TaxTMI 
TaxTMI 
2022 (12) TMI 1305
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....the said addition be deleted. The appellant craves to add, alter, amend or omit any of the grounds of appeal before or during the hearing of the appeal." 3. The grounds of appeal raised by the Revenue are as under: -- "1. Whether on the facts and circumstance of law, the Ld. CIT(A) has erred in deleting the addition amounting to Rs.98,28,36,362/- and failed to appreciate that the appellant had created and entered into sham transactions with group entity with the sole purpose of diverting revenue accruing to the assessee on account of sales of residential units. 2. Whether on the facts and circumstances in case of law, the Ld. CIT(A) has erred in restricting the disallowance u/s 14A of the I. T. Act to the extent of exempt income received by the assessee during the year under consideration without appreciating the Circular No.5 of 2014 dated 11.02.2014 of CBDT." 4. Ground No. 1 of both the appeals of the assessee and the Revenue are inter-connected and is therefore being taken up together. Briefly stated, the facts of the case are that, the assessee is a private limited company engaged in the business of real estate development, constructing resident....
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....t (A) 6,31,810 BUDGETED Land Cost 2,87,35,80,265 Construction Cost 15,66,51,53,277 Borrowing Cost 4,91,86,09,609 Total (B) 23,45,73,43,151 Cost Per Sqft (G) 37,127 ACTUAL Land Cost 2,87,35,80,265 Construction Cost 8,15,84,99,634 Borrowing Cost 3,15,02,43,446 Total Project Cost (C) 14,18,23,23,345 ACTUAL Carpet Area (Sqft) (D) 1,58,126 Sales value (E) 6,60,63,70,000 Parameters as per revised Guidance Note 23 % of Completion of Work (C/B) (F) 60.46% % of area Sold For determining Revenue Recognition (D/A) 25.03% Sale Amount on Revenue Recognition (E x F) 3,99,42,15,153 Cost on Revenue Recognition (G x D x F) 3,54,94,77,576 Gross Profit 44,47,37,577 Less: ICDS Impact (7,17,56,213) Profit Offered in COI of the year 37,29,81,364 5. When enquired by the AO as to why the initial working submitted on 30.01.2018 (before the Investigation Authorities) should not be considered, the assessee explained that it was an estimated working prepared prior to close of the year and therefore it should be ignored. Appreciating the said subm....
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.... 4,91,86,09,609 Total 23,45,73,43,151 Actual Land Cost 2,87,35,80,265 Construction Cost 8,15,84,99,634 Borrowing Cost 3,15,02,43,446 Total Estimated Project Cost 14,18,23,23,345 Actual Carpet Area (Sq.ft) 1,58,126 Sales Value 8,35,01,89,684 Percentage of completion of Work % of completion of work 60.46% % of Area sold for determining Revenue Recgn. 25.03% Sale Amount on Revenue Recognition 5,04,85,29,551 Cost on Revenue Recognition 3,54,94,77,576 Gross Profit 1,49,90,51,975 Less: Offered in COI 44,47,37,577 Balance 1,05,43,14,398 Less: ICD Impact (7,17,56,213) Balance to be offered to tax 98,25,58,185 7. In view of the above calculation, the AO accordingly added further sum of Rs.98,25,58,185/- to the total income of the assessee. Aggrieved by the aforesaid action of the AO, the assessee preferred an appeal before the Ld. CIT(A). On appeal, the Ld. CIT(A) after examining the facts of the case, held that the option agreements entered into by the assessee with HRPL was acceptable and not sham. The relevant findings of Ld. CIT(A) are as under: ....
