M/s. Adityaram Properties (P) Ltd., CHENNAI v. DCIT, CHENNAI

ITA 812/CHNY/2010 | 2007-2008
Pronouncement Date: 20-01-2011 | Result: Allowed

Appeal Details

RSA Number 81221714 RSA 2010
Assessee PAN AAACB2216N
Bench Chennai
Appeal Number ITA 812/CHNY/2010
Duration Of Justice 7 month(s) 25 day(s)
Appellant M/s. Adityaram Properties (P) Ltd., CHENNAI
Respondent DCIT, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 20-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 20-01-2011
Date Of Final Hearing 18-01-2011
Next Hearing Date 18-01-2011
Assessment Year 2007-2008
Appeal Filed On 26-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH D BEFORE DR. O.K.NARAYANAN VICE-PRESIDENT AND SHRI HARI OM MARATHA JUDICIAL MEMBER I.T.A. NO. 744/MDS/2010 ASSESSMENT YEAR : 2007-08 THE ASST. COMMISSIONER OF INCOME TAX COMPANY CIRCLE I (1) CHENNAI. VS. M/S.ADITYARAM PROPERTIES (P) LTD. NO.14 AMBADI ROAD KOTTURPURAM CHENNAI-600 085. PAN - AAACB 2216 N (APPELLANT) (RESPONDENT) I.T.A. NO. 812/MDS/2010 ASSESSMENT YEAR : 2007-08 M/S.ADITYARAM PROPERTIES (P) LTD. CHENNAI-85. (APPELLANT) VS. THE ASST.COMMISSIONER OF INCOME-TAX CHENNAI. (RESPONDENT) APPELLANT BY : SHRI K.E.B.RENGARAJAN JR. STANDING COUNSEL RESPONDENT BY : SHRI R.VIJAYARAGHAVAN ITA 744 & 812/10 :- 2 -: O R D E R PER DR. O.K.NARAYANAN VICE PRESIDENT THIS IS A SET OF CROSS APPEALS FILED BY THE REVEN UE AND BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08. THE APPEALS ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME-TAX (APPEALS) III AT CHENNAI DATED 30.03.2010 AND ARIS E OUT OF THE ASSESSMENT COMPLETED UNDER SEC.143(3) OF THE INCOM E-TAX ACT 1961. 2. THE ASSESSEE-COMPANY IS ENGAGED IN THE BUSINES S OF PURCHASE AND SALE OF LAND/THAT OF DEVELOPERS. IT P URCHASES LARGE PARCEL OF LAND DIVIDES INTO PLOTS AND SELL THEM IN INDEPE NDENT PLOTS. IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL THE ASSESSEE HAD PURCHASED LAND FOR ` 19.51 CRORES. AS THE ASSESSEE IS DEALING IN PURCHASE AND SALE OF LAND THE LAND HAS BEEN TREATED AS STOCK-IN-TRADE OF THE ASSESSEE. 3. THE ASSESSEE HAD PURCHASED LAND FROM ITS DIRECT ORS AND SHAREHOLDERS. THE LAND WAS PURCHASED AT THE RATE O F ` 3 LAKHS PER CENT. THE DIRECTORS OF THE ASSESSEE-COMPANY HAVE T O HAND OVER THE ITA 744 & 812/10 :- 3 -: POSSESSION OF THE PROPERTY TO THE COMPANY AS AND WH EN AN ULTIMATE BUYER IS LOCATED. ON THE BASIS OF THE ABOVE BUSINE SS ARRANGEMENT 41 BUYERS WERE LOCATED IN THE PREVIOUS YEAR RELEVANT T O THE ASSESSMENT YEAR UNDER APPEAL AND THAT MUCH LAND WAS RELEASED B Y THE DIRECTORS TO THE POSSESSION OF THE ASSESSEE. THE LAND PURCHASED BY THE ASSESSEE- COMPANY FROM ITS DIRECTORS WERE TRANSFERRED FROM TH E POSSESSION OF THE ASSESSEE-COMPANY TO ULTIMATE BUYERS IN A SEQUENTIAL MANNER IN THE SAME DAY. 4. AS AGAINST THE ABOVE THE ASSESSEE-COMPANY HAS SOLD DIFFERENT PLOTS OF LAND TO ULTIMATE BUYERS AT A PRI CE LESSER THAN THE PURCHASE PRICE. THE ASSESSING OFFICER HAD ATTACHED A LIST OF LAND TRANSACTIONS ENTERED INTO BY THE ASSESSEE-COMPANY I N THE RELEVANT PREVIOUS YEAR WHEREIN THE DETAILS OF SUCH SALES ARE AVAILABLE. IN THE CASE OF ONE SHRI T.RAGHURAMAN THE LAND WAS SOLD AT THE RATE OF ` 1 36 363/- PER CENT AS AGAINST THE PURCHASE VALUE O F ` 3 LAKHS. IN THE CASE OF ONE SHRI G. SARAVANAN THE SALE VALUE WAS ` 1 81 818/- PER CENT AS AGAINST THE PURCHASE VALUE OF ` 3 LAKHS. THE ASSESSING AUTHORITY HAD IDENTIFIED 29 SUCH INSTANCES WHERE TH E ASSESSEE HAS SOLD PLOTS TO DIFFERENT BUYERS AT A PRICE LESSER THAN TH E PURCHASE PRICE OF ` 3 LAKHS PER CENT. ITA 744 & 812/10 :- 4 -: 5. IN THE LIGHT OF THE ABOVE DETAILS THE ASSESSIN G OFFICER INITIATED THE PROVISIONS OF LAW CONTAINED IN SEC.40 A(2)(B) OF THE INCOME- TAX ACT 1961 WHICH STATES THAT WHERE AN ASSESSEE-C OMPANY INCURS AN EXPENDITURE IN RESPECT OF WHICH PAYMENT HAS BEEN MA DE TO ANY DIRECTOR OF THE COMPANY AND THE ASSESSING OFFICER IS OF THE OPINION THAT SUCH EXPENDITURE IS EXCESSIVE AND UNREASONABLE HAVING REGARD TO THE FAIR MARKET VALUE OF THE GOODS SO MUCH OF THE EXPENDITURE AS IS CONSIDERED BY HIM TO BE EXCESSIVE OR UNREASONABLE S HALL NOT BE ALLOWED AS A DEDUCTION. ON THE BASIS OF THE ABOVE FINDING THE ASSESSING OFFICER MADE AN ADDITION OF ` 5 42 99 307/- TO THE INCOME RETURNED BY THE ASSESSEE-COMPANY. 6. THE ASSESSMENT WAS TAKEN IN FIRST APPEAL BEFOR E THE COMMISSIONER OF INCOME-TAX (APPEALS). THE MAIN THR UST OF THE ARGUMENT OF THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS THAT THE ASSESSEE HAS PROCURED LAND F ROM ITS DIRECTORS AT A FLAT RATE OF ` 3 LAKHS PER CENT ON A BUSINESS PROPOSITION THAT TH E LAND VALUE WILL BE INCREASED YEAR AFTER YEAR AND IN FUTU RE THE ASSESSEE- COMPANY WILL BE IN A POSITION TO SELL THE LAND AT A VERY MUCH HIGHER RATE AND THAT THE SALE OF PLOTS IN THE INITIAL YEARS FOR A PRICE LESSER THAN THE PURCHASE PRICE WAS ONLY AN INITIATION OF BUSINESS P ROPOSITION OF THE ITA 744 & 812/10 :- 5 -: ASSESSEE. IT IS THE CASE OF THE ASSESSEE-COMPANY T HAT THE SCHEME OF THE BUSINESS ENVISAGED BY THE ASSESSEE-COMPANY DOE S NOT CONFINE TO ONE OR TWO ASSESSMENT YEARS BUT SPREADS OVER A LONGER PERIOD OF 6 TO 10 YEARS BY WHICH TIME PLOTS OF LAND CAN BE SOLD A T A HIGHER PRICE THEREBY REAPING HIGH DIVIDENDS IN FUTURE. 