2019 (11) TMI 1235 - AT - Income Tax

Deduction u/s 80IB(10) - addition as income from business and profession - HELD THAT - We are aware that partnership firm has done meagre hardly business the partnership business during these 5 years since the partnership firm was constituted. The land cost of the Thane project has been appreciated and only appreciated value as per the shares in the partnership firm assessee received ₹ 14,35,00,000/- and assessee has also paid long-term capital gain tax to the revenue. In our considered opinion, we do not find any reason into interfere in the order passed by the Ld. CIT(A) and we are reluctant to accept pleas of the revenue. Therefore, we dismiss this ground of appeal of the Revenue. Now, we come to next ground with regard to allowing deduction u/s. 80IB(10) - In this case assessee has claimed deduction under section 80IB(10) of ₹ 38,75,140/- for the year under consideration. It has been noticed that in earlier years on the same issue of deduction under 80IB(10) for A.Y. 2007-08, A.Y. 2010-11, A.Y. 2011-12 and A.Y. 2012-13 claim of the assessee was allowed by the Ld. CIT(A). Thus, at the principle of consistency we dismiss this ground of appeal of the Revenue.

Summary

Issues Involved:
1. Valuation of shares received by the assessee at the time of retirement from a partnership firm.
2. Allowance of deduction under section 80IB(10) of the Income Tax Act.

Issue 1: Valuation of Shares Received by the Assessee:
The Revenue appealed against the order of the Ld. CIT(A) regarding the valuation of shares received by the assessee at the time of retirement from a partnership firm. The Revenue contended that the amount paid to the assessee over and above the capital contribution was not objectively determined. The Revenue argued that the valuation of the shares should have been done using the Net Asset Method or Discounted Cash Flow method. The Revenue also raised concerns about the compensation amount received by the assessee and the method of valuation submitted during appellate proceedings. The Ld. CIT(A) had allowed the appeal of the assessee, considering various factors and documents, leading to the Revenue's appeal to the ITAT.

Issue 2: Allowance of Deduction under Section 80IB(10):
The Revenue challenged the decision of the Ld. CIT(A) to allow deduction under section 80IB(10) of the Income Tax Act to the assessee. The Revenue argued that the assessee was not eligible for the deduction as per the Joint Venture Agreement, where the assessee's role changed from a Developer to a facilitator. However, the Ld. CIT(A) considered the facts and circumstances, including the nature of the agreement and the development timeline, and granted relief to the assessee. The Revenue contended that the relief should not have been granted, leading to the second statutory appeal.

In conclusion, the ITAT upheld the decision of the Ld. CIT(A) on both issues, finding no reason to interfere with the orders. The ITAT dismissed the Revenue's appeal, stating that the Ld. CIT(A) had passed reasoned orders and granted relief to the assessee based on the facts and circumstances presented. The ITAT emphasized the principle of consistency in allowing the deduction under section 80IB(10) and dismissed the Revenue's appeal accordingly.