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....ant. In my view, the transaction between the two parties here is a transaction between two related parties as majority stake in both these entities are owned by the same promoters and hence while the transaction cannot be denied, there is an onus on the appellant to demonstrate the arm's length nature of the transaction. It has already been held earlier that transactions of such option assignment arrangement are a market reality and are undertaken to meet fund requirements as well as transfer risks. Hence, to this extent, the AO's action has not been held as correct. But, the claim of the assessee that the AO could not examine the transaction value in light of either commercial expediency or independent legal/corporate structure is not found tenable and is rejected. The AO was fully competent to examine whether the flats had been transferred to the other party a prevailing rates or not. ...... 5.18 The assessee further claims that it had entered into an option agreement with Hypercity which allowed Hypercity either to exercise its right to purchase the flat at the pre-determined rate or to assign its right to a third party. Once Hypercity had transferred its right....
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....al Corporation and hence, are justifiable. In my view, the ready reckoner prices do not provide any basis for determining market value of flats sold by the appellant. The flats sold by the appellant are luxury flats with very high-end amenities. In its submission which is reproduced at page 7 (para 3 of the assessee's submission), the assessee itself describes the project as iconic, designed by international designers and one of the finest lifestyle projects undertaken by the appellant. The prices of these flats in subsequent years clearly indicate that the prices of these flats are much higher than the ready reckoner prices. During the course of hearing, the appellant was asked to explain whether its own prices were linked to ready reckoner prices. No such evidence has been produced before me to demonstrate such relationship. The sale prices of the assessee's flats are significantly higher than the ready reckoner prices as the assessee deals in high end flats which command high premium and which carry significantly higher costs. There being no relationship between the market price of the assessee's flats and the ready reckoner values, the claim made by the assessee that the option....
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....transferred needs to be adopted as a market value for determining the option price in respect of all the 20 flats for which agreement was entered into by the two parties. 11. Pegging the benchmark option price at Rs.30,522/-, the Ld. CIT(A) recomputed the arm's length revenues of the assessee from the sale of these twenty (20) flats and accordingly re-worked the income of the assessee for AY 2018-19. The relevant working is found at Para 5.33 of the appellate order, which for the sake of convenience, is reproduced below: "5.33 Based on the above computation, the income of the assessee for the AY 2018-19 is computed as below: Particulars Amount as on 31.03.2018 Total Carpet Area Sq. ft (A) 6,31,810 BUDGETED Land Cost 2,87,35,80,265 Construction Cost 15,66,51,53,277 Borrowing Cost 4,91,86,09,609 Total (B) 23,45,73,43,151 COST PER Sq. ft (G) 37,127 ACTUAL Land Cost 2,87,35,80,265 Construction Cost 8,15,84,99,634 Borrowing Cost 3,15,02,43,446 Total Project Cost (C) Refer (Annexure III) 14,18,23,23,345 ACTUAL Carpet Area (Sq ft) (D) 1,58,126 Sales Value (E) 6,90,15,....
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....c. prevailing at the material time when the option agreement was entered into. The Ld. AR has also filed written note in support of its case, along with rebuttals to the submission furnished by the Ld. DR appearing for the Revenue. The contentions raised by both the parties have been discussed and dealt with in detail in the succeeding paragraphs. 14. Before we proceed to deal with the rival contentions, let us first examine the relevant option agreement in question and also the background facts and circumstances leading to such agreement. We find that, the assessee company, in the instant case, had launched a residential project - 'Artesia' in Worli, Mumbai, whose title certificate was issued on 06.05.2009. The proposed development was subject to approvals and clearances from the Municipal Corporation of Brihanmumbai. In the meantime, the assessee had begun marketing the said residential project and in FY 2010-11, the assessee was only able to obtain bookings for two (2) flats in the proposed development. In the same year, the assessee entered into an agreement with its associate entity, HRPL in terms of which the latter was given a pure irrevocable option to purchase twenty (2....
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....ely admeasuring 334.91 sq. mtrs. Equivalent to 3605 sq. ft. carpet area, subject to final plans that may be approved by MCGM. Accordingly, and as provided in Clause 3 of the said MOU read with the said Letter, the price of the proposed Apartment No. 1901 is fixed at Rs.10,43,00,000/- ["the revised Fixed Price"], subject to further proportionate variation in the price commensurate with increase or decrease in carpet area, if any, as per the final plans that may be approved by MCGM. The Parties agree that the said Letter (read with the said MoU) has fixed the Revised Fixed Price for the proposed Apartment, as on the date of the said Letter. The Option Holder has deposited Rs.99,00,000/- till date as part of the Option Deposit under the said MOU read with the said Letter. As also paid Rs.7,49,068/- as Service Tax thereon. Clause 29 of the said MOU entitles the Option Holder to a one time right to assign and transfer the option rights under the said MOU to a third party, after expiry of 12 months from the date of the MOU." 16. It is noted from Clause (8) of the original Agreement that, the option holder was required to a place deposit with the assessee, to retain the right to exerci....
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....reed that in consideration for grant of the option, the Option Holder shall deposit Rs.10,43,00,000/- (Rupees Ten Crores Forty Three Lakhs Only) with the Developer in keeping with the understanding as set out in the said Letter (read with the said MOU), as an Option Deposit, to enable the Option Holder to reserve the Option Holder's right to exercise the option to acquire the proposed Apartment and to bind the Developer to reserve the proposed Apartment for exercise of the option at the Fixed Price (upto the expiry of the Option Period during which the option shall be available to the Option Holder). The Option deposit is/shall be paid in installments as follows:- (i) Rs.1,06,49,068/- received by the Developer from the Option Holder prior to execution hereof as follows:- Rs.25,00,000/- received on 25.03.2010 Rs.27,50,000/- received on 02.05.2011 Rs.27,50,000/- received on 06.05.2013 Rs.1,55,788/- received on 20.08.2013 Rs.24,74,280/- received on 20.12.2013 Rs.19,000/- received on 06.01.2014 The aforesaid amounts have been received with applicable service tax, which has been paid by the Developer to the Authorit....
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....ctions 19. The Option Holder has inspected and been given a copy of the Title Certificate dated 6th May, 2009 relating to the leasehold land (and the said Title Certificate shall be Annexed to the Agreement for Sale), and has accepted and is satisfied about the title of the Developer and the entitlement to develop the said property. The Option Holder shall not be entitled to question or raise queries relating to the title, or entitlements of the developer. The Option Holder has inspected all title documents relating to the Developer's right relating to the municipal leasehold land, and has been informed to the status of approval, conditions, encumbrances, mortgages and other relevant issues and accepts and is aware of all facts relating thereto, including:- (1) Equitable mortgage in favour of Housing Development Finance Corporation Ltd. in respect of the said plot of land; (2) Rents, premium, transfer charges, renewal, redevelopment, change of user and other terms conditions and policies of MMC (Estates) and relating to the municipal lease of the said plot; (3) Mutation of records in favour of Developer by MMC (Estates); (4) Parking lot,....
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.... 'Artesia' had not received approvals/clearances from the Municipal Corporation on the date of the option agreement. Accordingly, Clause (22) of the Original Agreement included a termination clause, in terms of which, HRPL was entitled to terminate the MOU, if the assessee failed to obtain necessary sanctions within twelve months and/or the extended period, as agreed upon. Correspondingly, if HRPL defaulted in payment of option deposits, as agreed upon in Clause (8) of the MOU, the assessee had the right to terminate the agreement. Upon termination at the instance of either parties, the assessee was required to refund the option deposits to HRPL. This Termination Clause is noted to have been amended by the Supplemental Agreement dated 04.03.2014, wherein primarily the right of termination given to the option holder on account of assessee's failure to obtain requisite approval was omitted, as the certificate of commencement (dated 27.05.2013) had since been obtained. The amended Termination Clause read as follows: "17. This Option MOU shall stand terminated and the right to exercise the option shall come to an end and stand relinquished in the earliest of the following even....
