration.
For Assessment year 2019-20 & 2020-21	Where stamp duty value does not exceed 5%of the consideration, the consideration so received shall be deemed to be the full value of the consideration
From Assessment year 2021-22	Where stamp duty value does not exceed 10% of the consideration, the consideration so received shall be deemed to be the full value of the consideration
	20% from 12.11.2020 to 30.06.2021 for only primary sale of residential units of value up to Rs. 2 crores.

 

Stamp duty value can be up to 120% of the consideration if the transfer of “residential unit” is made between 12.11.2020 and 30.06.2021 [Second proviso to Section 43CA]

The Finance Act, 2021, with effect from 01.04.2021 i.e. from Assessment year 2021-22, has increased the safe harbour threshold in section 43CA of the Act from existing 10% to 20% by inserting a second proviso in section 43CA(1). For the purpose of computing the considerations value of the property, the value of the property being residential unit sold during 12.11.2020 to 30.06.2021 and consideration not exceeding Rs. 2 crores shall be at the full value of consideration provided that the Stamp duty value does not exceed 120% of the value of property. The increased safe harbour of 20% threshold for excess of stamp duty value and consideration applies if the following conditions are satisfied:-

Conditions:

(a) Transfer of Residential Unit takes place during the period from 12.11.2020 to 30.06.2021

(b) Transfer of residential property is by way of first-time allotment of the residential unit to any person.

(c) Consideration received or accruing as a result of such transfer should not exceed Rs. 2 crores

Thus, Extended safe harbour rules of 20% are applicable only for a limited set of transactions which satisfy the following conditions:

(a) Residential units of value upto Rs. 2 crores.

(b) Primary sale by real estate developer to home buyers (i.e., stock-in-trade)

(c) Sale from 12.11.2020 to 30.06.2021

Illustration where extension of safe harbour rules will not apply

The following are some of the illustrative scenarios where the said extension of safe harbour rules will not apply.

(i) Sale of Capital Assets (not stock-in-trade) i.e., sale by one home buyer to another.

(ii) Sale of land or commercial units (i.e., Offices/shops etc.)

(iii) Sale of residential units above Rs. 2 crores

NOTE

Stamp duty will be paid at the circle rate and there is no change in the provisions of the Registration Act, 1908.

 

Proviso has been inserted to section 43CA (1) with effect from assessment year 2019-20 to provide that if the stamp duty value does not exceed 110% of the declared sale consideration, the declared consideration shall be reckoned for the purposes of computing profits and gains. In other words, the stamp duty value will be adopted as consideration only if it exceeds 110% of the declared consideration.

 

PRESS RELEASE

Section 43CA, read with section 56 of the income-tax act, 1961 - Full value of consideration for transfer of assets other than capital assets in certain cases - income tax relief for real-estate developers and home buyers

Press Release, Dated 13.11.2020

As part of the Aatma Nirbhar Bharat Package 3.0 as announced by Hon’ble Finance Minister on 12th November, 2020, certain income tax relief measures were brought in for real-estate developers and home buyers.

Up to 2018, section43CA of the Income-tax Act, 1961 (‘the Act’) provided for deeming of the stamp duty value (circle rate) as sale consideration for transfer of real-estate inventory in the case the circle rate exceeded the declared consideration. Consequentially, stamp duty value was deemed as purchase consideration in case of buyer under section 56(2)(x) of the Act.

In order to provide relief to real estate developers and buyers, the Finance Act, 2018, provided a safe harbour of 5%. Accordingly, these deeming provisions triggered only where the difference between the sale/purchase consideration and the circle rate was more than 5%. In order to provide further relief in this matter, Finance Act, 2020 increased this safe harbour from 5% to 10%. Therefore, currently, the circle rate is deemed to be the sale/purchase consideration for real estate developers and buyers only where the variation between the agreement value and the circle rate is more than 10%.

In order to boost demand in the real-estate sector and to enable the real-estate developers to liquidate their unsold inventory at a rate substantially lower than the circle rate and giving benefit to the home buyers, it has been decided to further increase the safe harbour from 10% to 20% under section43CA of the Act for the period from 12th November, 2020 to 30th June, 2021 in respect of only primary sale of residential units of value up to Rs. 2 crore. Consequential relief by increasing the safe harbour from 10% to 20% shall also be allowed to buyers of these residential units under section 56(2)(x) of the Act for the said period. Therefore, for these transactions, circle rate shall be deemed as sale/purchase consideration only if the variation between the agreement value and the circle rate is more than 20%.

Legislative amendments in this regard shall be proposed in due course.

 

Explanation in section 43CA clarifies that for the purposes of this section, “residential unit” means

§  an independent housing unit

§  with separate facilities for living, cooking and sanitary requirement,

§  distinctly separated from other residential units within the building,

§  which is directly accessible from an outer door or through an interior door in a shared hallway and not by walking through the living space of another household.

 

Tax auditor’s duty if 2nd proviso to section 43CA(1)/4th proviso to section 56(2)(x) applies           

Mere “Yes” answer will not suffice if 2nd proviso to section 43CA(1)/4th proviso to section 56(2)(x) applies. The deemed income, if any, in the hands of builder (if tax audit is of builder) due to SDV exceeding 120% of consideration should be reported against clause 16(d) of Form No. 3CD as ‘any other income not credited to profit and loss account’.

Applicability of Section 43CA

(a) Section 43CA is applicable to assessee who held land or building or both as stock-in-trade

The section is applicable to assessee who held land or building or both as stock in trade and not capital assets (used in business or profession). Immovable properties being land or building can be residential flats, commercial flats, industrial building or plots, agricultural lands whether in rural area or urban area.

AGRICULTURAL LAND - HELD AS STOCK-IN-TRADE

If the agricultural land is held as stock-in-trade, then the sale of such land would result into business income and the provisions of section 43CA would be applicable.

(b) Section 43CA comes into force when the transferred value is less than the stamp duty value

The section 43CA comes into force when the transferred value is less than the stamp duty value of the immovable property and the receipt is taxable under the head “Profits & Gains of Business or Profession”.

(c) Stamp duty value will be substituted

In computing the business profit arising from the transfer of such asset, the value assessed or assessable by the Stamp Valuation Authority (SVA) will be substituted in place of the actual consideration received.

Stamp Duty value to be considered (stamp duty value to be deemed consideration in certain cases) [Section 43CA(l)]

The Finance Act, 2013, with effect from 01.04.2014 has inserted section 43CA to provide that where the consideration received or accruing as a result of the transfer by an assessee of an asset (other than a capital asset), being land or building or both, is less than the stamp duty value, the value so adopted or assessed or assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall be deemed to be the full value of the consideration received or accruing as a result of such transfer for the purposes of computing income under the head “Profits and Gains of Business or Profession” from such transfer.

 

(d) Assessee has the option to refer the valuation of the property

Assessee has the option to claim before the Assessing Officer that the value adopted or assessed or assessable by the Stamp Valuation Officer exceeds the Fair Market Value (FMV) as on date of the transfer and ask him to refer the valuation of the property to the Valuation Officer like as per the provisions of section 50C.

Preference to Valuation Officer (Provisions of Section 50C(2) and (3) made applicable to section 43CA) [Section 43CA(2)]

Section 43CA(2) provides that the provisions of section 50C(2) and (3) shall, so far as may be, apply in relation to determination of the value adopted or assessed or assessable under section 43CA(1).

Thus, Sub-section (2) makes it clear that the provisions of sub-sections (2) and (3) of section 50C shall be applied in relation to the determination of the value adopted or assessed or assessable under sub-section (1).

Where valuation can be referred to the Valuation Officer [Section 50C(2)]

If the following conditions are satisfied, the Assessing Officer may refer the valuation of the relevant asset to a Valuation Officer in accordance with section 55A of the Income-tax Act:—

(i) Where the assessee claims before the Assessing Officer that the value adopted or assessed or assessable by the stamp valuation authority exceeds the fair market value of the property as on the date of transfer; and

(ii) The value so adopted or assessed or assessable by stamp valuation authority has not been disputed, in any appeal or revision or no reference has been made before any authority or Court or High Court is made applicable under section 43CA also.

Consequences where the value is determined by the valuation officer

If the fair market value determined by the Valuation Officer is less than the value adopted (assessed or assessable) for stamp duty purposes, the Assessing Officer may take such fair market value to be the full value of consideration. However, as per section 50C(3), if the fair market value determined by the  Valuation Officer is more than the value adopted or assessed or assessable for stamp duty purposes, the Assessing Officer shall not adopt such fair market value and will take the full value of consideration to be the value adopted or assessed or assessable for stamp duty purposes.

