ITO, Ward-3, Warangal V. Shri Ved Prakash, Warangal

ITA 1171/HYD/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53721 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 17-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUDHAKAR RAO
• Assessee Lawyers: A V RAGHURAM
• Keywords: Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B ', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.1171/HYD/2011 : ASSESSMENT YEAR 2007-08 INCOME-TAX OFFICER, WARD-3, WARANGAL V/S. SHRI VED PRAKASH(HUF) PROP. M/S. MEENAKSHI SUPER MARKET, WARANGAL. ( PAN - AAEHV 8450 R) (APPELLANT) (RESPONDENT) AND CROSS OBJECTION NO.69/HYD/2011 (IN ITA NO.1171/HYD/2011) : ASSESSMENT YEAR 2007-08 SHRI VED PRAKASH (HUF) PROP. M/S. MEENAKSHI SUPER MARKET, WARANGAL. ( PAN - AAEHV 8450 R) V/S. INCOME - TAX OFFICER, WARD-3, WARANGAL (CROSS - OBJECTOR) (APPELLANT - IN - APPEAL) ASSESSEE BY : SHRI A.V.RAGHURAM DEPARTMENT BY : S HRI SUDHAKAR RAO DATE OF HEARING 13.10.2011 DATE OF PRONOUNCEMENT 4.11.2011 O R D E R PER G.C.GUPTA, VICE PRESIDENT: THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08 ARE DIRECTED AGAINS T THE ORDER OF THE CIT(A). ITA NO.1171/HYD/2011 A ND CO THEREIN S SHRI VED PRAKASH (HUF), PROP. M/S. MEENAKSHI SUPER MARKET , WARANGAL 2 REVENUES APPEAL: ITA NO.1168/HYD/2011 : ASSESSMENT YEAR 2007-08 2. GROUNDS OF THE REVENUE IN THIS APPEAL ARE AS U NDER- 1. THE LEARNED CIT(A) ERRED BOTH ON FACTS AND IN L AW. 2. THE CIT(A) ERRED IN DIRECTING THE AO TO ALLOW 1 5% DISCOUNT ON THE VALUE ESTIMATED BY THE VALUATION OFFICER IN THE LIGHT OF THE FACT THAT THE EXECUTIVE ENGINEER, VALUATION CELL, H AS ESTIMATED THE VALUE OF THE COMMERCIAL COMPLEX AFTER CONSIDERI NG THE LOCAL RATES PREVAILING IN THE MARKET AND NOT AS PER THE RATES FIXED BY THE CPWD WHICH FACT IS CLEARLY EVIDENT FRO M THE VALUATION REPORT OF THE EXECUTIVE ENGINEER. 3. THE CIT(A) ERRED IN DIRECTING THE AO TO ALLOW O VERALL 10% DEDUCTION ON ACCOUNT OF SELF SUPERVISION CHARGES IN VIEW OF THE FACT THAT AS PER THE VALUATION REPORT THE EXECUTIVE ENGINEER HAS ALLOWED 7.5% REBATE ON ACCOUNT OF SELF SUPERVISION. THE CIT(A) HAS ALSO FAILED TO APPRECIATE THE FACT THAT THE AO HAS FURTHER, ALLOWED 2.5% ON ACCOUNT OF SELF-SUPERVISIO N. 3. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED T HAT THE DEPARTMENTAL VALUATION OFFICER (DVO) OF THE DEPARTM ENTAL VALUATION CELL HAS ESTIMATED THE VALUE OF THE COMMERCIAL COMPLEX OF THE ASSESSEE, AFTER CONSIDERING THE LOCAL RATES PREVAILING IN THE MARKE T AND NOT AS PER THE RATE FIXED BY THE CPWD FOR DELHI AND THEREFORE, THERE IS NO JUSTIFICATION FOR ALLOWING A REBATE OF 15% ON THIS ACCOUNT. HE SUBMI TTED THAT THE ASSESSING OFFICER HAS HIMSELF ALLOWED 10% DEDUCTION ON ACCOUN T OF SELF-SUPERVISION CHARGES AND THEREFORE, NO FURTHER RELIEF COULD BE A LLOWED BY THE CIT(A). 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE WAS ALWAYS A DIFFERENCE BETWEEN THE CPWD RATE OF NEW DE LHI AND THE LOCAL RATE OF A TOWN AND THEREFORE, 15% DEDUCTION ON THIS COU NT WAS JUSTIFIED. HE ITA NO.1171/HYD/2011 A ND CO THEREIN S SHRI VED PRAKASH (HUF), PROP. M/S. MEENAKSHI SUPER MARKET , WARANGAL 3 FAIRLY CONCEDED THAT THERE WAS NO GRIEVANCE TO THE ASSESSEE ON ACCOUNT OF DEDUCTION FOR SELF-SUPERVISION, AS THE ASSESSING OF FICER HAS HIMSELF ALLOWED 10% DEDUCTION, AS CLAIMED BY THE ASSESSEE, ON THIS COUNT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND H AVE PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). FR OM THE PERUSAL OF THE REPORT OF THE DEPARTMENTAL VALUATION OFFICER, IT IS CLEAR THAT HE HAS APPLIED LOCAL RATES PREVAILING IN THE MARKET AND NOT THE CP WD RATES OF NEW DELHI, AND ACCORDINGLY, WE HOLD THAT THERE WAS NO JUSTIFIC ATION FOR THE CIT(A) TO DIRECT THE ASSESSING OFFICER TO ALLOW A FURTHER DED UCTION OF 15% ON THIS COUNT. WE FIND THAT THE LEARNED COUNSEL FOR THE AS SESSEE COULD NOT SERIOUSLY CONTEST THE FACT THAT THE DVO HAS APPLIED THE LOCAL RATES AND NOT THE CPWD RATES OF NEW DELHI. ACCORDINGLY, THIS ISSUE IS DECI DED IN FAVOUR OF THE REVENUE AND GROUND OF APPEAL NO.2 OF THE REVENUE IS ALLOWED. 6. WITH REGARD TO THE ISSUE OF SELF SUPERVISION CH ARGES RAISED IN THE GROUND OF APPEAL NO.3 OF THE REVENUE, WE FIND THAT THE ASSESSING OFFICER HAS ALLOWED AN OVERALL DEDUCTION OF 10% ON ACCOUNT OF S ELF-SUPERVISION OF THE BUILDING, AS CLAIMED BY THE ASSESSEE, AND ACCORDING LY NO FURTHER DEDUCTION IS ALLOWABLE TO THE ASSESSEE ON THIS COUNT. ACCORDI NGLY, WE DISPOSE OFF THE GROUND OF APPEAL NO.3 OF THE REVENUE WITH A DIRECTI ON THAT NO FURTHER DEDUCTION ON ACCOUNT OF SELF-SUPERVISION IS ALLOWAB LE TO THE ASSESSEE, OTHER THAN 10% DEDUCTION ON ACCOUNT OF SELF-SUPERVISION A LREADY ALLOWED BY THE ASSESSING OFFICER ITSELF. WE DIRECT ACCORDINGLY. CROSS-OBJECTION 69/HYD/2011: 7. THERE IS A DELAY OF SEVEN DAYS IN THE FILING OF THE CROSS-OBJECTION BY THE ASSESSEE. THE ASSESSEE HAS FILED AN APPLICAT ION FOR CONDONATION OF ITA NO.1171/HYD/2011 A ND CO THEREIN S SHRI VED PRAKASH (HUF), PROP. M/S. MEENAKSHI SUPER MARKET , WARANGAL 4 DELAY IN FILING THE CROSS OBJECTION BEFORE THE TRIB UNAL AND HAS ALSO FILED AN AFFIDAVIT OF THE ASSESSEE EXPLAINING THE REASONS FO R THE DELAY IN FILING THE CROSS OBJECTION. WE HAVE HEARD THE PARTIES ON THIS ISSUE AND HOLD THAT FROM THE FACTS OF THE CASE, THERE WAS JUSTIFIABLE REASON FOR THE DELAY OF SEVEN DAYS IN THE FILING OF CROSS-OBJECTION BY THE ASSESS EE. ACCORDINGLY, THE DELAY OF SEVEN DAYS IN FILING THE CROSS-OBJECTION BY THE ASSESSEE BEFORE THE TRIBUNAL IS CONDONED. 8. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN TH E CROSS-OBJECTION BEFORE US. 1. THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED G OING INTO ERRORS IN VALUATION INSTEAD OF HOLDING THE VERY REF ERENCE TO VALUATION CELL IS INVALID SINCE MADE WITHOUT REJECT ION OF BOOKS OF ACCOUNT AND THEREBY ERRED IN NOT DELETING THE EN TIRE ADDITION MADE ON ACCOUNT OF VALUATION DIFFERENCE. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT( A) ERRED IN NOT HOLDING THAT NO ADDITION COULD BE MADE IF THE DIFFE RENCE DUE TO VALUATION IS LESS THAN 10% FOR ADMITTED VALUE OF CO NSTRUCTION. 9. THE ASSESSEE HAS ALSO RAISED THE FOLLOWING ADDI TIONAL GROUNDS IN THE CROSS-OBJECTION BEFORE US. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LEARNED CIT(A) ERRED IN NOT GRANTING DEDUCTION @ 15% OUT OF THE TOTAL COST FOR THE HALL TYPE CONSTRUCTION. THE LEARNED. CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE/CROSS-OBJECTOR HAS CON STRUCTED A HALL TYPE COMMERCIAL STRUCTURE FOR MEETING THE COMMERCIA L NEEDS OF THE BUSINESSES AND THEREFORE OUGHT TO HAVE ALLOWED DEDU CTION FOR HALL- TYPE 10. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS A SHARE IN COMMERCIAL COMPLEX CONSTRUC TED BY ITS OWNER, WHICH WAS HALL-TYPE CONSTRUCTION AND THERE IS NO DI SPUTE BY THE DEPARTMENT ON THIS ISSUE. HE SUBMITTED THAT THE ASSESSEE HAS C ONSTRUCTED A COMMERCIAL COMPLEX WHICH WAS ESSENTIALLY A HALL-TYPE CONSTRUCT ION AND AS SUCH IT IS ITA NO.1171/HYD/2011 A ND CO THEREIN S SHRI VED PRAKASH (HUF), PROP. M/S. MEENAKSHI SUPER MARKET , WARANGAL 5 ENTITLED TO A DEDUCTION OF 15% ON THIS COUNT AND TH E ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE HYD ERABAD BENCH OF THE TRIBUNAL IN THE CASE OF G.PULLA REDDY IN ITA NO.65 TO 71/HYD/2003 FOR ASSESSMENT YEARS 1992-93 TO 1998-99 DATED 29.10.200 4. 11. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS OP POSED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE . HE SUBMITTED THAT ALTHOUGH THE BUILDING CONSTRUCTED BY THE ASSESSEE W AS COMMERCIAL COMPLEX, BUT THE ASSESSEE COULD NOT JUSTIFY THE DEDUCTION OF 15% ON ACCOUNT OF HALL- TYPE CONSTRUCTIONS CLAIMED BY IT. 12. WE HAVE CONSIDERED THE REVIVAL SUBMISSIONS. WE FIND THAT THE ASSESSEE ALONGWITH OTHERS HAVE CONSTRUCTED A FOUR S TORIED COMMERCIAL COMPLEX AT WARANGAL, WHICH WAS A HALL-TYPE CONSTRUC TION. THE REVENUE COULD NOT SERIOUSLY CONTEST THAT THE BUILDING CONST RUCTED WAS A HALL-TYPE CONSTRUCTION. THE ASSESSEE HAS MADE THIS CLAIM OF HALL-TYPE CONSTRUCTION RIGHT FROM THE ASSESSMENT STAGE AND THERE IS NO MA TERIAL ON RECORD TO DOUBT THE GENUINENESS OF THE CLAIM OF THE ASSESSEE. WE HAVE PERUSED THE COPY OF THE REPORT OF THE DEPARTMENTAL VALUATION OF FICER FILED IN THE COMPILATION BY THE ASSESSEE AND THERE IS ALSO NO AD VERSE NOTE OVER THIS ISSUE. THE ISSUE THAT A DEDUCTION OF 15% IS ALLOWA BLE TO THE ASSESSEE, WHILE ESTIMATING COST OF CONSTRUCTION OF A BUILDING WITH HALL-TYPE CONSTRUCTION IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF G.PULLA REDDY (SUPRA ) ON THIS ISSUE. WE BEING IN AGREEMENT WITH THE DECISION OF THE COORDINATE BE NCH OF THE TRIBUNAL IN THE CASE OF G.PULLA REDDY (SUPRA) ON THIS ISSUE, DIREC T THE ASSESSING OFFICER TO DETERMINE THE COST OF CONSTRUCTION OF THE BUILDING AFTER ALLOWING 15% DEDUCTION ON ACCOUNT OF HALL-TYPE CONSTRUCTION. AC CORDINGLY, THERE BEING NO MERIT IN THE ORIGINAL GROUNDS OF CROSS-OBJECTION OF THE ASSESSEE, THE SAME ITA NO.1171/HYD/2011 A ND CO THEREIN S SHRI VED PRAKASH (HUF), PROP. M/S. MEENAKSHI SUPER MARKET , WARANGAL 6 ARE REJECTED AND THE ADDITIONAL GROUND OF CROSS-OBJ ECTION RAISED BY THE ASSESSEE IS ALLOWED. 13. IN THE RESULT, APPEAL OF THE REVENUE IS PARTL Y ALLOWED AND THE CROSS-OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 4TH NOVEMBER, 2 011 SD/- SD/- (CHANDRA POOJARI) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 4TH NOVEMBER, 2011 COPY FORWARDED TO: 1. SHRI VED PRAKASH ( HUF) , PROP. M/S. MEENAKSHI SUPER MARKET, H.NO.1-8-540, NAKKALGUTTA, HANAMKONDA, WARANGAL. 2. INCOME - TAX OFFICER, WARD= 3 , WARANGAL 3. COMMISSIONER OF INCOME - TAX(APPEALS) VI HYDERABAD 4. COMMISSIONER OF INCOME TAX V, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.