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2018 (3) TMI 1349 - AT - Income TaxValuation of land acquired from the partners in the partnership firm - Application of Section 40(2)(a) - The assessee has submitted that the provisions of sec. 40A(2)(a) will apply only to goods, services or facilities and the same will not apply to land. - it is further submitted that, the provisions of sec. 45(3) shall apply to the transaction of transfer of capital asset by a partner to the partnership firm and the provisions of sec. 40A(2) will not override the provisions of sec. 45(3) of the Act - Date on which partnership firm came into existence. Held that:- Since the assessee is dealing in land, as stated earlier, it constitutes “goods” in its hands and since the payments have been made to partners (who are covered by sec. 40A(2)(b)), we are of the view that the AO was very much entitled to examine the payments made vis-a-vis the fair market value of the goods (land) in terms of sec. 40A(2)(a) of the Act. Hence, as per the provisions of sec. 45(3), the assessee firm might have made payments to the partners towards the cost of land, but the same does not bar application of sec. 40A(2)(a) of the Act. We have noticed that the provisions of sec. 45(3) are applicable in the hands of partners. The objective behind provisions of sec. 45(3) and sec. 40A(2)(a) is different. Hence, in our view, sec. 45(3) cannot override provisions of sec. 40A(2)(a) of the Act. - Decided in favor of revenue. Date on which partnership firm came into existence - Held that:- The ld. CIT(A), upon going through the documents relating to the plan approval, Partnership deed etc., came to the conclusion that the partners have applied for a common layout in 2002-03 in their personal names and no further action has been taken up to 2005-06. Thereafter, for the first time, the Partnership deed was executed on 31/05/2005 with retrospective effect from 19/05/2005. Accordingly, the ld. CIT(A) held that the Partnership firm came into existence only on 19/05/2005, as recorded in the registered partnership deed. - tax authorities have given proper reasoning to come to the conclusion that the partnership firm came into existence only on 19/05/2005 as per the registered partnership deed executed on 31/05/2005 - Decided against the assessee.
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