(e) Value as on the date of agreement shall be considered

Where the promoter or developer has entered into an agreement for sale with the buyer of the property, but the sale is accounted for at the time of registration of deed at a subsequent date, the promoter-assessee has the option to take the value assessable by Stamp Valuation Authority (SVA) on the date of agreement provided the consideration or a part of it has been received by him on or before the date of agreement in cheque. In other words, in case the date of agreement fixing consideration and date of registration are different, then for the purposes of determination of value under the section, the value as on the date of agreement shall be considered, provided the consideration or part of consideration is received prior to date of agreement by any mode other than cash.

In other words, in case the date of agreement fixing consideration and date of registration are different, then for the purposes of determination of value under the section, the value as on the date of agreement shall be considered, provided the consideration or part of consideration is received prior to date of agreement by any mode other than cash.

Stamp Duty value on the date of agreement to be deemed consideration [Section 43CA(3)]

Section 43CA(3) has provided that where the date of an agreement fixing the value of consideration for the transfer of the asset and the date of registration of the transfer of an asset are not same, then the stamp duty value may be taken as on the date of agreement of transfer and not as on the date of registration of the transfer.

However, this exception shall apply only in those cases where amount of consideration or a part thereof for the transfer has been received by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account] or through such other electronic mode as may be prescribed] on or before the date of agreement. [Section 43CA(4)]

Taxable in the hands of

Transferor [i.e. As per Section 43CA, the stamp duty value of the property is deemed as sale consideration in the hands of the seller]

PROVISIONS ILLUSTRATED -1

Suppose if value of the property is Rs.1,00,000 and stamp duty value of such property is Rs.1,08,000 (i.e. Within the limit of Rs.1,10,000), then for the purpose of section 43CA, full value of consideration can be taken as Rs.1,00,000. If stamp duty value of such property is Rs.1,12,000, then for the purpose of Full Value of Consideration, stamp duty value of Rs. 1,12,000 has to be taken because it is not within the prescribed limit of 10%.

 

S. No.	Value of Property	Stamp Duty Value	110% of(ii)	Full Value of consideration to be taken
(i) 1	(ii) 1,00,000	(iii) 1,08,000	(iv) 1,10,000	(4 1,00,000
2	1,00,000	1,17,000	1,10,000	1,17,000
3	1,00,000	97,000	1,10,000	1,00,000
4	90,000	97,000	99,000	90,000
5	80,000	92,000	88,000	92,000

PROVISION ILLUSTRATED - 2

S. No.	Particulars	Safe harbour (10%)	Safe harbour (20%)
(i)	Actual Sale Consideration	10,00,000	10,00,000
(ii)	Stamp Duty Valuation (circle rate)	12,00,000	12,00,000
(iii)	Difference Between circle rate and actual sale consideration	2,00,000	2,00,000
(iv)	Acceptable safe harbour	@lo%-1,00,000	@20%-2,00,000
(v)	Full value of consideration under section 43CA	12,00,000	10,00,000

 

Section 43CA not applicable if assessee gave property to developer for limited purpose not resulting in transfer

Assessing Officer reopened completed assessment of assessee for reason that assessee being an owner of land had entered into a joint development agreement (JDA) with a developer. He was of view that this execution of joint development agreement amounted to transfer of capital asset and therefore, assessee was liable to pay long-term capital gains tax which had escaped assessment. Assessee submitted that observation made by Assessing Officer in recorded reason was not correct since said land was stock-in-trade, it could not be treated as capital asset under provisions contained in section 2(14) hence, there was no case of any chargeable long-term capital gains escaping assessment. Assessing Officer after taking into consideration said submissions accepted returned income of assessee as nil. Thereafter, Commissioner invoked his jurisdiction under section 263 and observed that though Assessing Officer had accepted aforesaid contention of assessee, however he had failed to apply provision of section 43CA and such omission on part of Assessing Officer rendered assessment order erroneous and prejudicial to interest of revenue. It was noted from terms and conditions of JDA that owner (assessee) had continued to be owner of property throughout development of property and had at no stretch of time transferred his right similar to ownership to developer. Further, possession of property was given to developer for limited purpose of development only for which assessee was not liable to pay any tax. Terms of JDA clearly showed that there was no transfer, and, therefore, provisions of section 43CA would not have any applicability to case of assessee.  Each and every document which is produced before Registration Authority and which is subject to stamp duty cannot be regarded as a transfer deed or conveyance deed. Therefore, merely, because JDA had been registered with registering authority and stamp duty had been paid at applicable rates for JDA, that does not ipso facto attract provisions of section 43CA especially when neither as per terms of JDA same could be treated as transfer of an asset, nor registering authority/stamp duty authority had treated JDA as transfer/conveyance. In said circumstances, Assessing Officer had rightly passed assessment order, and same was neither erroneous nor prejudicial to interest of revenue. [In favour of assessee] (Related Assessment year : 2014-15) – [Emporis Properties (P.) Ltd. v. PCIT (2023) 147 taxmann.com 280 (ITAT Kolkata)