7. THIS CONTENTION WAS CONSIDERED BY THE COMMISSIO NER OF INCOME-TAX (APPEALS) IN THE LIGHT OF THE FACTS AVAI LABLE BEFORE HIM. HE FOUND THAT THE ASSESSEE HAD PURCHASED LAND FOR ` 3 LAKHS PER CENT AND SOLD THE LAND IN THE PREVIOUS YEAR AT THE RATE OF ` 1 36 000/- PER CENT. HE POINTED OUT THAT EVEN THOUGH THIS TRANSACTION RE SULTED IN A LOSS IN SUBSEQUENT YEAR THE LAND WAS SOLD BY THE ASSESSEE A T THE RATE OF ` 2 72 000/- PER CENT AND THEREAFTER AT THE RATE OF ` 6 36 000/- PER CENT. THE COMMISSIONER OF INCOME-TAX (APPEALS) FOUND THAT WHEN THE PLOT OF LAND WAS SOLD AT THE RATE OF ` 6 36 000/- PER CENT THE PRICE PAID TO THE DIRECTORS WAS THE SAME FLAT RATE OF ` 3 LAKHS PER CENT. THE COMMISSIONER OF INCOME-TAX (APPEALS) HELD THAT THIS YEARLY INCREASE IN THE SALE PRICE OF PLOT JUSTIFIES THE BUSINESS SCHEM E PROPOSED BY THE ASSESSEE. THE 568 CENTS OF LAND REMAINING UNSOLD AS ON 31 MARCH 2007 IF SOLD AT THE RATE OF ` 6 36 000/- PER CENT WHICH IS THE LATEST SALE PRICE THE ASSESSEE WILL BE MAKING A SUBSTANTIAL GA IN OF NEARLY ` 39 ITA 744 & 812/10 :- 6 -: CRORES. HE HELD THAT THE GAIN OF THE ASSESSEE-COMP ANY WILL BE MUCH HIGHER AS AND WHEN THE SITUATION IN THE REAL ESTATE MARKET IMPROVES IN FUTURE. THEREFORE HE HELD THAT IT IS NOT POSSIBLE TO OVERRULE THE SUBMISSIONS OF THE ASSESSEE WITH REFERENCE TO THE S ALE PRICE OF THE LAND ONLY FOR THE REASON THAT IN THE INITIAL YEARS THE LAND WAS SOLD AT A PRICE LESSER THAN THE PURCHASE PRICE. 8. WHILE COMING TO THE ABOVE CONCLUSION THE COMMI SSIONER OF INCOME-TAX (APPEALS) HAS RELIED ON MAINLY ON THE JU DGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF S.A.BUILDERS LT D. V. CIT (288 ITR 1) AND ALSO OTHER DECISIONS OF VARIOUS HIGH COURTS TO BRING HOME THE POINT THAT THE BUSINESS SCHEME PROPOSED BY THE ASSE SSEE IS A LAWFUL ONE AND THERE CANNOT BE A CASE OF UNDER-STATEMENT A ND CONSEQUENT ADDITION TO THE INCOME. 9. AFTER MAKING SUCH A CATEGORICAL FINDING AS STAT ED ABOVE THE COMMISSIONER OF INCOME-TAX (APPEALS) FURTHER HELD T HAT NONETHELESS IN VIEW OF THE ORDER OF THE ASSESSING AUTHORITY THE P URCHASE PRICE SHOULD BE ADOPTED AT ` 2 75 000/- PER CENT AS AGAINST ` 3 LAKHS PER CENT CLAIMED BY THE ASSESSEE THEREBY MAKING A DISALLOWA NCE OF ` 25000/- PER CENT. ITA 744 & 812/10 :- 7 -: 10. THE REVENUE AS WELL AS THE ASSESSEE ARE AGGRIE VED AND THEREFORE THE CROSS APPEALS BEFORE THE TRIBUNAL. 11. THE DETAILED GROUNDS RAISED BY THE REVENUE IN I TS APPEAL ARE AS UNDER : 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ALL OW THE EXPENDITURE ON PURCHASE OF LAND @ ` 2 75 000/- PER CENT. 2.1 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) FAILED TO NOTE THAT THE SALE VALUE OF THE LANDS DURING THE SUBSEQUENT YEARS CANNOT BE TAKEN INTO ACCOUNT IN DECIDING THE ADMISSIBILITY OF AN EXPENDI TURE IN THE EARLIER ASSESSMENT YEAR SINCE WHAT WAS DECID ED FOR A.Y. 2007-08 WAS WHETHER THE PRICE PAID TO DIRECTORS FOR THE RELEVANT ASSESSMENT YEAR WAS EXCESSIVE HAVING REGARD TO THE FAIR MARKET VALUE OF THE LANDS. 