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TMI Blog2020 (9) TMI 672X X X X Extracts X X X X X X X X Extracts X X X X ..... ing sold the land at the guideline value. There was no material available before the PCIT that such guideline value was ridiculously low. Profit is being computed based on the sale which were effected during the assessment year under consideration, AY 2012-13, that is more than five years after entering into the Joint Development Agreement, four years after the Partnership Firm came into being. In the absence of any material to show that the assessee had so arranged the business and made transaction to produce more than the ordinary profits and the same having not been established by the Revenue, there was no ground for the PCIT to exercise its power under Section 263 of the Act. PCIT power u/s 263 - The Statute mandates twin conditions to be fulfilled while exercising such power and therefore there is no room to invoke such a power and in the absence of any material before the PCIT to term the Partnership Firm to be a device adopted by the assessee to earn more than the ordinary profit, there was no reason for the PCIT to interfere with the Assessment Order under Section 143(3) of the Act. That apart, the Tribunal has elaborately considered the factual position and granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .V.Chandrasekaran and Mrs.Saraswathi Chandrasekaran, who are the joint owners of the land measuring about 2.61 acres in Tambaram. The land owners entered into an Agreement for joint development on 05.01.2007 proposing to put up a Housing Project. The Partnership Firm came into being on 10.10.2008 in which 65% share was held by the Doshi family and remaining 35% were held by the sons of Mr.Chandrasekaran. The land appears to have been developed by the Firm and sale of the flats took place during the assessment years under consideration, AY 2012-13 and 2013-14. The firm filed return of income on 29.09.2012 admitting total income as 'Nil'. The return was processed under Section 143(1) of the Act and subsequently the case was selected for scrutiny and the Firm filed a revised return and after hearing the assessee, the Assessing Officer completed the assessment under Section 143(3) by order dated 27.03.2015 and the income assessed was at ₹ 23,235/-. 4. The Principal Commissioner of Income Tax-5, Chennai ('PCIT' for brevity) invoked his power under Section 263 of the Act, who opined that the Assessing Officer while computing the quantum eligible for deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessarily be in the ratio of 65:35 between the builder and the owner of the land. This ratio is uniformly adopted in all Joint Development Agreement in Chennai and in suburbs of Chennai. The PCIT opined that instead of providing sale proceeds of the proportionate share of the constructed place to the owner directly, by the arrangement of the partnership business, the assessee firm has passed on the value of sale proceeds indirectly as share of profit credited to the sons of the land owner, this according to PCIT was nothing but excess sale consideration to the land transferred by the owners. The PCIT though found that the land was sold at the guideline value, held that the guideline value need not be a decisive factor to determine the sale consideration between related enterprises / parties and the guideline value cannot be the sole factor to determine the sale consideration for the purpose of computing the capital gains. The PCIT relied on the decision in the case of Thulasimani Ammal Vs. the Commissioner of Income Tax and Another (158 CTR Mad 5 (2000)] and in the case of M.Ponnusamy and Others Vs. District collector, Erode and Others (1999 (2) L.W 231) and the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee more than the ordinary profits which might be accepted to arise in such eligible business. It is submitted that the Tribunal on going through the factual position found that there is no such methodology adopted by the assessee for invoking the provisions of Section 80IA(10). It is further submitted that the land owner is also entitled to claim deduction under Section 80IB and in support of such argument, reliance was placed on the decision in the case of Commissioner of Income Tax Vs. Astoria Leathers [2020 117 taxmann.com 907 (Madras)] dated 08.07.2020. 9. We have elaborately heard learned counsel appearing for parties and carefully perused the entire materials placed on record. We find that the issue involved in the matter is wholly factual. The Assessing Officer formed an opinion initially and completed the assessment under Section 143(3) of the Act. The PCIT thought fit to invoke his power under Section 263 of the Act and doubted the value adopted in the transaction and that the Partnership Firm was a device made to divert the excess profit to the sons of the land owners and this according to the PCIT was clearly hit by Section 80 IA(10) of the Act and the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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