Deletes Section 43CA addition for Revenue’s failure in referring case to valuation officer

Mumbai ITAT deletes addition made under Section 43CA on the ground that Revenue failed to follow the mandate of Section 43CA(2) read with Section 50C(2) by not referring valuation of property sold to valuation officer; Opines that “AO is duty-bound to follow the mandate of subsection (2) of section 43CA of the act.”, holds that where the Revenue fails to follow mandate of law, there is no alternative but to delete the addition/disallowance made; For Assessment year 2018-19, Assessee-Company sold various properties both commercial and residential in nature and offered Rs. 1.44 Cr as disallowance under Section 43CA for difference in stamp duty value and sale consideration of the properties sold by it; However, Revenue observed that the total variance was Rs. 39.79 Cr., thus, disallowed the balance amount of Rs. 38.35 Cr.; ITAT notes that during the assessment proceedings, Assessee had objected to the addition proposed and had even obtained valuation report from an independent valuer, however, the Revenue did not take cognizance of Assessee’s submission that the stamp duty rates are not the fair market value of the property; Refers to provisions of Section 43CA(2) read with Section 50(2)/(3), whereby if the Assessee claims before the Revenue that the value of the property determined by the stamp valuation authority exceeds the fair market value of the property as on date of transfer, the Revenue is duty-bound to refer valuation of such capital asset to valuation officer and thereafter to look at provisions of section 50(3) to substitute the actual sale consideration with the such valuation; Holds that the Revenue failed to do what the law mandates him to do and conveniently did not look into Assessee’s claim at all, states that there was no justification in rejecting Assessee’s claim by holding that the Assessee failed to substantiate that valuation of stamp duty authority is not challenged/disputed; Holds that “where the law mandates the learned assessing officer to do the things in a particular manner, if he fails to do so as per the provisions of the law, we do not have any other alternative but to delete the addition.”, accordingly deletes the addition made under Section 43CA; With respect to addition under Section 43CA for Assessment year 2017-18, ITAT notes that Assessee sold commercial property for Rs. 4.75 Cr whereas the stamp duty value was Rs. 4.77 Cr, thus the difference was merely 0.43%; Rejects Revenue’s contention that prior to insertion of proviso to Section 43CA, regarding difference between stamp duty value and actual sale consideration received by Assessee on transfer of asset, no tolerance band benefit would be available to the Assessee, relies on Pune ITAT ruling in Sai Bhargavanath Infra v. ACIT (2022) 197 ITD 496 : 144 taxmann.com 168 (ITAT Pune) wherein it was held that tolerance band of 10% would be applicable retrospectively and accordingly, holds that no addition is warranted under Section 43CA; With respect to disallowance under Section 40(a)(i), ITAT notes that Assessee had availed consultancy and architectural services from Singaporean entities and no tax was deducted under Section 195 in respect of fees paid to such entities; Rejects Revenue’s argument that the nature of services are such that it would have required very long presence of the service provider or its people to see the desired result on the ground and training of the manpower of the Assessee would be a prerequisite for subsequent observation and upkeep and thus a dominant possibility of make available element being present in rendering of the services; States that the services rendered by the consultant are highly technical and cannot be replicated by the Assessee on its own, points out that even the Revenue has also expressed merely a possibility of make available condition being satisfied, however, no evidences were led which shows that those consultants have made available the technical skill or expertise to the Assessee which Assessee can apply on its own without the help of those consultant in its business; Remarks that Revenue failed to understand that there is a basic distinction between the services that are rendered and such services that are made available; Observes that the agreement did not put forth any condition of training by these consultants to the staff of the Assessee, thus holds that make available test fails and the services cannot be held to be chargeable to tax as FTS as per India-Singapore DTAA; Relies on coordinate bench ruling in DCIT v. Forum Homes (P) Ltd. in ITA No. 5804/Mum/2018 dated 04.10.2021., wherein adjudicating on identical nature of services, it was held that conditions of article 12(4) was not satisfied; States that wordings of India-Singapore DTAA makes an exclusion in Article 12(4)(c) stating that it "excludes any services that does not enable the person acquiring the services to apply the technology contained therein”, hinting that it is identical to 'make available' condition applicable to Article 12 (4)(b); Also relies on Assessee’s own case in Assessment years 2014-15 to 2016-17 and 2018-19 in appeal against Section 201 order, held that Assessee was not required to deduct tax at source on this payment under Section 195, accordingly holds that no disallowance was warranted under Section 40(a)(i). [In favour of assessee] (Related Assessment Years : 2017-18 & 2018-19) – [Macrotech Developers Ltd. v. DCIT [TS-221-ITAT-2023(Mum)] – Date of Judgement : 17.04.2023 (ITAT Mumbai)]