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....und of deposit (and Compensation, if any), subject to deduction of tax at source, if applicable as per rules, shall be payable only against a confirmation letter from the Option Holder, that the Option Holder has no claim, dispute or right of any nature whatsoever in or relating to the proposed Apartment or the said MOU/ the said Letter/this option MOU or against the Developer on any account whatsoever. On tender of the refund of the deposit (and such Compensation, if any) by the Developer to the Option Holder, the Developer shall be fully and absolutely entitled to deal with or sell the proposed Apartment in any manner whatsoever in its sole discretion, without any claim, objection or obstruction by the Option Holder and without further reference to or recourse by the Option Holder." 23. Upon examination of the agreements between the assessee and HRPL and the terms & conditions contained therein, it is thus noted that in the year 2010, HRPL had acquired an option to buy flats in the proposed development, which would be constructed by the assessee, in lieu of which it had placed adjustable interest-free security deposit. It is noted that, at the material time, when this agreemen....
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....ects rather than under-construction projects to avoid risks of delayed completion, regulatory issues, escalation costs, etc. The real estate developers are, however, keen to sell to-be constructed or under-construction properties for twin reasons, (a) it acts as a seal of approval to the sale-ability of the project, (b) the interest-free advances received upon bookings ease the liquidity position, mitigates interest burden, reduces the requirement of borrowings, as it acts as working capital for construction costs to be incurred. Hence, there are financial investors in the real-estate industry, who provide interest-free capital for a proposed project and in lieu thereof, these investors secure a right/option over the proposed construction at pre-agreed prices. If the project turns out to be successful at a later date, the investor earns a profit on its capital investment from the uptick/increase in the price of such constructed spaces. However, if the project gets stalled or delayed or is unsuccessful, then these investors can only seek refund of their capital/deposit invested, which is either refunded with or without interest, depending upon the terms agreed upon. In such a transa....
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....loans to the concerns where directors are co-directors or have substantial interest in those concerns. Thus urgent need for low cost fund necessitating forfeit of substantial future profits for little or no money is NOT emanating from the same. In fact it would be necessary to identify the parties that have been the recipients of these loans to ascertain the true nature of the arrangements under consideration." 27. To this, the Ld. AR pointed out that the above analysis undertaken by the Ld. DR to doubt the genuineness of the option agreement was based on irrelevant considerations. In the first instance, he argued that no such allegation had been made by the AO in the assessment order and therefore it was wholly impermissible for the Revenue to make out a new case at this stage. He further contended that, the need of funds for business and the manner in which the businessman chooses to raise it, is solely the prerogative of the businessman and that the Revenue cannot place itself in the shoes of the businessman and dictate as to how the businessman ought to run its operations or raise funds. Inviting our attention to the Balance Sheet for the FY 2009-10 [Page 1 of the paper book....
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....arket value for stamp duty purposes and therefore it was not a case that the option to acquire twenty (20) flats was given to related party, HRPL at understated values. On the issue of loans of Rs.135.23 crores advanced by the assessee to its sister concerns, it is noted that they were given in the course of business and were interest bearing, and on which the assessee had derived interest income to tune of Rs.25.67 crores. On the other hand, the interest-free deposits with embedded option received from HRPL were not only interest-free but also did not entail any cash outflow. On conspectus of these facts, we agree with the finding of the Ld. CIT(A) in holding the option agreement between the assessee and HRPL to be commercially expedient and thus acceptable. 29. The next argument [Para 3.3 of his written submissions] raised by the Ld. DR, was that the option deposits received from HRPL in the initial years were only to the tune of Rs.11 crores and that the option deposits aggregating to Rs.104 crores only accumulated with the assessee in the later years, when the sales had picked up, which further raised serious doubt on the genuineness of option agreement. In the rebuttal, the....
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....e expenditure being not for the purposes of the business. It is the question of an appropriate amount which would have been paid as commission. In fact, the Assessing Officer himself has allowed to the extent of Rs. 4,35,854 holding, inter alia, "the payment of Rs. 1.75 per M.T. to Cement Distributors Ltd. is very much on the excessive side". This in our view was impermissible within the framework of section 37. The jurisdiction of the revenue is confined to deciding reality of the expenditure, namely, whether the amount claimed as deduction was factually expended or laid down and whether it was wholly and exclusively for the purpose of the business. The reasonableness of the expenditure could be gone into only for the purpose of determining whether, in fact, the amount was spent. Once it is established that there was a nexus between the expenditure and the purpose of business, the revenue cannot justifiably claim to put itself in the armchair of a businessman or in the position of the board of directors and assume the said role to decide how much is a reasonable expenditure having regard to the circumstances of the case. We need not go into any hypothetical issue in this case in v....
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....e Department itself, there cannot be any question of raising the issue of want of business expediency. The learned counsel for the respondent is right in his submission that the Department could not sit on the armchair of the assessee and decide as to whether it was appropriate on business expediency for the assessee to incur such an expenditure or not. If the transaction is otherwise valid in law and is a part of tax planning, merely because it has resulted in reduction of tax, such expenditure cannot be ignored raising the issue of underlying motive of entering into this type of transaction. Various judgments cited by the learned counsel for the respondents clearly get attracted to this Court." 35. The Hon'ble Punjab & Haryana High Court in the case of CIT Vs Rockman Cycle Industries (P.) Ltd. (331 ITR 401) has observed as under:- '23. In view of our aforesaid discussion and pronunciation of law, as referred to above, the question referred for consideration by the larger Bench can very well be answered by opining that the Assessing Officer or the appellate authorities and even the courts can determine the true legal relation resulting from a transaction. If so....
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....t may, a perusal of the arrangement reveals that the transaction has been made on the basis of very vague terms on lump-sum basis with no basis for arriving at the price determined in each of the flat agreed to be sold. Of the two flats whose option agreements have been examined by the CIT(A)/submitted by assessee, the flat bearing no 1401 has been sold as per square feet carpet area @ 27,430/- [on the basis of the working in pt.5.29 of the CIT(A) order. The option price to HRIPL is 6.83 crs for this flat with carpet area of 2490 sq.ft. while flat no.1901 has been sold @28,915/-[As per sample option agreement submitted as part of the PB did. 08/06/2021-page 34 of the PB. The original option price is Rs.7.20 crs for a flat with carpet area of 2490 sq.ft along with 2 parking lots and other amenities included -page 36 of the PB] The reason or basis for the variation is not emanating from agreements nor the submissions. Similar would be the situation in case of other flats. The transaction is with it associate concern, it perforce mandates that the transaction be examined with reference to whether the transaction is as per open market terms or not. The rates at which final tra....
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.... Amount Agreed time of payment 1 25,00,000 At the time of the execution of option agreement 2 27,50,000 To be deposited within one week from the date of intimation of submission of plans for the approval to the authorities. 3 27,50,000 To be deposited within one week from the date of intimation of commencement of work 4 80,00,000 3 months from the date of intimation of commencement of work 5 80,00,000 6 months from the date of intimation of commencement of work 6 80,00,000 9 months from the date of intimation of commencement of work 7 80,00,000 12 months from the date of intimation of commencement of work 8 80,00,000 15 months from the date of intimation of commencement of work 9 80,00,000 18 months from the date of intimation of commencement of work 10 80,00,000 21 months from the date of intimation of commencement of work 11 80,00,000 Plus balance as per subject to variation of option price of the flat upon intimation of the completion of the building. However as is noted in the supplemental agreement, the total payment received till the date of signing of the supplemen....
