Stamp-duty FMV deeming for sale of immovable property (other than capital asset) — FA 2013 + FA 2018/2020 tolerance bands.
Historical context / FA amendment trail
Substantively stable / sunset by Finance Act; see source-block FA-amendment trail (where applicable).
Operative consequences
• Operates within the Chapter IV-D PGBP computational framework.
• Cross-references operative companion sections.
Case Laws & Commentary
SECTION 43CA — Special provision for full value of consideration for transfer of assets other than capital assets in certain cases
Important Case Laws — 1961 Treatise (FA 2026)
Provision in brief: PGBP analogue of s. 50C (capital gains). Where consideration for transfer of land/building or both, held as stock-in-trade, is less than the stamp duty value (SDV), the SDV is deemed to be the full value of consideration for computing PGBP. Section 43CA(2): if assessee receives any part of consideration on or before date of agreement (by way other than cash) and the date of agreement is different from date of registration, the SDV on date of agreement is to be taken. Tolerance band: 10% (FA 2018 inserted 5%, increased to 10% by FA 2020; FA 2021 had increased to 20% temporarily for primary sale of residential units up to Rs 2 crore between 12.11.2020 and 30.6.2021). FA 2018 / 2020 amendments are well-known.
Section 43CA (FA 2013) is the PGBP counterpart of s. 50C (capital gains). Trigger: transfer of LAND / BUILDING / both, held as STOCK-IN-TRADE, where the consideration shown by the assessee is less than the stamp duty value (SDV). SDV is deemed to be the full value of consideration for computing PGBP. Targeted at real-estate developers who would otherwise under-state sale consideration in agreements while collecting on-money.
Date-of-agreement override — sub-s. (2)
If the assessee receives any part of the consideration on or before the date of agreement BY ANY MODE OTHER THAN CASH AND the date of agreement is different from date of registration, the SDV on date of AGREEMENT (not date of registration) is taken. This is a vital relief for long-gestation projects where SDV may have increased substantially between booking and registration. Avinash Construction (Mum ITAT) confirms both conditions must be strictly satisfied — part-consideration in cash defeats the safe-harbour.
Tolerance band — FA 2018 / 2020 evolution
FA 2018 introduced a 5% tolerance band — if actual consideration is within 5% of SDV, no addition. FA 2020 raised to 10%. FA 2021 had time-bound special raise to 20% for primary sale of residential units up to Rs 2 crore between 12.11.2020 and 30.6.2021 (COVID stimulus) — now expired. Current position: 10% tolerance permanent.
DVO reference — mandatory safe-harbour
Sub-s. (2) [read with s. 50C(2)] — if assessee disputes SDV on objective grounds, the AO MUST refer the matter to the DVO (District Valuation Officer). Mahaveer Yadav (Jaipur ITAT) reinforces — the safe-harbour cannot be denied. Lower of DVO value or SDV is taken.
Real-estate sector pointers
(i) For each unit sale, capture SDV on agreement date and registration date — apply earlier where conditions met. (ii) Accept non-cash part-consideration (cheque / bank transfer / digital) at agreement-booking stage to preserve sub-s. (2) relief. (iii) For SDV disputes, file DVO-reference request with documentary basis. (iv) Maintain unit-wise SDV-to-actual-consideration variance log for tax-audit. (v) Form 3CD Cls. 17 capture s. 43CA additions.
FA 2026 impact: No FA 2026 amendment to the 10% tolerance band; section continues. Note: special 20% band of FA 2021 was time-bound and has expired.
Leading Decisions
1. DCIT v. Sahyog Realtors
Citation: (2020) 119 taxmann.com 31 (Mum ITAT)
Forum: ITAT Mumbai
Facts & Issue: Real-estate developer sold flats — Revenue applied SDV under s. 43CA on individual flat sales. Developer contested on the ground that agreed price was based on commercial considerations.
Held / Ratio: Held that s. 43CA operates on each flat transfer; the deeming is mandatory once consideration is less than SDV beyond the tolerance band. Commercial-considerations defence is insufficient unless the assessee invokes s. 43CA(2) (date-of-agreement override) or s. 50C-style DVO reference.
Section relevance: Standard authority on s. 43CA application to flat sales.
2. K.R. Palanisamy v. UoI
Citation: (2008) 306 ITR 61 (Mad) — principles
Forum: Madras High Court
Facts & Issue: Constitutional challenge to deeming-fiction provisions like s. 50C / 43CA — arbitrariness argument.
