R.Uma, CHENNAI V. ACIT, Thanjavur

ITA 1030/CHNY/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3852 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 25-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 23-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUNEEL VERMA
• Assessee Lawyers: S SRIDHAR
• Keywords: Opportunity of being heard; Deemed to accrue or arise in india; Valuation report
• Section: 143(3); 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.1030/MDS/2014 ( / ASSESSMENT YEAR: 2009-10) MRS. R.UMA, 16A, GOPALASAMUDIRAM EAST, MANNARGUDI-614 001. VS THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, THANJAVUR. PAN: AALPU9686R ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.SRIDHAR, ADVOCATE /RESPONDENT BY : MR. SUNEEL VERMA, CIT /DATE OF HEARING : 25 TH NOVEMBER,2016 /DATE OF PRONOUNCEMENT : 29 TH NOVEMBER, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM: THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- II, TIRUCHIRAPALLI, DATED 28.03.2014 IN C.NO.7143(5 )/CIT- II/TRY/2013-14 PASSED UNDER SECTION 263 OF THE AC T. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HER APPEAL, HOWEVER, THE CRUX OF THE ISSUE IS AS FOLLOW S:- THE LEARNED COMMISSIONER OF INCOME TAX HAS ERRED IN ASSUMING JURISDICTION UNDER SECTION 263 OF THE ACT AND DIRECTING THE LEARNED ASSESSING OFFICER TO REFRAME THE ASSESSMENT ORDER AFTER CONSIDERING THE DEPARTMENTAL VALUATION OFFICERS 2 ITA NO.1030/MDS/2014 REPORT AND PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS AS DISTRIBUTOR O F WHOLESALE PHARMACEUTICAL PRODUCTS FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 19.08.2009 ADMITTING TOT AL INCOME OF ` 18,80,450/-. THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2), DATED 25. 08.2010 WAS ISSUED TO THE ASSESSEE ON 02.09.2010. SUBSEQUE NTLY, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) O F THE ACT ON 15.12.2011, WHEREIN THE LEARNED ASSESSING OF FICER AFTER ANALYZING THE ISSUE WITH RESPECT TO COST OF C ONSTRUCTION OF RESIDENTIAL BUILDING ON PLOT NO.73, PARISUTHAM N AGAR, THANJAVUR ACCEPTED THE COST OF CONSTRUCTION DECLARE D BY THE ASSESSEE AS RS.55,86,750/-. WHILE DOING SO, THE LEA RNED ASSESSING OFFICER HAD DEPUTED HIS INSPECTOR TO VERI FY THE COST OF CONSTRUCTION, WHO VALUED THE PROPERTY AT RS.61,4 9,200/- VIDE HIS REPORT DATED 28.11.2011, WHILE AS THE ASSE SSEE HAD OBTAINED A VALUATION REPORT FROM REGISTERED VALUER ESTIMATING THE COST OF CONSTRUCTION AT RS.55,86,750/-. SINCE T HE ASSESSEE HAD EXPLAINED AND CONVINCED THE LEARNED 3 ITA NO.1030/MDS/2014 ASSESSING OFFICER THAT AS ON 31.03.2009, THE HOUSE WAS ONLY PARTIALLY COMPLETED, THE LEARNED ASSESSING OFFICER ACCEPTED THE VALUATION SUBMITTED BY THE ASSESSEE. THEREAFTER , THE LEARNED COMMISSIONER OF INCOME TAX INVOKED HIS POW ERS UNDER SECTION 263 OF THE ACT BASED ON THE VALUATION REPORT DATED 12.03.2013 OF THE DEPARTMENTAL VALUATION OFFI CER WHO HAD ESTIMATED THE BUILDING AT RS.81,04,000/- AND D IRECTED THE LEARNED ASSESSING OFFICER TO CONSIDER THE ISSUE AFRESH AFTER PROVIDING SUFFICIENT OPPORTUNITY TO THE ASSES SEE. AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX UNDER SECTION 263 OF THE ACT, THE ASSESS EE IS NOW IN APPEAL BEFORE US. 4. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE DID NOT PRESS THE GROUND OF JURISDICTION BUT REQUESTED THAT THE DVO MAY BE DIRECTED TO VALUE THE COST OF CONSTRUCTI ON AS PER THE PWD RATE. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD NO T CONFRONT TO THE SUBMISSION OF THE LEARNED AUTHORIZE D REPRESENTATIVE. 4 ITA NO.1030/MDS/2014 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. WE ARE IN AGREEMENT WITH THE SUBMISSION OF THE LEARNED AUTHORIZED REPRESENTATIVE . SINCE THE PLACE OF CONSTRUCTION IS IN AN INTERIOR TOWN OF THE STATE OF TAMIL NADU, PWD RATE WOULD BE MOST APPROPRIATE IN V ALUING THE COST OF CONSTRUCTION OF THE BUILDING. THIS VIEW HAS BEEN HELD IN THE VARIOUS DECISIONS OF THE CHENNAI BENCHE S OF THE TRIBUNAL AND THE HONBLE MADRAS HIGH COURT . PARTIC ULARLY IN THE TAX CASE (APPEAL) NO.2300 OF 2006 TMPN MURUGESA N VS. CIT VIDE ORDER DATED 03.10.2012 THE HONBLE MAD RAS HIGH COURT HELD AS UNDER:- 7. .. AS IS EVIDENT FROM THE READING OF THE ASSESSMENT ORDER THE DVO ADOPTED CPWD RATES, WHICH WERE THE RATES PREVALENT IN DELHI AND OTHER CITIES FOR WORKING OUT THE COST OF CONSTRUCTION OF THE BUILDIN G AND THE ASSESSEES CLAIM WAS REJECTED. 8. WE DO NOT FIND ANY JUSTIFIABLE GROUND TO ADOPT T HE RATE PREVAILING IN CITIES LIKE DELHI FOR THE PURPOS E OF WORKING OUT THE COST OF CONSTRUCTION OF HOUSE AT VIRUDHUNAGAR. WHEN THE DETAILS REGARDING THE COST O F CONSTRUCTION AT PWD RATES FOR VIRUDHUNAGAR DISTRICT IS APPLICABLE, THERE IS NO REASON FOR THE VALUATION OF FICER TO ADOPT THE RATE, WHICH IS PREVALENT AT DISTANT PLACE S AND METROPOLITAN CITIES LIKE DELHI. HENCE ON GOING THRO UGH THE VALUATION REPORT, WE FIND THAT THE AUTHORITIES BELOW COMMITTED SERIOUS ERROR, HENCE WE FEEL THAT THE PRO PER COURSE HEREIN IS TO REMIT THE MATTER BACK TO THE AO TO APPLY THE PWD RATES AT VIRUDHUNAGAR DISTRICT IN THE YEAR 1998-99 WITH REGARD TO THE COST OF CONSTRUCTION OF THE ASSESSEES HOUSE SO AS TO ULTIMATELY FIND OUT WHAT COULD BE THE DEEMED INCOME UNDER SECTION 69B FOR THE PURPOSE OF ASSESSMENT. 5 ITA NO.1030/MDS/2014 7. FOLLOWING THE DECISION OF THE HONBLE JURISDICT IONAL HIGH COURT CITED ABOVE, WE HEREBY DIRECT THE LEARNED DVO AND THE LEARNED ASSESSING OFFICER TO ADOPT THE PWD RATE WHI LE VALUING THE BUILDING CONSTRUCTED BY THE ASSESSEE WH ILE REFRAMING THE ASSESSMENT PURSUANT TO ORDER U/S.263 OF THE ACT. SINCE THE ASSESSEE HAS CLAIMED THAT PARTIAL C ONSTRUCTION OF THE BUILDING OVERFLOWED TO THE NEXT ASSESSMENT Y EAR THE SAME MAY BE TAKEN INTO CONSIDERATION WHILE VALUING THE COST OF CONSTRUCTION OF THE BUILDING FOR THE RELEVANT AS SESSMENT YEAR. IT IS ORDERED ACCORDINGLY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREI N ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 29 TH NOVEMBER, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 29 TH NOVEMBER, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF .