Assessee had entered into option agreement for sale of twenty (20) flats in its residential project ‘Artesia’ with its group entity, HRPL. In terms of agreement, HRPL had placed refundable deposits with assessee to obtain an option to purchase proposed flat, which would be constructed by assessee, at a pre-determined option price.  According to Assessing Officer, transaction with HRPL was a way to divert profits and shift consideration received on sale of flats from books of assessee to HRPL Assessing Officer, added revenues realized by HRPL on sale of these flats to third parties to sales value declared by assessee and made additions to income. Held that  at material time, when this agreement was entered into, even approval/clearance from local authority for commencement of construction was pending Further, this option deposit was neither secured nor did it give HRPL any right to specific performance.  It was only an irrevocable option and not an agreement for sale.  Further, there was no definitive manner provided for calculation of compensation and instead it was to be based on mutually agreeable terms. Therefore, it could not be said that assessee had entered into sham transactions with group entity with sole purpose of diverting revenue accruing to it and, thus, additions made by Assessing Officer was deleted. (AY. 2018-19)