IN INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICIAL MEMBER /I.TA No. 7366/Mum/2014 ( [ [ / Assessment Year:2011-12 ACIT, CC -3(4), / M/s. Sky Build Pvt. Ltd., Central Range-3, 1 s t Floor, Henleen, Vs. Mumbai 32, Main Avenue, . / . /PAN/GIR No. AAACS 9956L ( /Appellant) .. ( / Respondent) / Appellant by: Shri S. Sathya Moorthy /Respondent by: Shri V.C. Shah / Date of Hearing :12.07.2016 /Date of Pronouncement :23.09.2016 / O R D E R PER C.N. PRASAD, JM: This appeal is filed by Revenue against order of Ld. CIT(A)-39, Mumbai dated 01.09.2014 pertaining to assessment year 2011-12. 2. only grievance of Revenue in its appeal is that Ld. CIT(A) erred in deleting addition of Rs. 78,24,992/- in respect of sales of flats/office space made by assessee which was much less than stamp duty valuation. 2 ITA No.736/M/14 3. Brief facts are that assessee is Private Limited company engaged in business of construction filed return of income on 30.9.2011 declaring loss of Rs. 82,26,873/-. assessment was completed u/s. 143(3) on 29.1.2014 determining income at Rs. 56,40,630/-. While completing assessment, Assessing Officer made addition of Rs. 78,24,992/- on ground that sale value reported by assessee in agreement is less than stamp duty value as per Maharashtra State Government ready reckoner therefore, for purpose of computing profit and gains from above sales, value so adopted by State Government authority is deemed to be full value of consideration received by assessee. Thus, difference between ready reckoner value and agreement value was treated as income of assessee ignoring submission of assessee that it is constructing commercial building and started construction in year 2004 and not yet completed as on date. There were hurdles from land owners and others, matter was in Court, some bookings were done in initial year and only allotment letters were given, only part payment was received. There has been abnormal delay due to litigation. Moreover, price agreed was much earlier when initial part payment was received. Registration is now done and hence ready reckoner value adopted is of date when agreement was entered into. Ready reckoner gives value of ready premises and not for under construction premises. More than 3 years have passed after agreement and till today possession has not been given. premises were sold to third party not related to any directors at market value. Hence market value being sale value is required to be accepted as correct. However, Assessing Officer 3 ITA No.736/M/14 without appreciating above submissions added difference as income observing that assessee did not submit intermediate deeds or any other evidence/document supporting such claim. 4. On appeal, Ld. CIT(A) deleted addition observing that provisions of law do not enable Assessing Officer to treat value as declared by Stamp Valuation authority as deemed sales as on date of agreement. Against this order, Revenue is in appeal before us. 5. Ld. Departmental Representative submits that assessee has not furnished any details before Assessing Officer or Ld. CIT(A) in support of its claim that ready reckoner value cannot be adopted as deemed consideration. He vehemently supported order of Assessing Officer in bringing to tax difference between agreement value and ready reckoner value as income of assessee. 6. Ld. Counsel for assessee brought our attention to written submissions filed before Ld. CIT(A) and placed reliance on order of Ld. CIT(A) in deleting addition. He further submits that assessee has received only advances and there was no completed sale, no possession has been given till today, therefore he submits that there is no justification in bringing to tax difference between ready reckoner value and agreement value. 7. We have heard rival submissions and perused orders of authorities below. issue has been considered by Ld. 4 ITA No.736/M/14 CIT(A) with reference to averments in assessment order and elaborate submissions made by assessee before him. Ld. CIT(A) concluded that no addition can be made as per provisions of law as it stood then treating value as declared by Stamp Valuation authority as deemed sales as on date of agreement observing as under: 7.1. discussion on this matter is found in Paragraph 7 of assessment order. In respect of sale of office premises, as detailed in Para 7 of assessment order, A.O. has stated that consideration received or accruing is shown to be less than value adopted by Stamp Valuation Authority/State Government. AO noticed that value as appended in agreements is less than Stamp Duty Value and A.O. computed difference at Rs. 78,24,992/- which has been considered as income for captioned year. appellant objected to said addition stating that prices were agreed much earlier when initial part payment was received and that more than 3 years have passed after agreement but till today possession has not been given. According to appellant, due to bad track record regarding possession, actual price was much less than Ready Reckoner Value. A.O. however rejected said explanation on ground that there has been no deed or document provided to substantiate that bookings were done earlier and agreements were registered much later. A.O. has stated that no intermediate deeds or any other evidence was provided so as to enable A.O. to adopt Ready Reckoner values for that date on which booking was done. Accordingly, A.O. treated value adopted by Stamp Valuation Authority as full value of consideration received and thereby made addition of Rs. 78,24,992/-. 7.2. appellant has been heard in matter. It is submission of appellant that government did not provide for adopting Ready Reckoner value for premises under construction particularly by builders being Stock in Trade until 31.03.2013. In said circumstances, when sale of stock is effected, prescribed value by Maharashtra Government in Ready Reckoner is not material. It is further pointed out that 5 ITA No.736/M/14 A.O. has erred in calculating difference in ready reckoner value by comparing same with agreement value and including difference in total income. appellant has also pointed out that some of agreements considered by A.O. pertained to preceding financial year. It is further pointed out that there is no sale completed by appellant in impugned year and hence, no such inclusion can be made to total income. 7.3 I have very carefully considered matter. A.O. has calculated difference between Ready Reckoner value and agreement value and treated difference as income. In other words, A.O. has treated valuation as made by Stamp Valuation Authority as on date of agreement as deemed sales consideration. I am unable to sustain s aid action of A.O. provisions of law, as it stood then do not enable A.O. to treat value as declared by Stamp Valuation Authority as deemed sales as on date of Agreement. provisions of Sec. 43CA has come into effect only with effect from 01.04.2014. In circumstances, addition is not sustained. Ground III is allowed. 8. On careful reading of Ld. CIT(A) s order and observations therein, we do not find any valid reason to interfere with findings. Thus, we sustain order of Ld. CIT(A) and reject grounds of Revenue. 9. In result, appeal filed by Revenue is dismissed. Order pronounced in open court on 23rd September, 2016. Sd/- Sd/- (RAJENDRA) (C.N. PRASAD ) / ACCOUNTANT MEMBER /JUDICIAL MEMBER Mumbai; Dated 23rd September, 2016 . . ./ Rj , Sr. PS 6 ITA No.736/M/14 /Copy of Order forwarded to : 1. / Appellant 2. / Respondent. 3. ( ) / CIT(A)- 4. / CIT 5. , , / DR, ITAT, Mumbai 6. [ / Guard file. / BY ORDER, //True Copy// / (Dy./Asstt. Registrar) , / ITAT, Mumbai ACIT, CC -3(4), Central Range-3, Mumbai v. M/s. Sky Build Pvt. Ltd