First proviso to section 43CA inserted by Finance Act, 2020 with effect from 01.04.2021 is applicable retrospectively and thus where difference recorded between sale value of flats sold by assessee and stamp value of such flats was within 10 per cent margin, no addition to be made

Assessee was a builder and developer. During year he sold certain flats. Assessing Officer made addition to assessee's income under section 43CA being difference between sale value of flats sold and stamp duty value of same. Assessee stated before Tribunal that said difference was less than 10 per cent margin and, therefore, not required to be added. It was noted that first proviso to section 43CA inserted by Finance Act, 2020 with effect from 01.04.2021 stated that if there was a difference between consideration received by assessee as a result of transfer of land or building and value adopted by Government Authority for purpose of payment of stamp duty was within 10 per cent margin then there could not be any addition on pretext of deemed income. It was further noted that Supreme Court in case of CIT v. Vatika Township (P) Ltd. (2014) 367 ITR 466 : 227 Taxman 121 : 49 taxmann.com 249 (SC) held that if a fresh benefit was provided by Parliament in an existing provision then such an amendment should be given retrospective effect. Even without going into merits of case by application of first proviso to section 43CA having retrospective effect, appeal of assessee deserved to be allowed. [In favour of assessee] (Related Assessment year : 2015-16) – [Sai Bhargavanath Infra v. ACIT (2022) 197 ITD 496 : 144 taxmann.com 168 (ITAT Pune)]

Prior to incorporation of proviso to section 43CA(1), vide Finance Act, 2018, with effect from 01.04.2019, there was no tolerance limit envisaged in section 43CA, regarding difference between stamp duty value and actual sale consideration received by assessee on transfer of asset (other than a capital asset)

Prior to incorporation of proviso to section 43CA(1), vide Finance Act, 2018, with effect from 01.04.2019, there was no tolerance limit envisaged in section 43CA, regarding difference between stamp duty value and actual sale consideration received by assessee on transfer of asset (other than a capital asset). [In favour of revenue] (Related Assessment year : 2015-16) - [Welfare Properties (P) Ltd. v. DCIT (2020) 180 ITD 591 : 113 taxmann.com 156 (ITAT Mumbai)]

Assessee, engaged in construction of a commercial project, entered into agreement to sell flats/offices (which were under construction) and there was no transfer of any land or building or both in favour of buyers in year under appeal, provisions of section 43CA could not be made applicable to assessee’s case

Povisions of section 43CA are applicable only when there is transfer of land or building or both. Therefore, where assessee, engaged in construction of a commercial project, entered into agreement to sell flats/offices (which were under construction) and there was no transfer of any land or building or both in favour of buyers in year under appeal, provisions of section 43CA could not be made applicable to assessee’s case. [In favour of assessee] (Related Assessment year : 2014-15) - [Shree Laxmi Estate (P) Ltd. v. ITO (2019) 178 ITD 98 : 108 taxmann.com 195 (ITAT Mumbai)]