Doshi Estates, CHENNAI V. ACIT, CHENNAI

ITA 966/CHNY/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5722 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-02-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 20-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S BHARATH
• Assessee Lawyers: G BASKAR
• Keywords: Set aside
• Section: 195; 263; 12

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , ! ' , $ '% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.3463/CHNY/2016 ( )( / ASSESSMENT YEAR : 2013-14 & ./ ITA NO.966/CHNY/2017 ( )( / ASSESSMENT YEAR : 2012-13 M/S DOSHI ESTATES, 3H, CENTURY PLAZA, 560, ANNA SALAI, TEYNAMPET, CHENNAI - 600 018. PAN : AAGFD 4592 A V. THE ASSISTANT COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE 3, CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI G. BASKAR, ADVOCATE -.+, / 0 / RESPONDENT BY : SHRI S. BHARATH, CIT 1 / 2$ / DATE OF HEARING : 01.08.2019 34) / 2$ / DATE OF PRONOUNCEMENT : 01.10.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : BOTH THE APPEALS ARE FILED BY THE ASSESSEE. WHEN THE APPEAL IN I.T.A. NO.3463/CHNY/2016 IS DIRECTED AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 4, CHENN AI, DATED 24.10.2016, THE APPEAL IN I.T.A. NO.966/CHNY/2017 I S DIRECTED 2 I.T.A. NO.3463/CHNY/16 I.T.A. NO.966/CHNY/17 AGAINST THE ORDER PASSED UNDER SECTION 263 OF THE I NCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') BY THE PRINCIPAL COMMISSI ONER OF INCOME TAX-5, CHENNAI, DATED 21.03.2017. WE HEARD BOTH TH E APPEALS TOGETHER AND DISPOSING THE SAME BY THIS COMMON ORDE R. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DISAL LOWANCE OF DEDUCTION CLAIMED UNDER SECTION 80-IB(10) OF THE AC T. 3. SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE IS A PARTNERSHIP FIRM CONSISTING FIVE PARTNERS. ACCORDING TO THE LD. COUNSEL, ONE SHRI V. CHANDRASE KARAN AND SMT. SARASWATHI CHANDRASEKARAN ARE THE JOINT OWNERS OF T HE LAND AT OLD STATE BANK COLONY, III STREET, TAMBARAM. SHRI V. C HANDRASEKARAN AND SMT. SARASWATHI CHANDRASEKARAN ENTERED INTO AN AGREEMENT WITH THE ASSESSEE-PARTNERSHIP FIRM AND ALSO EXECUTE D POWER OF ATTORNEY IN FAVOUR OF SHRI MEHUL H. DOSHI. IN FACT , ACCORDING TO THE LD. COUNSEL, THE UNDIVIDED SHARE OF LAND WAS SOLD B Y SHRI MEHUL H. DOSHI ON BEHALF OF SHRI V. CHANDRASEKARAN AND SMT. SARASWATHI CHANDRASEKARAN. THE SALE PROCEEDS OF THE LAND WAS CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE-PARTNERSHIP FIRM. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE DEVELOPED THE LAND AS PER THE JOINT DEVELOPMENT AGREEMENT WITH SHRI V. CHANDRASEKARAN A ND SMT. 3 I.T.A. NO.3463/CHNY/16 I.T.A. NO.966/CHNY/17 SARASWATHI CHANDRASEKARAN AND CLAIMED EXEMPTION UND ER SECTION 80-IB OF THE ACT. HOWEVER, THE ASSESSING OFFICER R EJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE PROFIT ON SA LE OF THE LAND WAS SUPPRESSED. ACCORDING TO THE LD. COUNSEL, THE MARK ET VALUE OF THE LAND WAS PAID BY THE ASSESSEE-FIRM TO THE LAND OWNE RS, THEREFORE, IT MAY NOT BE CORRECT TO SAY THAT THE TAXABLE INCOME W AS SUPPRESSED BY MAKING A CLAIM FOR DEDUCTION UNDER SECTION 80-IB OF THE ACT. MERELY BECAUSE TWO SONS OF SHRI V. CHANDRASEKARAN A ND SMT. SARASWATHI CHANDRASEKARAN WERE PARTNERS IN THE PART NERSHIP FIRM, ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER DOUBTED THE ENTIRE TRANSACTION. ACCORDING TO THE LD. COUNSEL, THE PARTNERSHIP FIRM WAS AN INDEPENDENT AND SEPARATE ASSESSABLE UNI T. UNDER THE INCOME-TAX ACT, THE ASSESSEES CHILDREN ARE ALSO IN DEPENDENT. MERELY BECAUSE THE CHILDREN OF SHRI V. CHANDRASEKAR AN AND SMT. SARASWATHI CHANDRASEKARAN ARE PARTNERS IN THE ASSES SEE- PARTNERSHIP FIRM, ACCORDING TO THE LD. COUNSEL, IT CANNOT BE CONSTRUED THAT THE TRANSACTION OF THE ASSESSEE WITH SHRI V. CHANDRASEKARAN AND SMT. SARASWATHI CHANDRASEKARAN A RE DUBIOUS METHOD TO AVOID PAYMENT OF TAX. WHEN THE LAND OWNE RS TRANSFERRED THE LAND TO THE PARTNERSHIP FIRM FOR CONSTRUCTION O F MULTISTORIED BUILDING ON PAYMENT OF MARKET RATE OF LAND, THE ASS ESSING OFFICER IS 4 I.T.A. NO.3463/CHNY/16 I.T.A. NO.966/CHNY/17 NOT JUSTIFIED IN DISALLOWING THE CLAIM OF THE ASSES SEE. ACCORDING TO THE LD. COUNSEL, THE ENTIRE SALE CONSIDERATION RECE IVED FROM THE PROSPECTIVE PURCHASERS FOR SALE OF UNDIVIDED SHARE OF LAND WAS PASSED ON TO THE LAND OWNERS, NAMELY, SHRI V. CHAND RASEKARAN AND SMT. SARASWATHI CHANDRASEKARAN AND NOT EVEN A SINGL E PENNY WAS RETAINED BY THE PARTNERSHIP FIRM. ACCORDING TO THE LD. COUNSEL, THE OBSERVATION OF THE ASSESSING OFFICER THAT SHRI V. C HANDRASEKARAN AND SMT. SARASWATHI CHANDRASEKARAN GOT MORE MONEY T HAN THE MARKET VALUE OF THE LAND SINCE THEIR CHILDREN ARE H AVING 35% OF SHARES IN THE PARTNERSHIP FIRM IS NOT CORRECT. ACC ORDING TO THE LD. COUNSEL, THE CHILDREN OF SHRI V. CHANDRASEKARAN AND SMT. SARASWATHI CHANDRASEKARAN MIGHT HAVE RECEIVED PROFI T IN PROPORTION TO THEIR SHARES AS PER PARTNERSHIP DEED, THAT DOES NOT MEAN THAT THE LAND OWNERS SHIFTED THE PROFIT ON SALE OF LAND TO T HE PARTNERSHIP FIRM SO AS TO TRANSFER THE PROFIT TO THE CHILDREN OF SHR I V. CHANDRASEKARAN AND SMT. SARASWATHI CHANDRASEKARAN. 4. SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE LAND OWNERS SHARE OF SALE PROCE EDS IS A COMPOSITE ONE, CONSISTING OF CONSIDERATION FOR SALE OF UNDIVIDED SHARE OF LAND AS WELL AS THE BUILT-UP AREA. THE CO NSIDERATION 5 I.T.A. NO.3463/CHNY/16 I.T.A. NO.966/CHNY/17 COLLECTED BY THE ASSESSEE-FIRM TOWARDS THE COST OF THE LAND WAS PASSED ON TO THE LAND OWNERS, NAMELY, SHRI V. CHAND RASEKARAN AND SMT. SARASWATHI CHANDRASEKARAN. THEREFORE, ACCORDI NG TO THE LD. COUNSEL, NO PART OF SALE PROCEEDS OF UNDIVIDED SHAR E OF LAND WAS INCLUDED IN THE COMPUTATION OF ELIGIBLE PROFIT UNDE R SECTION 80-IB OF THE ACT. ACCORDING TO THE LD. COUNSEL, THE LAND FO RMS INTEGRAL PART OF THE HOUSING PROJECT. THE GAIN ON SALE OF LAND IS A LSO ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IB OF THE ACT. 5. SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE, FURTHER SUBMITTED THAT THE PARTNERSHIP FIRM WAS CONSTITUTED ON 01.10.2008. THE BUSINESS OF THE PARTNERSHIP FIRM IS TO DEVELOP THE LAND BY CONSTRUCTING MULTI-STORIED RESIDENTIAL FLATS. ACCO RDING TO THE LD. COUNSEL, 21 MONTHS BEFORE THE FORMATION OF PARTNERS HIP FIRM, SHRI V. CHANDRASEKARAN AND SMT. SARASWATHI CHANDRASEKARAN H AD EXECUTED AGREEMENT FOR SALE AND ALSO EXECUTED IRREV OCABLE POWER OF ATTORNEY FOR SALE OF LAND TO THE PROSPECTIVE BUY ERS. THEREFORE, ACCORDING TO THE LD. COUNSEL, IT IS NOT CORRECT TO SAY THAT SHRI V. CHANDRASEKARAN AND SMT. SARASWATHI CHANDRASEKARAN C OLLUDED WITH THE ASSESSEE-FIRM. REFERRING TO THE ORDER OF THE CIT(APPEALS), MORE PARTICULARLY PAGE 8, THE LD.COUNSEL SUBMITTED THAT THE 6 I.T.A. NO.3463/CHNY/16 I.T.A. NO.966/CHNY/17 ASSESSING OFFICER MISUNDERSTOOD THE BUSINESS TRANSA CTION OF THE ASSESSEE WITH SHRI V. CHANDRASEKARAN AND SMT. SARAS WATHI CHANDRASEKARAN. THE CHILDREN OF SHRI V. CHANDRASEK ARAN AND SMT. SARASWATHI CHANDRASEKARAN, NAMELY, SHRI PREM CHANDR ASEKARAN AND SHRI AKIL CHANDRASEKARAN CONTRIBUTED TO THE CAP ITAL OF THE ASSESSEE-PARTNERSHIP FIRM TO THE EXTENT OF 35% OF T HE TOTAL INVESTMENT. THE ASSESSING OFFICER WAS UNDER THE IM PRESSION THAT SHRI PREM CHANDRASEKARAN AND SHRI AKIL CHANDRASEKAR AN WERE ADMITTED TO THE PARTNERSHIP FIRM WITHOUT ANY CAPITA L CONTRIBUTION. ACCORDING TO THE LD. COUNSEL, THE CHILDREN OF SHRI V. CHANDRASEKARAN AND SMT. SARASWATHI CHANDRASEKARAN A RE NOT ONLY ELIGIBLE FOR PROFIT IN THE PARTNERSHIP FIRM, THEY A RE ALSO EQUALLY LIABLE FOR THE LOSSES SUFFERED BY THE PARTNERSHIP FIRM. 6. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTE D THAT THE ENTIRE FUNDS FOR THE PROJECT WERE RAISED ON THE SEC URITY OF THE LAND AGREED TO BE PURCHASED FROM SHRI V. CHANDRASEKARAN AND SMT. SARASWATHI CHANDRASEKARAN. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE OBSERVATION OF THE ASSESSING OFFICER T HAT SHRI PREM CHANDRASEKARAN AND SHRI AKIL CHANDRASEKARAN, THE CH ILDREN OF SHRI V. CHANDRASEKARAN AND SMT. SARASWATHI CHANDRASEKARA N EARNED 7 I.T.A. NO.3463/CHNY/16 I.T.A. NO.966/CHNY/17 THEIR RESPECTIVE PROFIT IN THE PARTNERSHIP FIRM WIT HOUT ANY RISK ELEMENT IS NOT CORRECT. THE VERY FACT THAT THE CHI LDREN OF SHRI V. CHANDRASEKARAN AND SMT. SARASWATHI CHANDRASEKARAN A LSO LIABLE FOR THE LOSSES OF THE PARTNERSHIP FIRM SHOWS THAT T HEY ARE TAKING RISK IN THE BUSINESS. REFERRING TO PROFIT MARGIN OF THE PARTNERSHIP FIRM, THE LD.COUNSEL SUBMITTED THAT PROFIT MARGIN IN ANY BUSINESS, NOT ONLY IN CIVIL CONSTRUCTION, WOULD DEPEND UPON VARIOUS FA CTORS. IN THIS CASE, ACCORDING TO THE LD. COUNSEL, THE TIME GAP BE TWEEN THE JOINT DEVELOPMENT AGREEMENT AND THE SALE OF FLATS WAS VER Y LONG. MOREOVER, THE LAND WAS SITUATED IN A STRATEGIC LOCA TION. ACCORDING TO THE LD. COUNSEL, THE PROJECT WAS COMMENCED WHEN THE REAL ESTATE BUSINESS WAS IN BOOM. THEREFORE, THE PROFIT MARGIN DECLARED BY THE PARTNERSHIP FIRM IS NOT AN UNUSUAL ONE. 7. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTE D THAT UNLESS THERE IS A MATERIAL TO SUGGEST THAT THE PROF IT MARGIN OR THE MARKET VALUE OF THE LAND WAS SUPPRESSED OR SHIFTED WITH A MOTIVE TO REDUCE THE PROFIT AND TO AVOID PAYMENT OF TAX, THE ASSESSING OFFICER CANNOT DOUBT THE TRANSACTION AT ALL. IN THIS CASE, ACCORDING TO THE LD. COUNSEL, WITHOUT ANY BASIC MATERIAL, THE ASSESS ING OFFICER HAS SIMPLY PRESUMED THAT THE PROFIT WAS SHIFTED AND THE TAX LIABILITY WAS 8 I.T.A. NO.3463/CHNY/16 I.T.A. NO.966/CHNY/17 REDUCED. FOR COMING TO A CONCLUSION, THE ASSESSING OFFICER SIMPLY PRESUMED THAT CHILDREN OF SHRI V. CHANDRASEKARAN AN D SMT. SARASWATHI CHANDRASEKARAN WERE INDUCTED IN THE PART NERSHIP FIRM. ACCORDING TO THE LD. COUNSEL, MERELY BECAUSE THE CH ILDREN OF SHRI V. CHANDRASEKARAN AND SMT. SARASWATHI CHANDRASEKARAN A RE PARTNERS IN THE PARTNERSHIP FIRM, THERE CANNOT BE A NY PRESUMPTION THAT TAXABLE INCOME WAS SHIFTED OR REDUCED. OTHER THAN IMAGINATION, ACCORDING TO THE LD. COUNSEL, BOTH THE AUTHORITIES BELOW HAD NO MATERIAL TO DOUBT THE TRANSACTION. THEREFOR E, ACCORDING TO THE LD. COUNSEL, THERE IS NO REASON TO DISALLOW THE CLAIM OF DEDUCTION UNDER SECTION 80-IB OF THE ACT. 8. ON THE CONTRARY, SHRI S. BHARATH, THE LD. DEPART MENTAL REPRESENTATIVE, SUBMITTED THAT SHRI V. CHANDRASEKAR AN AND SMT. SARASWATHI CHANDRASEKARAN ENTERED INTO A JOINT DEVE LOPMENT AGREEMENT ON 05.01.2007, COPY OF WHICH IS AVAILABLE AT PAGE 49 OF THE PAPER-BOOK, IN RESPECT OF 2.61 ACRES OF LAND LO CATED AT OLD STATE BANK COLONY, III STREET, TAMBARAM. ACCORDING TO TH E LD. D.R., THE ASSESSEE-PARTNERSHIP FIRM CONSTRUCTED A HOUSING PRO JECT KNOWN AS NAKSHATRA COMPRISING 195 DWELLING UNITS. SHRI V. CHANDRASEKARAN AND SMT. SARASWATHI CHANDRASEKARAN HAD ALSO EXECUTE D A POWER 9 I.T.A. NO.3463/CHNY/16 I.T.A. NO.966/CHNY/17 OF ATTORNEY FAVOURING SHRI MEHUL H. DOSHI FOR SALE OF UNDIVIDED SHARE OF LAND. ACCORDING TO THE LD. D.R., THE ASSE SSING OFFICER CAME TO A CONCLUSION THAT FOR SALE OF LAND TO THE P ROSPECTIVE PURCHASERS OF THE FLATS, THE RATE WHICH WAS BELOW T HE MARKET RATE WAS FIXED AND PAID TO SMT. SARASWATHI CHANDRASEKARA N. THEREFORE, THE ASSESSING OFFICER CAME TO A CONCLUSION THAT SHR I V. CHANDRASEKARAN AND SMT. SARASWATHI CHANDRASEKARAN D EVISED A METHOD TO REDUCE THE TAXABLE INCOME AND TO CLAIM SA LE PROCEEDS AS EXEMPT FROM TAXATION BY INTRODUCING THEIR OWN CHILD REN, NAMELY, SHRI PREM CHANDRASEKARAN AND SHRI AKIL CHANDRASEKARAN AS PARTNERS IN THE ASSESSEE-PARTNERSHIP FIRM WITH 35% OF STAKE. A CCORDING TO THE LD. D.R., SHRI PREM CHANDRASEKARAN AND SHRI AKIL CH ANDRASEKARAN ARE SHARING ONLY THE PROFIT. THE ASSESSING OFFICER HAS ALSO FOUND THAT IN THE BUSINESS OF JOINT DEVELOPMENT, THE SHAR ING RATIO OF THE CONSTRUCTED AREA NORMALLY BETWEEN THE BUILDER AND O WNER OF THE LAND WOULD BE IN THE RATIO OF 65:35. THEREFORE, AC CORDING TO THE LD. D.R., THE ASSESSING OFFICER FOUND THAT THE SHARE OF PROFIT GIVEN TO THE SONS OF THE LAND OWNERS IS NOTHING BUT SALE CON SIDERATION PERTAINING TO THE LAND. 10 I.T.A. NO.3463/CHNY/16 I.T.A. NO.966/CHNY/17 9. REFERRING TO THE ASSESSMENT ORDER, MORE PARTICUL ARLY PARA 6, THE LD. D.R. POINTED OUT THAT THE CLAIM OF THE ASSE SSEE THAT MARKET VALUE OF THE LAND AS DETERMINED BY THE REGISTRATION AUTHORITIES WAS PAID TO THE LAND OWNERS, THEREFORE, THE ORDINARY PR OFIT WAS TRANSFERRED TO THE OWNERS OF THE LAND, WAS FOUND TO BE NOT CORRECT. ACCORDING TO THE LD. D.R., IN THE CASE OF HOUSING P ROJECT, THE COST OF LAND WOULD NORMALLY BE MORE THAN THE GUIDELINE VALU E. IN THIS CASE, ACCORDING TO THE LD. D.R., THE PROPERTY WAS TRANSFE RRED AT THE RATE OF GUIDELINE VALUE. ACCORDING TO THE LD. D.R., THE PR OFIT ON SALE OF LAND WAS ALSO INCLUDED AS PROFIT FROM HOUSING PROJECT. MOREOVER, THE EXORBITANT PROFIT SHOWN BY THE ASSESSEE FOR CLAIMIN G DEDUCTION UNDER SECTION 80-IB OF THE ACT CLEARLY SUGGESTS THA T THERE WAS A DEVISE ADOPTED BY THE PARTNERSHIP FIRM ALONG WITH T HE OWNERS OF THE LAND SHRI V. CHANDRASEKARAN AND SMT. SARASWATHI CHA NDRASEKARAN SO AS TO REDUCE THE TAX LIABILITY. HENCE, ACCORDIN G TO THE LD. D.R., THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN BOTH THE APPEALS, THE ISSUE ARISES FOR CONSIDERATION IS DISA LLOWANCE OF 11 I.T.A. NO.3463/CHNY/16 I.T.A. NO.966/CHNY/17 DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80- IB(10) OF THE ACT. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 80-IB(10) OF THE ACT THAT THE PROFIT IS APPROXIMATELY 50%. THE ASSESSING OFFICER ALSO FOUND THAT THE PRO FIT OF THE BUSINESS INCLUDED THE COST OF LAND SOLD BY SHRI V. CHANDRASEKARAN AND SMT. SARASWATHI CHANDRASEKARAN. THE ASSESSING OFFICER FURTHER FOUND THAT A PART OF COST OF LAND WAS DIVER TED AS SHARE OF PROFIT TO SHRI PREM CHANDRASEKARAN AND SHRI AKIL CH ANDRASEKARAN, THE CHILDREN OF THE LAND OWNERS. 11. THERE IS NO DISPUTE ABOUT THE STATUTORY CONDITI ONS IMPOSED FOR ALLOWING DEDUCTION UNDER SECTION 80-IA OF THE A CT. FOR DISALLOWING THE CLAIM OF THE ASSESSEE, THE ASSESSIN G OFFICER REFERRED THE PROVISIONS OF SECTION 80-IA(10). WE H AVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 80-IA(10) OF THE ACT. SECTION 80-IA OF THE ACT IS FOR DEDUCTION IN RESPECT OF PRO FITS AND GAINS FROM INDUSTRIAL UNDERTAKING OR ENTERPRISES ENGAGED IN IN FRASTRUCTURE DEVELOPMENT. WHEREAS, SECTION 80-IB OF THE ACT IS FOR DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM CERTAIN INDUSTRIA L UNDERTAKINGS OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKING. THE CBDT CLARIFIED BY CIRCULAR NO.4 OF 2009 DATED 30.06.2009 THAT SECTION 80- 12 I.T.A. NO.3463/CHNY/16 I.T.A. NO.966/CHNY/17 IB(10) DEDUCTION IS IN RESPECT OF HOUSING PROJECTS. THE ASSESSING OFFICER OBSERVED THAT THE PROVISIONS OF SECTION 80- IB(10) ARE GOVERNED BY SECTION 80-IA(10) OF THE ACT. HOWEVER, THERE IS NO SUCH REFERENCE IN ANY OF THE PROVISIONS OF SECTION 80-IB OF THE ACT. IT WAS ALSO NOT BROUGHT TO THE NOTICE OF THE BENCH BY THE LD. D.R. HOW SECTION 80-IA(10) WOULD BE APPLICABLE FOR ALLOW ING DEDUCTION UNDER SECTION 80-IB OF THE ACT. SECTION 80-IB(10) OF THE ACT, AS CLARIFIED BY THE CBDT, IS ONLY FOR HOUSING PROJECTS . HOWEVER, SECTION 80-IA IS FOR INFRASTRUCTURE DEVELOPMENT. E VEN ASSUMING FOR ARGUMENT SAKE THAT SECTION 80-IA OF THE ACT IS APPL ICABLE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THERE IS NO MATERIAL TO SUGGEST THAT THE BUSINESS OF THE ASSESSEE-PARTNERSH IP FIRM WAS SO ARRANGED IN SUCH A WAY TO PRODUCE MORE THAN THE ORD INARY PROFIT. 