Applicability of Section 43CA for agreements entered and consideration received

[sujittalukder]

What is the applicability of section 43CA in respect of agreements entered prior to 01.04.2013 for selling flats to buyers and also part consideration received prior to April 2013 and some part is received after April 2013 and the property will now be registered. In cases the builders enters into agreement to sell after receipt of consideration and hands over the possession of the flats upon registration.

Now the query is-

If the registration takes place say in Sep. 2013 in respect of those agreements (entered before April 2013 and part consideration is also received) whether Section 43CA will be applicable to builders or not? –
Keeping in view the provisions of sub-section (4) of Section 43CA which stipulates "the provisions of sub-section (3) shall apply only in a case where the amount of consideration or a part thereof has been received by any mode other than cash on or before the date of agreement for transfer of the asset"

Further, sub-section (3) states that "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."

Will this covers or excludes the agreements entered before April 2013 and registered after April 2013 and consideration is received partly before April 2013 and partly afterwards?
Regards

Sujit Talukder

[camanojgupta]

Section 43CA(3) provides for taking of stamp value as sale value if there is diff bet date of ag and date of registration. This will be done only if amount of consideration or part thereof is recd by any mode other than cash on or before date of ag.
Section 43CA(1) comes ito paly on the event of transfer and in this case transfer will b complete only on delivery of possesion which is in sept 2013 hence section 43CA will apply. Now wht will b stamp value that depends upon section 43CA(3) R/w section 43CA(4)
CA MANOJ GUPTA
JODHPUR
09828510543

[sujittalukder]

Thank you for the reply

As said, Section 43CA will come into play when the transfer is complete in Sep 2013. But since the agreement was made prior to April 2013 - when the section was not in force, how the full value of consideration on the date of agreement, which is prior to April 2013, will be taken?

This is the thrust of my question.

Is Section 43CA will fail to operate in this case?

Any view will be highly appreciated.

regards

Sujit Talukder

[Dharan Gandhi]

In the case under consideration, the issue is regarding applicability of section 43CA. Section 43CA speaks of 'transfer of asset other than capital asset'. This term is not defined in the Act. Further section 2(47) deals with transfer of capital asset. Therefore, reliance can be placed on section 54 and 53A of TOPA. Sec 54 speaks of registration whereas section 53A speaks of possession in case where registration is pending.  In the case under consideration both section 54 and 53A will attract only in or after Sept 13, therefore one can say that even though agreement has been entered into prior to April 2013, however, transfer takes place when either the agreement is registered or possession has been given.

Once this conclusion has been arrived at, section 43CA(1) will come into picture, the Stamp Duty value needs to be taken into consideration for determining the profits. For the purpose of Stamp Duty, one may rely upon 43CA(3) and can take the stamp duty value as on the date of the agreement. However, in my view it will be false to conclude that 43CA(3) can restrict the application of section 43CA(1) in so far as, since the agreement is entered into prior to April 2013.

One more controversy is that, whether 43CA is applicable on transfer of asset or on booking of profits. Since, one following Project Completion Method may enter into agreement and register the same prior to April 2013 in which case transfer gets completed prior to that date. However, it may book profit only later when the project is completed which may take place after April 2013. In the case under consideration, neither the transfer has taken place nor profits on the same has been booked prior to April 2013. So, according to me, section 43CA should get attracted.