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....ons of the assessee till date. In view of all the above, it is submitted that the decision of the CIT(A) vide his order dtd.08/09/2021 may be rejected and the action of the assessing officer on this issue be upheld." 38. To this, the Ld. AR first pointed out that the entire exercise, which has been conducted by the Ld. DR, suffered from hindsight bias, as the Revenue is presuming by standing and looking back in FY 2017-18 that, the assessee and HRPL, could have successfully predicted this highly positive outcome of the project - 'Artesia' back in FY 2009-10, when they entered into the option agreement. He argued that the correct manner to ascertain the reasonableness of the option price, was to examine the same in light of the circumstances and position prevailing at the time when the assessee and HRPL had entered into this option agreement in FY 2009-10. He pointed out to us that, there was an ongoing global recession precipitated from the Lehman Brothers crisis in the relevant FY 2009-10, and more particularly the real estate market was reeling from the fallout of this global recession. Hence, there was a significant loss of faith amongst customers in the real-estate developer....
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....ttal submitted by the Ld. AR is as follows: "Submissions of the assessee : .... 6. In the FY 2010-11, the assessee was hardly able to market any of the flats. It is evident that before the deal with Hypercity, the assessee was able to market only 2 flats; i.e to Flat No.2701 and 2702 to Universal Polymer and Mukul Deora (Pg No.73 of PB). Most importantly it must be noted that the assessee was not able to book a single flat in a long span of 2 years after the option agreement with Hypercity (Pg No.73 of PB) and one of the reason attributable for the same can be the effect caused by the Lehman Brothers crisis. 7. Booking of the flats at an early stage of the project is recognized method of raising resources and even the Hon'ble CIT(A) has held the same. A copy of the sample Option Agreement for Flat No. 1901 has been enclosed at Pg No. 32-70 of the PB. Similar agreements were entered for all the flats. This establishes the practice of booking the flats through option agreements. As on 31.03.2018, the total option deposit received by the assessee was Rs 318 crores which was Rs 5.61] crores as on 31.03.2010. The assessee has enclosed balance shee....
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....Not all the flats have been sold immediately. One cannot ignore the risk and reward undertaken by Hypercity. Most importantly, the assessee has entered into similar agreement with other parties and the prices are comparable. Once, that is established, nothing else survive. Flat no. 1401 was purchased at Rs. 6.83 crores by Hypercity and sold after one year at Rs. 7.60 crores. Earning 10% margin in one year, after taking risk of committing purchase transaction tn an under-construction building, is not unusual. Anyone who is reasonably acquainted with real estate market in the city of Mumbai would vouch for this. 5. Paragraph no. 5- payments in respect of flat no. 1901 All the payments in respect of flat no. 1901 has been received from Hypercity as per the terms of agreement. This allegation has not been made by any authority below. This is a fresh case made out by the ld. D.R. If Hypercity has not made the payment because of delay in obtaining approval from the local authority by the assessee so as the case with the other customers. There is absolutely no separate treatment given to any customers. The details of Payments received ....
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.... alleged arm's length price of options, by pegging it to the actual sales price/value achieved in the later years, indeed suffered from hindsight bias and was therefore inherently flawed. For this, we gainfully refer to the following observations made by this Tribunal at Hyderabad in the case of DQ (International) Ltd Vs ACIT (72 taxmann.com 142). "We are in agreement with the above findings of the Bangalore Bench that the valuation method adopted for determining the future years cannot be replaced with actuals down the line, the valuation will go either way. When it goes to north, the revenue may adopt the same time, when it goes to south, the assessee may adopt, there won't be any consistency. What is important is the value available at the time of making business decision. It should be left to the wisdom of the businessman, he knows what is good for the organization. No doubt, 'IP" was sold to "AE". The method adopted should be consistent and should be documented to review in the future. The review does not mean replacing the projection with actuals. It is the rational of adopting the values for making decision at the point of time of making decision. When the v....
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....be substituted with the market value for stamp duty purposes and shall be deemed to be the revenue of the assessee. As already noted earlier, the option price agreed in 2010 was commensurate with the prevailing market rate for stamp duty purposes and therefore it cannot be said that the option prices agreed upon were understated. Even the Ld. DR has been unable to refute this fact. From the details of flat sold by the assessee [Page 74 of paperbook], it is observed that the assessee had sold several flats in 2015, which inter alia comprised of a flat sold for Rs.58,323/sq. ft. and another flat sold for Rs.72,900/sq. ft. Going by the logic propounded by the Revenue, since the price of the flats in the same project, which was sold in the same month of the same year, was at variance, the sale price of Rs.58,323/sq. ft., negotiated and agreed with third party, ought to be substituted with higher sale price of Rs.72,900/sq. ft. This however has neither been done by the AO nor is this the position of law. In our considered view, a seller of an immovable property is not required to compare the prices at which different flats are sold to different parties. Instead, the only exercise, which....
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....g regard to the foregoing, the differential of 10% [(30,522-27,429)/30,522] between the price of option agreed between assessee and HRPL in 2010 vis-à-vis the price of option at which HRPL sold it to an unrelated party in 2011 could easily be attributed to timing difference and in that view of the matter, on the given facts, the option price cannot be said to be lower or understated. We thus hold that the benchmarking conducted by the Ld. CIT(A), to ultimately confirm addition to the extent of Rs.10,67,26,046/-, was unjustified. 43. The Ld. DR, on the other hand, has also cited the instance of Flat No. 1401 assigned/sold by HRPL to an unrelated party, but to contend that HRPL had made a profit of 308% from this option agreement in a year's time, which according to him, showed that all the option prices as originally agreed upon was on lower side. We however find this calculation of the Ld. DR to be flawed. As noted above, the assessee had entered into the option agreement with HRPL for Flat No. 1401 for a price of Rs.27,429/sq. ft., which in turn, had assigned/sold this option after one year for Rs.30,522/sq. ft., resulting in profit of 11% [(30,522-27,429)/27,429] in a s....
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....ee before all the authorities that the said three companies are independent and acted as such at arm's length. In fact, SCCIL is a listed company. This contention of the assessee is accepted by CIT(A) who has reached a finding of fact that the amounts received by Maharana Mills from the Banks and financial institutions and from SCCIL were utilised in purchasing new machinery which was also installed and it is not the allegation of the Assessing Officer that these funds were misappropriated by the directors or were frittered away. CIT(A) have, therefore, reached a finding of fact that the guarantee given by Agrima was genuine. This finding of fact is also accepted by the Appellate Tribunal. In view of these concurrent findings of fact, we see no reason as to why we should interfere with the said finding of fact. 6. In view thereof we are of the view that except for making a bare allegation that the entire exercise of giving guarantee by Agrima to SCCIL was collusive and only to book losses on the ground that the companies have common directors and were under the same management, the revenue has failed to produce any material in support of their case that the guarantee g....
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....mpetitive price for investing in twenty (20) flats of the proposed development to be undertaken by the assessee, particularly when the construction of the project was yet to begin. 46. On totality of the above facts and circumstances, we do not find merit in the benchmarking analysis undertaken both by Ld. CIT(A) and Ld. DR. We also find the averments made by the Ld. DR in her written submissions to be untenable. 47. The Ld. AR appearing on behalf of the assessee has also demonstrated before us that, it was also not the case, that by entering into this option agreement, the assessee had shifted profits to HRPL thereby reducing its tax liability. It is not in dispute that, both the assessee and HRPL are assessed in the status of 'company' at the same applicable tax rates. It is also not the case of the Revenue that HRPL did not credit the revenues derived from sale/assignment of options as income in its books of accounts. From Page 76 of the paperbook, it is noted that the assessee had brought forward losses to the tune of Rs.156 crores from earlier years. Hence, even taking into account the addition of Rs.98 crores made by the AO, there were sufficient losses available with t....