Agreement Value at Booking Exceeded Stamp Duty Value: ITAT Deletes ₹38.69L Addition on Sale of 12 Flats as Section 43CA Not Applicable [Read Order]

The assessee, Bansal Land Developers, a partnership firm engaged in the business of builders and developers, filed its return of income on 15.10.2016 declaring total income of ₹4,59,330.

The case was selected for scrutiny, and the Assessing Officer(AO) noted that out of 50 flats held as stock-in-trade, 12 flats were sold for a consideration less than the market value. The AO observed, based on the tax audit report, that 12 flats were sold for ₹85,37,500 as against the market value of ₹1,24,07,367, and added the difference of ₹38,69,867 under section 43CA.

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The assessee submitted that the flats were sold at the prevailing market rate as on the date of booking, and the initial amounts were received through banking channels. It furnished the details showing that the booking dates were much before the dates of registration, and that on the dates of booking, the agreement values were higher than the corresponding stamp duty values.

The AO, however, made an addition of ₹38,69,867 under section 43CA.

On appeal, the commissioner of Income Tax (Appeals) (CIT(A)) observed that the assessee failed to provide evidence as required under section 43CA(4) and upheld the order of the AO.

On further appeal, the Tribunal noted that the assessee had filed detailed replies during assessment and that the documents clearly showed the agreement value on the date of booking was higher than the stamp duty value. It held that merely because the auditor had pointed out a difference at the time of registration, the addition could not be sustained when the clear provisions of section 43CA(3) and (4) applied.

The Tribunal also relied on its earlier decision in Kolte Patil Developers Ltd. v. DCIT (2024) and the Jabalpur Bench ruling in ACIT v. Rajul Constructions(2024) and held that where advances were received by cheque at the time of agreement, the agreement value should prevail, even if the market price had increased by the date of registration.

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The Bench comprising R.K. Panda (Vice President) and Astha Chandra (Judicial Member) observed that the agreement value at the time of booking was higher than the stamp duty value and part consideration had been received through banking channels, satisfying the statutory conditions. Accordingly, the Tribunal set aside the order of the CIT(A) and directed the deletion of the ₹38,69,867 addition.

The assessee was represented by Divesh Chawla, while Vishwas Mundhe appeared for the Revenue.

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