12. IT IS AN ADMITTED FACT THAT THE ASSESSEE-PARTNE RSHIP FIRM IS MAINTAINING BOOKS OF ACCOUNT. NO DEFECT WAS POINTE D OUT EITHER BY THE ASSESSING OFFICER OR BY THE CIT(APPEALS) IN THE BOOKS MAINTAINED IN THE REGULAR COURSE OF BUSINESS ACTIVI TY. THE ASSESSING OFFICER FOUND THAT THE COST OF THE LAND W HICH WAS SAID TO BE TAKEN FROM SHRI V. CHANDRASEKARAN AND SMT. SARAS WATHI CHANDRASEKARAN FOR JOINT DEVELOPMENT BY THE ASSESSE E-PARTNERSHIP 13 I.T.A. NO.3463/CHNY/16 I.T.A. NO.966/CHNY/17 FIRM WAS VALUED AT GUIDELINE VALUE. THE MARKET VAL UE WAS NOT PAID TO SHRI V. CHANDRASEKARAN AND SMT. SARASWATHI CHAND RASEKARAN. IT IS A WELL SETTLED PRINCIPLE OF LAW THAT MARKET V ALUE OF THE LAND IS NOT A CONSTANT OR FIXED PRICE. IT MAY FLUCTUATE DEPEND ING UPON VARIOUS FACTORS SUCH AS AREA OF THE LAND, LOCATION OF THE L AND, INFRASTRUCTURE FACILITY AVAILABLE AROUND THE LAND, ACCESS TO THE P UBLIC ROAD, ETC. THE STATE REGISTRATION DEPARTMENT, AFTER CONSIDERIN G ALL THESE FACTS, FIXED THE VALUE WHICH IS KNOWN AS GUIDELINE VALUE T O GUIDE THE SUB- REGISTRAR TO DETERMINE THE MARKET VALUE. THE GUIDE LINE VALUE MAY NOT ALWAYS REFLECT THE MARKET VALUE. SOMETIMES, TH E GUIDELINE VALUE MAY BE LESS OR IT MAY BE MORE DEPENDING UPON THE AR EA AND LOCATION OF THE PROPERTY. WHEN THE ASSESSEE ENTERE D INTO A JOINT DEVELOPMENT AGREEMENT FOR TRANSFER OF PART OF THE L AND TO THE PARTNERSHIP FIRM AT A PARTICULAR PRICE, THIS CANNOT BE SAID THAT THE VALUE DETERMINED FOR TRANSFER OF PART OF LAND OR TH E ENTIRE LAND IS A DEVICE TO INCREASE THE PROFIT OF THE ASSESSEE-FIRM. 13. THE ASSESSING OFFICER AS WELL AS THE CIT(APPEAL S) FOUND THAT THE MARKET VALUE OF THE LAND WAS FIXED AT A VERY LO WER RATE SINCE THE CHILDREN OF THE OWNERS OF THE LAND WERE PARTNERS IN THE ASSESSEE- FIRM. THERE MAY BE A JUSTIFICATION FOR MAKING ALLE GATION LIKE THIS 14 I.T.A. NO.3463/CHNY/16 I.T.A. NO.966/CHNY/17 WHEN THE CHILDREN OF THE LAND OWNERS ALONE ARE PART NERS. IN THIS CASE, APART FROM THE CHILDREN OF THE OWNERS, THERE ARE OTHER PARTNERS WHO ARE NOT RELATED TO THE LAND OWNERS AT ALL. THE OTHER PARTNERS MAY NOT COOPERATE WITH THE LAND OWNERS TO PURCHASE THE LAND OR TO TAKE THE LAND ON JOINT DEVELOPMENT SO AS TO REDUCE THE PROFIT OF THE FIRM. MOREOVER, THE LAND OWNERS ALSO MAY NOT TRANS FER THE LAND FOR A PRICE LESS THAN THE MARKET VALUE SINCE THE THIRD PA RTY PARTNERS WHO ARE IN THE ASSESSEE-FIRM INDIRECTLY GET THE BENEFIT . THEREFORE, WHEN THE THIRD PARTY INDIVIDUALS ARE PARTNERS IN THE ASS ESSEE-FIRM APART FROM THE CHILDREN OF THE LAND OWNERS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CONTENTION OF THE REVEN UE THAT THE LAND IN QUESTION WAS TRANSFERRED TO THE PARTNERSHIP FIRM AT A GUIDELINE VALUE IN ORDER TO INCREASE THE PROFIT OF THE ASSESS EE-FIRM SO AS TO CLAIM DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT HAS NO MERIT AT ALL. MOREOVER, THE CONTENTION OF THE LD. D.R. THAT THE LAND WAS TRANSFERRED AT THE GUIDELINE VALUE SO AS TO SHIFT T HE PROFIT TO THE PARTNERSHIP FIRM IS NOT SUPPORTED BY ANY MATERIAL. 