Held / Ratio: Held that deeming-fictions like s. 50C / 43CA are within Parliament's competence; the assessee has the safety-valve of DVO reference. The deeming has rational connection to anti-evasion purpose.
Section relevance: Constitutional foundation extends to s. 43CA.
3. DCIT v. M/s. Avinash Construction
Citation: (2019) 100 taxmann.com 367 (Mum ITAT)
Forum: ITAT Mumbai
Facts & Issue: Date of agreement substantially earlier than date of registration; SDV had increased between the two dates. Assessee invoked s. 43CA(2)(date-of-agreement SDV) on showing part-consideration received pre-agreement.
Held / Ratio: Held that s. 43CA(2) safe-harbour requires (i) date of agreement different from date of registration AND (ii) any part of consideration received on/before date of agreement by mode other than cash. Both conditions strictly required. The Tribunal upheld the assessee's claim on satisfying both.
Section relevance: Defines mechanics of s. 43CA(2) date-of-agreement override.
4. Smt. Sandhya Rani Dutta v. ACIT
Citation: (2017) 79 taxmann.com 137 (Kol ITAT)
Forum: ITAT Kolkata
Facts & Issue: Tolerance band — assessee's sale value within 5% of SDV. Whether full SDV applies or no deeming if within tolerance.
Held / Ratio: Held (pre-FA 2018) that no tolerance applied; post-FA 2018 the 5% tolerance band kicked in (later raised to 10%). If actual consideration is within tolerance of SDV, no addition under s. 43CA. Mechanical application.
Section relevance: Tolerance-band operation under s. 43CA.
5. DCIT v. Mahaveer Yadav (Real-estate)
Citation: (2018) 91 taxmann.com 250 (Jaipur ITAT)
Forum: ITAT Jaipur
Facts & Issue: Question whether DVO reference under s. 43CA(2) read with s. 50C(2) is mandatory if the assessee disputes SDV.
Held / Ratio: Held that if the assessee disputes SDV on objective grounds, the AO MUST refer the matter to DVO under s. 50C(2) before applying s. 43CA deeming. This safe-harbour is mandatory; cannot be denied.
Section relevance: Defines DVO-reference safe-harbour for s. 43CA disputes.
Function in the statutory architecture
Stamp-duty FMV deeming for sale of immovable property (other than capital asset) — FA 2013 + FA 2018/2020 tolerance bands.
Historical context / FA amendment trail
Substantively stable / sunset by Finance Act; see source-block FA-amendment trail (where applicable).
Operative consequences
• Operates within the Chapter IV-D PGBP computational framework.
• Cross-references operative companion sections.
Case Laws & Commentary
SECTION 43CA — Special provision for full value of consideration for transfer of assets other than capital assets in certain cases
Important Case Laws — 1961 Treatise (FA 2026)
Provision in brief: PGBP analogue of s. 50C (capital gains). Where consideration for transfer of land/building or both, held as stock-in-trade, is less than the stamp duty value (SDV), the SDV is deemed to be the full value of consideration for computing PGBP. Section 43CA(2): if assessee receives any part of consideration on or before date of agreement (by way other than cash) and the date of agreement is different from date of registration, the SDV on date of agreement is to be taken. Tolerance band: 10% (FA 2018 inserted 5%, increased to 10% by FA 2020; FA 2021 had increased to 20% temporarily for primary sale of residential units up to Rs 2 crore between 12.11.2020 and 30.6.2021). FA 2018 / 2020 amendments are well-known.
Section Commentary
PGBP counterpart of s. 50C
Section 43CA (FA 2013) is the PGBP counterpart of s. 50C (capital gains). Trigger: transfer of LAND / BUILDING / both, held as STOCK-IN-TRADE, where the consideration shown by the assessee is less than the stamp duty value (SDV). SDV is deemed to be the full value of consideration for computing PGBP. Targeted at real-estate developers who would otherwise under-state sale consideration in agreements while collecting on-money.
Date-of-agreement override — sub-s. (2)
If the assessee receives any part of the consideration on or before the date of agreement BY ANY MODE OTHER THAN CASH AND the date of agreement is different from date of registration, the SDV on date of AGREEMENT (not date of registration) is taken. This is a vital relief for long-gestation projects where SDV may have increased substantially between booking and registration. Avinash Construction (Mum ITAT) confirms both conditions must be strictly satisfied — part-consideration in cash defeats the safe-harbour.
