ITO, Hubli V. Smt. Renu S. Ladha, Hubli

ITA 1029/BANG/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1463 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 24-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANOJ D PUKALE
• Keywords: Valuation report

Judgement Text

PAGE 1 OF 5 ITA NO.1209/BANG/2010 1 IN THE INOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE DR. O K NARAYANAN, VICE PRESIDENT AND SMT. P MADHAVI DEVI, J.M. ITA NO.1029/BANG/2010 (ASST. YEAR 2007-08) THE INCOME TAX OFFICER, WARD-3(2), HUBLI. -APPELLANT VS SMT. RENU S LADHA, PROP: M/S HUBLI ASBESTOS CEMENT PRODUCTS, C-14, INDUSTRIAL ESTATE, GOKUL ROAD, HUBLI-580 030. - RESPONDENT APPELLANT BY : SHRI MANOJ KUMAR, ADDL. CIT RESPONDENT BY : SHRI MANOJ D PUKALE, ADVOCATE O R D E R PER P MADHAVI DEVI : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF THE CIT(A), HUBLI DATED 07.07.2010 FOR THE ASST. YEAR 2007-08. 2. THE ONLY GRIEVANCE OF THE REVENUE IN THIS APPEAL IS AGAINST THE ORDER OF CIT(A) IN DELETING THE ADDITIO NS TO THE EXTENT OF RS.10,08,775/- OUT OF THE TOTAL ADDITION OF RS.1 1,07,772/- MADE BY THE AO ON ACCOUNT OF UNRECORDED INVESTMENT IN THE RESIDENTIAL BUILDING. PAGE 2 OF 5 ITA NO.1209/BANG/2010 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL, CARRYING ON THE BUSINESS OF MANUFACTURE OF PVC PIPES AT INDUSTRIAL ESTATE, GOKUL ROAD, HUBLI. DURING THE R ELEVANT FINANCIAL YEAR, THE ASSESSEE GOT COMPLETED CONSTRUCTION OF HER RESIDENTIAL BUILDING AT NO.28, WARD NO.33 IN CTS NO.4253/2 AT V IDYANAGAR, HUBLI. THE CONSTRUCTION OF THE SAID BUILDING WAS S TARTED IN THE YEAR 2005 AS PER MUNICIPAL CORPORATION PERMISSION LETTER DATED 2/2/2005 AND WAS COMPLETED DURING THE YEAR 2006 AS P ER THE COMPLETION CERTIFICATE ISSUED BY THE HDMC, HUBLI ON 8/8/2006. IN THE AUDITED BALANCE SHEET AS ON 31.3.2007, THE ASSE SSEE HAD SHOWN THE VALUE OF THE HOUSE BUILDING AT RS.33,27,619/-. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3), THE ASSESSING AU THORITY SPECIFICALLY ENQUIRED ABOUT THE DETAILS OF THE CONST RUCTION OF THE HOUSE BUILDING AND THE ASSESSEE FURNISHED THE COPIE S OF THE MUNICIPAL CORPORATION PERMISSION AND OTHER DETAILS SUCH AS APPROVED BUILDING PLAN, VALUATION REPORT DATED 30.11.2008 OB TAINED FROM CHARTERED ENGINEER SRI K K RANJANAGI, BANK LOAN CER TIFICATE AND CONFIRMATION LETTERS IN RESPECT OF SUNDRY CREDITORS ETC.. AS PER THE VALUATION REPORT FURNISHED BY THE ASSESSEE, THE FOLLOWING IS THE VALUE OF THE RESIDENTIAL BUILDING:- I) COST OF LAND RS. 5,15,000 II) COST OF CONSTRUCTION OF GROUND FLOO R RS.11,61,500 III) COST OF CONSTRUCTION OF FIRST FLOOR RS. 5,98,000 IV) COST OF CONSTRUCTION OF COMPOUND WA LL RS. 56,500 V) COST OF ENTIRE INTERIOR DECORATION RS.10,12,0 00 TOTAL = RS.33,43,000 PAGE 3 OF 5 ITA NO.1209/BANG/2010 3 AFTER CONSIDERING THE SAID VALUATION REPORT, THE AO OBSERVED THAT THERE IS A DIFFERENCE IN THE VALUE SHOWN BY THE ASSE SSEE IN THE BALANCE SHEET AND THE VALUE SHOWN BY THE CHARTERED E NGINEER IN HIS ESTIMATE AND WHEN THESE DIFFERENCES WERE POINTED OU T TO THE ASSESSEE, THE ASSESSEE COULD NOT EXPLAIN THE CONSTR UCTION DETAILS WITH DOCUMENTARY EVIDENCES. IN VIEW OF THE SAME, TH E MATTER WAS REFERRED TO THE ASSISTANT VALUATION OFFICER (AVO), HUBLI, WHO FURNISHED A VALUATION REPORT VALUING THE PROPERTY AT RS.33,62,000/-. THE ASSESSEE WAS CONFRONTED WITH THIS VALUATION REP ORT AND AFTER CONSIDERING HER OBJECTIONS, THE ASSESSING AUTHORITY MADE THE ADDITION OF DIFFERENCE IN THE COST OF THE HOUSE BUI LDING AT RS.11,07,722/-. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT(A) STATING THAT THE AO HAS NOT CONSIDERED T HE COST OF SITE OF RS.5,80,000/- DEBITED TO THE CAPITAL ACCOUNT OF THE ASSESSEE IN THE FIRM AND THAT THE CPWD RATES ADOPTED BY THE LEAR NED DEPARTMENT VALUER ARE NOT RELEVANT IN A PLACE LIKE HUBLI AND THAT THE VALUATION OF THE CONSTRUCTION COST ADOPTED BY TH E ASSESSEE WAS CORRECT. 5. AFTER CONSIDERING THE ASSESSEES CONTENTIONS, T HE CIT(A) HELD THAT THE ADDITION TOWARDS HOUSING LOAN INTEREST OF RS.64,366/- IS REQUIRED TO BE DELETED AS THE INTERE ST WAS PROPERTY ACCOUNTED BY DEBITING THE CAPITAL ACCOUNT OF THE AS SESSEE AND IT IS NOT UNACCOUNTED. HE ALSO HELD THAT THE ADDITION TO WARDS COST OF PAGE 4 OF 5 ITA NO.1209/BANG/2010 4 LAND OF RS.5,15,000/- IS REQUIRED TO BE DELETED AS THE COST OF LAND WAS DULY ACCOUNTED BY DEBITING TO THE CAPITAL ACCOUNT OF THE ASSESSEE. AS REGARDS THE ADDITION OF RS.4,93,775/- CONSIDERED BY THE AO TOWARDS NON-FIXED ITEMS I.E. INTERIOR DECORA TION, HE HELD THAT THE SAME IS NOT BASED ON THE FACTS, AS THE TOT AL VALUE OF THE ITEMS OF FITTINGS AND FURNITURE ARE ALREADY INCLUDE D IN THE VALUATION REPORT OF THE AVO. HE ALSO HELD THAT THE REBATE OF 7.5% OF TOTAL COST OF CONSTRUCTION COULD HAVE BEEN ALLOWED FOR SE LF SUPERVISION AS THE CONSTRUCTION WORK WAS SUPERVISED BY THE ASSESSEE WITH THE HELP OF HER HUSBAND AND THAT THE DIFFERENCE IN VALUATION OF COST SHOULD BE TAKEN BETWEEN THE VALUE DEBITED IN THE BOOKS AND THE VALUE ESTIMATED BY THE AVO. HE THUS DELETED THE ADDITION OF RS.11,07,722/-. 6. AGGRIEVED BY THE RELIEF GIVEN BY THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 7. THE LEARNED DR WHILE SUPPORTING THE ORDER OF TH E AO SUBMITTED THAT THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE COST OF LAND AND THE COST OF INTERIOR DECORATION OF ITEM S SHOULD BE ADDED TO THE COST OF CONSTRUCTION AS PER THE AVO WH ILE DETERMINING THE TOTAL COST OF CONSTRUCTION. 8. THE LEARNED AR ON THE OTHER HAND SUPPORTED THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE ASSESSEE HAS E XPLAINED ALL THE INVESTMENTS WITH NECESSARY DOCUMENTARY EVIDENCE A ND THE PAGE 5 OF 5 ITA NO.1209/BANG/2010 5 CIT(A), AFTER DULY CONSIDERING ALL THE DETAILS ONLY, HAS ALLOWED THE SAME AND THEREFORE, IT NEEDS NO INTERFERENCE. 9. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE RIVAL CONTENTIONS, WE FIND THAT THE RESIDENTIAL BUILDING IS CONSTRUCTED AT HUBLI AND THE ASSESSEE HAS SHOWN ALL THE INVESTMENTS WITH DUE DOCUMENTARY EVIDENCE BEFORE THE AO AS WELL AS THE CIT(A). THE CIT(A), THROUGH HIS POWER WHICH IS COTERMINOUS WITH THAT OF THE AO, HAS DULY CONSIDERED ALL THE EVI DENCES FILED BY THE ASSESSEE AND AFTER APPRECIATING THE SAME, HAS D ELETED THE ADDITIONS MADE BY THE AO. THE LEARNED DR IS NOT ABL E TO PRODUCE BEFORE US ANY EVIDENCE CONTRARY TO THE FINDING OF THE CIT(A). IN VIEW OF THE SAME, WE DO NOT SEE ANY REASON TO INTERF ERE WITH THE ORDER OF THE CIT(A). 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ORDER PRONOUNCED ON MONDAY, THE 14 TH DAY OF MARCH, 2011 AT BANGALORE. SD/- SD/- (DR. O K NARAYANAN) (P MADHAVI DE VI) VICE PRESIDENT JUDICIAL MEMBER COPY TO : 1) THE ASSESSEE (2) THE REVENUE (3) THE CIT(A) CONCERNED. (4) THE CIT CONCERNED. (5) THE DR (6) GUARD FILE. MSP/10.3. BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.