2.2 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE SEEN THAT THE FAIR MARKET V ALUE PRESCRIBED FOR THE SAID LANDS IN THE WEBSITE OF TH E REGISTRATION DEPARTMENT IS ONLY ` 10 000/- PER CENT FOR THE PERIOD 01-04-2003 TO 31-03-2007. ITA 744 & 812/10 :- 8 -: 2.3 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE SEEN THAT REGARDING THE SAL E PRICE OF LAND DURING SUBSEQUENT YEARS AT ` 2.72 LACS AND ` 6.36 LACS FOR ASSESSMENT YEARS 2008-09 AND 2009-10 RESPECTIVELY DOES NOT APPEAR TO BE BACKED BY ANY EVIDENCE AND EVEN IF IT WAS BASED ON EVIDENCE PRODUCED BEFORE THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) SUCH EVIDENCE WAS NOT FURNISHED TO TH E ASSESSING OFFICER FOR HIS COMMENTS. 2.4 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) FAILED TO APPRECIATE THE FACT RECORDED IN THE ASSESSMENT ORDER THAT ON AN AVERAGE THE LAND PURCHASED FROM THE DIRECTORS HAD BEEN SOLD BY THE ASSESSEE-COMPANY TO THE ULTIMATE BUYERS (41 IN NUMBER) AT ` 1.36 LAKHS PER CENT AND THAT THAT TRANSMISSION OF LAND THROUGH THE COMPANY BY THE DIRECTORS RESULTED IN TRANSMISSION OF EXCESS MONEY TO THE TUNE OF ` 5 42 99 307 FROM COMPANY TO THE DIRECTORS DURING THE PREVIOUS YEAR ALONE. 2.5 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE SEEN THE FACT THAT AS PER T HE AGREEMENT BETWEEN THE ASSESSEE-COMPANY AND THE DIRECTORS THE LANDS WERE NOT TRANSFERRED TO THE COMPANY BUT POSSESSION OF THE LAND PROPERTY WAS HANDED OVER TO COMPANY ONLY WHEN THE COMPANY FINDS AN ULTIMATE BUYER AND HENCE ACT OF FIXING HIGH PRIC E NOT ITA 744 & 812/10 :- 9 -: PREVALENT IN THE MARKET IN THE AGREEMENT AND LOSIN G HUGE MONEY BY THE ASSESSEE IS A COLOURABLE ACTION PARTICULARLY WITH RESPECT TO THE PRESENT ASST. YEAR . 2.6 IT IS SUBMITTED THAT THE INFLATION OF COST OF PURCHASES IS TO SHIFT THE TAXABLE PROFITS TO THE DIRECTORS H ANDS WHEREIN SUCH PROFITS ARE EXEMPT FROM TAX AND THAT T HE AGREEMENT WAS COLOURABLE DEVICE FALLING WITHIN PURV IEW OF SEC.40(A)(2)(B) OF THE IT ACT. 12. THE GROUNDS RAISED BY THE ASSESSEE IN ITS CROS S APPEAL ARE AS BELOW : 2. THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE U/S.40A(2)(B) TO THE EX TENT OF ` 25 000/-. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DIRECTING THE ASSESSING OFFICER TO ADOPT A SUM OF ` 2 75 000/- PER CENT AS COST OF LAND PURCHASED FROM THE DIRECTO RS AS AGAINST THE ACTUAL COST OF ` 3 00 000/-. 4. THE COMMISSIONER OF INCOME-TAX (APPEALS) FAILED TO APPRECIATE THAT THE LAND ACQUIRED FROM THE DIRECTOR S WHICH CONSTITUTE LESS THAN 30% OF THE OVERALL AREA OF THE PROJECT WAS VERY CRUCIAL FOR ACCESS WITHOUT WHICH THE PROJE CT COULD NOT HAVE BEEN IMPLEMENTED SUCCESSFULLY AND HENCE TH E PREMIUM OVER THE MARKET PRICE WAS CONSIDERED ESSENT IAL AND REASONABLE. ITA 744 & 812/10 :- 10 -: 5. THE COMMISSIONER OF INCOME-TAX (APPEALS) FAILED TO APPRECIATE THAT THE SALE INSTANCES RECORDED DURING THE