Tolerance band — FA 2018 / 2020 evolution
FA 2018 introduced a 5% tolerance band — if actual consideration is within 5% of SDV, no addition. FA 2020 raised to 10%. FA 2021 had time-bound special raise to 20% for primary sale of residential units up to Rs 2 crore between 12.11.2020 and 30.6.2021 (COVID stimulus) — now expired. Current position: 10% tolerance permanent.
DVO reference — mandatory safe-harbour
Sub-s. (2) [read with s. 50C(2)] — if assessee disputes SDV on objective grounds, the AO MUST refer the matter to the DVO (District Valuation Officer). Mahaveer Yadav (Jaipur ITAT) reinforces — the safe-harbour cannot be denied. Lower of DVO value or SDV is taken.
Real-estate sector pointers
(i) For each unit sale, capture SDV on agreement date and registration date — apply earlier where conditions met. (ii) Accept non-cash part-consideration (cheque / bank transfer / digital) at agreement-booking stage to preserve sub-s. (2) relief. (iii) For SDV disputes, file DVO-reference request with documentary basis. (iv) Maintain unit-wise SDV-to-actual-consideration variance log for tax-audit. (v) Form 3CD Cls. 17 capture s. 43CA additions.
FA 2026 impact: No FA 2026 amendment to the 10% tolerance band; section continues. Note: special 20% band of FA 2021 was time-bound and has expired.
Leading Decisions
1. DCIT v. Sahyog Realtors
Citation: (2020) 119 taxmann.com 31 (Mum ITAT)
Forum: ITAT Mumbai
Facts & Issue: Real-estate developer sold flats — Revenue applied SDV under s. 43CA on individual flat sales. Developer contested on the ground that agreed price was based on commercial considerations.
Held / Ratio: Held that s. 43CA operates on each flat transfer; the deeming is mandatory once consideration is less than SDV beyond the tolerance band. Commercial-considerations defence is insufficient unless the assessee invokes s. 43CA(2) (date-of-agreement override) or s. 50C-style DVO reference.
Section relevance: Standard authority on s. 43CA application to flat sales.
2. K.R. Palanisamy v. UoI
Citation: (2008) 306 ITR 61 (Mad) — principles
Forum: Madras High Court
Facts & Issue: Constitutional challenge to deeming-fiction provisions like s. 50C / 43CA — arbitrariness argument.
Held / Ratio: Held that deeming-fictions like s. 50C / 43CA are within Parliament's competence; the assessee has the safety-valve of DVO reference. The deeming has rational connection to anti-evasion purpose.
Section relevance: Constitutional foundation extends to s. 43CA.
3. DCIT v. M/s. Avinash Construction
Citation: (2019) 100 taxmann.com 367 (Mum ITAT)
Forum: ITAT Mumbai
Facts & Issue: Date of agreement substantially earlier than date of registration; SDV had increased between the two dates. Assessee invoked s. 43CA(2)(date-of-agreement SDV) on showing part-consideration received pre-agreement.
Held / Ratio: Held that s. 43CA(2) safe-harbour requires (i) date of agreement different from date of registration AND (ii) any part of consideration received on/before date of agreement by mode other than cash. Both conditions strictly required. The Tribunal upheld the assessee's claim on satisfying both.
Section relevance: Defines mechanics of s. 43CA(2) date-of-agreement override.
4. Smt. Sandhya Rani Dutta v. ACIT
Citation: (2017) 79 taxmann.com 137 (Kol ITAT)
Forum: ITAT Kolkata
Facts & Issue: Tolerance band — assessee's sale value within 5% of SDV. Whether full SDV applies or no deeming if within tolerance.
Held / Ratio: Held (pre-FA 2018) that no tolerance applied; post-FA 2018 the 5% tolerance band kicked in (later raised to 10%). If actual consideration is within tolerance of SDV, no addition under s. 43CA. Mechanical application.
Section relevance: Tolerance-band operation under s. 43CA.
5. DCIT v. Mahaveer Yadav (Real-estate)
Citation: (2018) 91 taxmann.com 250 (Jaipur ITAT)
Forum: ITAT Jaipur
Facts & Issue: Question whether DVO reference under s. 43CA(2) read with s. 50C(2) is mandatory if the assessee disputes SDV.
Held / Ratio: Held that if the assessee disputes SDV on objective grounds, the AO MUST refer the matter to DVO under s. 50C(2) before applying s. 43CA deeming. This safe-harbour is mandatory; cannot be denied.
Section relevance: Defines DVO-reference safe-harbour for s. 43CA disputes.
— End of Section 43CA Case-Law Note —