QUERY: | S. 43CA : Date of Agreement - Transfer of assets other than capital assets (a) Mr. A purchased flat in March 2008 (Consideration Value as agreed being Rs. 95 lakhs). On receipt of token amount by cheque, the Developer issued allotment letter to Mr. A in March 2008 i.e. before the provision of sec. 43CA were introduced. Allotment letter clearly specifies the consideration value which is same as the Agreement value, the milestones on the basis of which installments are due. The same is signed by the Developer as also countersigned by the customer. The consideration value then was greater than the Ready Reckoner Value (being 90 lakhs as on March, 2008). (b) However the Agreement for the same was executed in April 2013 and registered in May, 2013 i.e. after the introduction of section 43CA, which is applicable from A.Y. 2014-15. The agreement value was less than the Ready Reckoner Value (Reckoner value being 125 lakhs as on April/May, 2013) (c) All the payments throughout the transaction of sale of flat, have been received by cheque. Can the allotment letter issued as on March 2008 be considered as the date of agreement fixing the value of consideration, for the purpose of Clause (3) of section 43CA? |
ANSWER: | Yes, sub-section (3) of section 43CA reads as under: “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 (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”. Now, the Income-tax Act, 1961 does not define the word "agreement". However, its cognate, Direct Taxes Code, 2010 defines “agreement” under section 314(8), which reads as under: "agreement" includes any arrangement or understanding or action in concert, whether or not such arrangement, understanding or action, is a) in writing; (b) formal; or (c) intended to be enforceable by legal proceedings”. Thus, from the above definition it is clear that allotment letter issued in 2008 signed by the Developer and countersigned by the customer is an “agreement”, as it is formal and intended to be enforceable by legal proceedings. Therefore, the value mentioned in that letter would be value assessable by any authority of State Government for the payment of stamp duty. |
EXPERT: | CA. H. N. Motiwalla |
SECTION(S): | 43CA |
GENRE: | Taxation (Domestic) |
CATCH WORDS: | Stamp valuation, Transfer of assets |
Opinion Of Eminent Legal Luminaries On Controversial Issues
Which Value To Be Taken For Transfer Of Assets Other Than Capital Assets U/s. 43CA – Date of Agreement – Date Of Registration?
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