ASSESSMENT YEAR REPRESENTS RETAIL SALE OF SMALL BIT S AND PIECES OF LAND AND THE SAME CANNOT BE REPRESENTATIV E OF THE OVERALL REALIZATION POTENTIAL OF THE PROJECT FROM T HE LARGER POINT OF VIEW. 6. THE COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT T O HAVE APPRECIATED IN THE SUBSEQUENT ASSESSMENT YEARS APPE LLANT HAD REALIZED FROM THE SALE OF LAND MORE THAN THE CO ST OF ACQUISITION OF LAND AND HENCE THE PROVISIONS OF SEC TION 40(A)(2)(B) ARE NOT ATTRACTED IN THE PRESENT CASE. 13. WE HEARD SHRI K.E.B.RENGARAJAN THE LD. STANDI NG COUNSEL APPEARING FOR THE REVENUE AND SHRI R. VIJAYARAGHAVA N THE LEARNED COUNSEL APPEARING FOR THE RESPONDENT-ASSESSEE. 14. WE CONSIDERED THE MATTER. THE ORDER OF THE CO MMISSIONER OF INCOME-TAX (APPEALS) HAS BROUGHT ON RECORD THE D ISCUSSION REGARDING THE RATIONALE BEHIND THE BUSINESS PROPOSI TION MOOTED BY THE ASSESSEE-COMPANY. THE ASSESSEE-COMPANY HAD PURCHAS ED THE LAND FROM ITS DIRECTORS AT THE RATE OF ` 3 LAKHS PER CENT. CERTAIN PLOTS OF LAND WERE SOLD IN THE PREVIOUS YEAR RELEVANT TO THE ASSE SSMENT YEAR UNDER APPEAL FOR A PRICE LESSER THAN THE PURCHASE PRICE. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ACCEPTED THE CONTENTION OF THE ASSESSEE- ITA 744 & 812/10 :- 11 -: COMPANY THAT THESE INITIAL SALES WERE MADE TO PROMO TE THE LAND DEVELOPED BY THE ASSESSEE-COMPANY SO THAT MORE BUYE RS WOULD COME FORWARD AND THE ASSESSEE-COMPANY WOULD BE IN A POSI TION TO SELL THE PLOTS AT A HIGHER RATE IN FUTURE. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS FOUND THAT THIS EXPLANATION OF THE AS SESSEE-COMPANY HAS BEEN PROVED BY THE FACT THAT IN SUBSEQUENT YEAR S THE LAND WAS SOLD AT THE RATE OF ` 6 36 000/- PER CENT. WHEN WE CONSIDER THE ARGUMEN T OF THE ASSESSEE-COMPANY THAT OVER ALL PROFITS OF THE A SSESSEE-COMPANY NEED TO BE APPRECIATED FOR A PERIOD OF MORE THAN SI X YEARS RATHER THAN FOCUSING THE LOSS INCURRED FOR THE INITIAL YEARS W E FIND THAT THERE IS SUBSTANCE IN THAT ARGUMENT. THE ASSESSEE-COMPANY H AS PURCHASED LARGE EXTENT OF LAND INCLUDING THE LAND OF THE DIRE CTORS. IT HAD TO DEVELOP THAT PROPERTY INTO SALEABLE PLOTS. IN SUCH A PROJECT IT IS NECESSARY THAT PLOTS BE SOLD INITIALLY FOR ATTRACT IVE PRICES SO THAT THE BUYERS WOULD DEVELOP THOSE PLOTS AND THEREBY THE OV ERALL MARKETABILITY OF THE ENTIRE PROPERTY WILL BE INCREASED. THEREFO RE IN ORDER TO STIMULATE FUTURE GROWTH THE ASSESSEE MIGHT HAVE SO LD PLOTS IN THE INITIAL YEARS FOR A PRICE LESSER THAN THE PURCHASE PRICE. BUT WHEN THE PLOTS SOLD BY THE ASSESSEE-COMPANY IN THE INITIAL YEARS A RE DEVELOPED BY THE BUYERS THE ACCEPTABILITY OF THAT PROPERTY INCREASE S AND THE ASSESSEE- COMPANY WILL BE IN A POSITION TO SELL THE REMAINING PLOTS OF LAND FOR A ITA 744 & 812/10 :- 12 -: BETTER AND REMUNERATIVE PRICE. THEREFORE IT IS TO BE SEEN THAT THE SALE OF LAND IN THE INITIAL YEARS FOR A PRICE LESSER THA N THE PURCHASE PRICE IS JUSTIFIED BY HIGHER AMOUNT OF PRICE FETCHED BY THE ASSESSEE-COMPANY ON SELLING PLOTS AT THE RATE OF ` 6 36 000/- PER CENT. THEREFORE IT IS QUITE NATURAL TO PRESUME THAT THE SALE VALUE WILL B E MORE IN COMING YEARS. 