Section 43CA in paralled with Section 50C for Immovable Property held as Stock-in-Tade
A new section 43CA is inserted which shall be effective from the assessment year 2014-15 and subsequent assessment years. It provides that the apparent sale considerations arising on account of transfer of an asset being land or building or both (not being a capital asset) shall be substituted by the valuation done by stamp valuation authorities. This provision is parallel to Sec. 50C which is applicable only in respect of transfer of capital asset. The provisions contained in Sec. 50C could not have been applied to transfer of land or building or both which are stock in trade. This view has been held in several cases such as:
(1) CIT v. M/S Kan Construction And Colonizers (P) Ltd  20 taxmann.com 381 (Allahabad)
(2) K.R. Palanisamy v. Union of India  180 Taxman 253 (Mad.)
(3) Asst CIT v. Excellent Land Developers (P.) Ltd.  1 ITR (TRIB.) 563 (Delhi)
Since Section 50C uses the word ‘capital asset’, its provisions can be invoked only if the land or buildings sold during the year is a capital asset. Stock in trade has been excluded from the definition of capital asset by sec. 2(14). As a result, the flats/building constructed and sold by builders and developers which are their business activity, and their ‘stock-in-trade’, could not be brought into Sec. 50C. Therefore the valuation done by stamp valuation authorities could not be substituted for apparent sale consideration in case of the transfer of flats/buildings even if such valuation by stamp valuation authorities was more than apparent sale consideration. In order to cover this apparent source of investment of unaccounted money, the new provision has been introduced to bring the transfer of land or building or both (being stock in trade) at par with section 50C and now the valuation done by stamp valuation authorities could be substituted for apparent sale consideration. All the provisions particularly Sec. 50C(2) and Sec. 50C(3) have been made applicable through provisions of Sec. 43CA to transfer of stock in trade as well. The judgments in respect of procedure in applying provisions of Sec. 50C would also be applicable under Section 43CA. However, it has been further provided in Sec. 43CA that where date of agreement and date of registration of transfer of asset are not the same then the valuation done by stamp valuation authorities for the purpose of payment of stamp duty as on the date of agreement may be taken for substitution in place of apparent sale consideration.