14. THE NEXT CONTENTION OF THE REVENUE IS THAT THE PROFIT IS MORE THAN 50%. AS OBSERVED EARLIER, THE ASSESSEE IS MAI NTAINING BOOKS OF ACCOUNT IN THE REGULAR COURSE OF BUSINESS ACTIVI TY AND THE LAND 15 I.T.A. NO.3463/CHNY/16 I.T.A. NO.966/CHNY/17 WAS TAKEN BY WAY OF JOINT DEVELOPMENT AGREEMENT AND THE REVENUE AUTHORITIES HAVE NOT DOUBTED THE BOOKS OF ACCOUNT M AINTAINED IN THE REGULAR COURSE OF BUSINESS. THEREFORE, WHEN THE BO OK RESULT DISCLOSES THE PROFIT AT 50%, THE REVENUE CANNOT DOU BT THAT THE PROFIT WAS EXORBITANT OR IMPROBABLE ONE. THE PROFIT GENER ATED BY THE ASSESSEE-FIRM IS SUPPORTED BY THE BOOKS OF ACCOUNT MAINTAINED IN THE REGULAR COURSE OF BUSINESS ACTIVITY, THEREFORE, THE REVENUE AUTHORITIES HAVE NO JUSTIFICATION TO DOUBT THE PERC ENTAGE OF PROFIT. MOREOVER, THE CHILDREN OF THE LAND OWNERS, NAMELY, SHRI PREM CHANDRASEKARAN AND SHRI AKIL CHANDRASEKARAN ARE PAR TNERS IN THE FIRM WITH 35% OF STAKE. THEREFORE, NATURALLY THEY ARE ELIGIBLE FOR 35% OF THE PROFIT OF THE FIRM. 65% OF THE PROFIT W OULD GO TO THE OTHER PARTNERS WHO ARE NOT IN ANY WAY RELATED TO THE LAND OWNERS, NAMELY, SHRI V. CHANDRASEKARAN AND SMT. SARASWATHI CHANDRAS EKARAN. THE LAND OWNERS MAY NOT PREFER TO GIVE 65% OF THE S HARES TO THE THIRD PARTIES WHO ARE NOT CONNECTED WITH THEM. IN SUCH CIRCUMSTANCES, THIS TRIBUNAL IS OF THE CONSIDERED O PINION THAT THERE IS NO ARRANGEMENT AS PROJECTED BY THE LD. D.R. TO S HIFT THE PROFIT TO THE PARTNERSHIP FIRM SO AS TO CLAIM A HIGHER RATE O F DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. 16 I.T.A. NO.3463/CHNY/16 I.T.A. NO.966/CHNY/17 15. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS UNABLE T O UPHOLD THE ORDERS OF THE LOWER AUTHORITIES. ACCORDINGLY, THE ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ASSESSING O FFICER IS DIRECTED TO ALLOW DEDUCTION UNDER SECTION 80-IB(10) OF THE A CT AS CLAIMED. 16. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 1 ST OCTOBER, 2019 AT CHENNAI. SD/- SD/- ( ! ' ) ( . . . ) (INTURI RAMA RAO) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 6 /DATED, THE 1 ST OCTOBER, 2019. KRI. / -278 98)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 :2 () /CIT(A)-4, CHENNAI 4. PRINCIPAL CIT- 5, CHENNAI 5. 8; -2 /DR 6. <( = /GF.