15. THEREFORE IN THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN THE LIGHT OF THE PRINCIPLES OF COMMERCIAL EXPEDIENC Y EXPLAINED BY THE HON'BLE SUPREME COURT IN THE CASE OF S.A.BUILDERS LT D. V. CIT (288 ITR 1) WE FIND THAT THE REASON FOR THE LOSS INCURRED I N THE RELEVANT YEAR IS EXPLAINED BY THE ASSESSEE-COMPANY IN A CONVINCING M ANNER. AS RIGHTLY ARGUED BY THE ASSESSEE THE PROFIT OF THE PR OJECT HAS TO BE ESTIMATED ON AN OVERALL BASIS EVEN THOUGH FOR INCOM E-TAX PURPOSE THE PROFIT OR LOSS IS TO BE WORKED OUT ON AN YEARLY BAS IS. 16. THE REVENUE FAILS IN ITS APPEAL. 17. NOW COMING TO THE APPEAL FILED BY THE ASSESSE E THE ISSUE IS WHETHER THE COMMISSIONER OF INCOME-TAX (APPEALS) IS JUSTIFIED IN SUSTAINING AN ADDITION OF ` 25000/- PER CENT. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS DISCUSSED THE MATTER IN A DETAILED WAY AND ITA 744 & 812/10 :- 13 -: HAS COME TO A CONCLUSION THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INITIATING SEC.40A(2)(B). ONCE THAT DECISION IS AR RIVED AT BY THE COMMISSIONER OF INCOME-TAX (APPEALS) AND FOUND THAT THE ASSESSEE WAS CONTEMPLATING A LONG RANGE BUSINESS PLAN THE C OMMISSIONER OF INCOME-TAX (APPEALS) SHOULD HAVE ACCEPTED THE FULL CONSIDERATION OF ` 3 LAKHS PER CENT PAID TO THE DIRECTORS AS REASONABL E. THERE IS NO JUSTIFICATION IN MAKING A DISALLOWANCE OF ` 25000/- OUT OF THAT PRICE OF ` 3 LAKHS PER CENT. THIS IS SOMEWHAT IN THE NATURE OF AN ANTI CLIMAX TO THE FINDING OF THE COMMISSIONER OF INCOME-TAX (APPE ALS) HIMSELF. IT LOOKS LIKE DISALLOWANCE FOR THE SAKE OF DISALLOWANC E. THEREFORE WE FIND THAT THERE IS NO REASON TO TREAT THE PURCHASE VALUE OF THE LAND AT ` 2 75 000/- AS AGAINST ` 3 LAKHS PER CENT STATED BY THE ASSESSEE. THIS INTERFERENCE MADE BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IS SET ASIDE AND THE PURCHASE VALUE OF THE LAND IN THE HAN DS OF THE ASSESSEE- COMPANY IS DIRECTED TO THE ACCEPTED AT THE RATE OF ` 3 LAKHS PER CENT AS CONCEDED BY THE ASSESSEE-COMPANY. IT IS TO BE SEEN FURTHER THAT THE DIRECTORS IN TURN HAVE DECLARED LONG TERM CAPITAL G AINS IN THEIR HANDS. 19. THE ASSESSEE IS SUCCESSFUL IN ITS APPEAL. ITA 744 & 812/10 :- 14 -: 20. IN RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THURSDAY THE 20 TH OF JANUARY 2011. SD/- SD/- ( HARI OM MARATHA) JUDICIAL MEMBER (DR. O.K.NARAYANAN) VICE-PRESIDENT CHENNAI DATED : 20 TH JANUARY 2011 MPO* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR