M/s. Chanakya Developers, Ahmedabad V. The Income tax Officer,Ward-3(2), Surat

ITA 1214/AHD/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6888 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 01-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 30-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PP D VS ITO WARD SURAT
• Assessee Lawyers: KETAN H SHAH; SHRI ROOPCHA
• Keywords: Valuation report
• Section: 80IB

Judgement Text

, , , , D, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ # ## #. .. .# ## #. . . . % % % %, , , , &' ( & ' &' ( & ' &' ( & ' &' ( & ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND N.S. SAINI, ACCOUNTANT MEMBER) ITA NO.1214/AHD/2013 [ASSTT.YEAR : 2009-2010] M/S.CHANAKYA DEVELOPERS C/O. KETAN H. SHAH, ADVOCATE 903, SAPPHIRE COMPLEX C.G. ROAD, NAVRANGPURA AHMEDABAD. PAN ABYPP 9346 D /VS. ITO, WARD-3(2) SURAT. ( (( ( *+ *+ *+ *+ / APPELLANT) ( (( ( ,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) ./ 0 1 & / ASSESSEE BY : SHRI KETAN H. SHAH, AR ( 0 1 & / REVENUE BY : SHRI ROOPCHAND, SR.DR 3 0 /4' / DATE OF HEARING : 19 TH DECEMBER, 2014 567 0 /4' / DATE OF PRONOUNCEMENT : 23-12-2014 &8 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL BY THE ASSESSEE FOR THE ASSTT.YEAR 2009-10 IS DIRECTED AGAINST THE ORDE R OF THE CIT(A)-IV, SURAT. 2. THE GROUND NO.1 AND 2 OF THE APPEAL OF THE ASSES SEE ARE AS UNDER: 1. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD.CIT(A) HAS ERRED IN CONFIRMING THE FINDING OF THE AO IN RE FERENCE TO THE ADDITION MADE BASED ON THE STATEMENT U/S.133A QUA BASED ON D VOS REPORT INTER ALIA RELYING UPON SEC. 142A OF THE ACT. IT IS PRAY ED THAT IN VIEW OF THE ITA NO.1214/AHD/2013 -2- FACTS AND CIRCUMSTANCES OF THE CASE, THERE IS NO JU STIFICATION FOR CONFIRMING THE ADDITION, WHICH IS SOLELY BASED ON T AKING DIFFERENCE BETWEEN THE COST OF CONSTRUCTION DECLARED BY THE AP PELLANT AND ESTIMATED BY DVO AND IT IS PRAYED THAT THE SAME IS REQUIRED T O BE DELETED. 2. IT IS PRAYED THAT NOW AFTER PASSING ORDER OF CI T(A) DATED 20.3.2013, THE ASSESSEE HAS RECEIVED THE ORDER OF H ONBLE ITAT IN HIS OWN CASE FOR ASSTT.YEAR 2008-09 DATED 22.3.2013 WHE REIN AS PER PAGE 21 PARA 7, THE HONBLE BENCH HAS DELETED THE ADDITION MADE BEING DIFFERENCE IN THE BOOKS OF ACCOUNTS COMPARED TO DVOS REPORT. THEREFORE, IT IS PRAYED THAT IN THIS YEAR ALSO, THE ADDITION BASED O N SAME FACTS MAY PLEASE BE DELETED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THIS CASE PERTAINS TO PRE-AMENDMENT IN LAW PERIOD, AND THEREFORE, REFEREN CE FOR THE COST OF CONSTRUCTION TO THE DEPARTMENTAL VALUATION OFFICER (DVO) COULD NOT HAVE BEEN MADE BY THE AO. HE SUBMITTED THAT ONCE THE DVOS R EPORT IS HELD AS ILLEGAL, THERE REMAINS NO OTHER MATERIAL WITH THE DEPARTMENT TO MAKE ADDITION OF RS.4.19 CRORES ON ACCOUNT OF COST OF CONSTRUCTION OF BUILDI NG CONSTRUCTED BY THE ASSESSEE. HE SUBMITTED THAT THE ISSUE THAT THE AO COULD NOT MAKE ANY VALID REFERENCE OF THE VALUATION OF COST OF CONSTRUCTION TO THE DVO, IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE ORDER OF THE TRIBUN AL IN ASSESSEES OWN CASE FOR THE EARLIER ASSTT.YEAR 2008-09 IN ITA NO.2595 AND 2 729/AHD/2011 VIDE ORDER DATED 22.3.2013 WHEREIN HELD THAT NO VALID REFERENC E FOR VALUING THE COST OF CONSTRUCTION COULD BE MADE BY THE AO TO THE DVO AND THE ENTIRE ADDITION MADE ON THIS COUNT WAS DELETED BY THE TRIBUNAL. HE SU BMITTED THAT THE APPEAL OF THE REVENUE AGAINST THIS ORDER OF THE TRIBUNAL IN ASSES SEES OWN CASE WAS DISMISSED BY THE HONBLE JURISDICTIONAL HIGH COURT IN TAX APP EAL NO.955 OF 2013 VIDE ORDER DATED 10.12.2013. HE SUBMITTED THAT THE ISSU E IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE HONBLE GUJARAT H IGH COURT IN GOODLUCK AUTOMOBILES PVT. LTD. V. ASSISTANT COMMISSIONER OF INCOME-TAX, 359 ITR 306. 4. THE LEARNED DR HAS OPPOSED THE SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE. HE SUBMITTED THAT THE CASE LAW CITED BY THE LEARNED COUNSEL OF THE ASSESSEE IS DISTINGUISHABLE ON FACTS, AND THEREFORE , THE AO HAS MADE VALID ITA NO.1214/AHD/2013 -3- REFERENCE FOR VALUING THE COST OF CONSTRUCTION TO T HE DVO. HE SUBMITTED THAT EVEN IF IT IS ASSUMED FOR A MOMENT THAT THE REFEREN CE TO THE DVO WAS NOT VALID, THE TRIBUNAL BEING A FINAL FACT FINDING BODY, SHOUL D CONSIDER THE ISSUE ON ITS MERITS AND ARRIVE AT FAIR VALUATION OF COST OF CONS TRUCTION OF THE BUILDING IN QUESTION. HE SUBMITTED THAT THE ASSESSEE HAS FAILE D TO FILE EVEN APPROVED VALUERS REPORT IN SUPPORT OF ITS CASE BEFORE THE R EVENUE AUTHORITIES. HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 5. WE HAVE CONSIDERED RIVAL SUBMISSION CAREFULLY AN D PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND ALSO COPIES OF VARIOUS DO CUMENTS FILED IN THE COMPILATIONS BY THE ASSESSEE. WE FIND THAT THE CAS E OF THE ASSESSEE PERTAINS TO PRE-AMENDMENT IN LAW PERIOD, AND THEREFORE, THE AO COULD NOT HAVE MADE ANY VALID REFERENCE FOR VALUING THE COST OF CONSTRUCTIO N TO THE DVO. THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE WITH A NUMBER OF DECISIONS OF HONBLE COURTS. HOWEVER, WE FIND THAT THE VALUATION OF THE COST OF CONSTRUCTION OF A BUILDING IS ALWAYS A MATTER OF ESTIMATE AND THAT THE REPORT FRA MED BY THE DVO OR THE ASSESSEES APPROVED VALUER, IS A PIECE OF EVIDENCE ONLY. IN THIS CASE, THE ASSESSEE HAS NOT FILED ANY APPROVED VALUERS REPORT OF BUILDING CONSTRUCTED DURING THE RELEVANT PERIOD. WE FIND THAT EVEN IF, THE DVOS REPORT IS IGNORED DUE TO THE INVALID REFERENCE MADE BY THE AO TO THE DVO FOR VALUATION OF COST OF CONSTRUCTION OF BUILDING, WE ARE OF THE CONSIDERED VIEW THAT THE REVENUE AUTHORITIES WERE LEGALLY ENTITLED TO GO INTO THE QU ESTION OF DETERMINING THE CORRECT FIGURE OF COST OF CONSTRUCTION OF BUILDING CONSTRUCTED BY THE ASSESSEE, WHICH SHOULD BE ON THE BASIS OF ENTIRETY OF FACTS A ND CIRCUMSTANCES OF THE CASE, AND ALSO MATERIAL BROUGHT ON RECORD ON BEHALF OF TH E ASSESSEE. WE ARE UNABLE TO ACCEPT THE PROPOSITION OF THE LEARNED COUNSEL OF TH E ASSESSEE THAT ONCE IT WAS HELD THAT THE VALUATION REPORT OF THE DVO COULD NOT BE VALIDLY TAKEN INTO CONSIDERATION, THE DEPARTMENT IS PRECLUDED FOR MAKI NG ANY ASSESSMENT OF THE VALUATION OF COST OF CONSTRUCTION IN THE CASE OF TH E ASSESSEE, AND THAT THE DEPARTMENT IS LEFT WITH NO ALTERNATIVE, BUT TO ACCE PT THE COST OF CONSTRUCTION OF THE BUILDING, AS MAY HAVE BEEN SHOWN BY THE ASSESSE E IN ITS ACCOUNT BOOKS, EVEN ITA NO.1214/AHD/2013 -4- IF, THE SAME WAS FOUND TO HAVE BEEN UNDER-STATED BY THE ASSESSEE. IN THIS VIEW OF THE MATTER, WE, WHILE IGNORING THE DVOS VALUATI ON REPORT, PROCEED TO CONSIDER THE ISSUE OF ADDITION IN THE COST OF CONST RUCTION CONFIRMED BY THE CIT(A) AT RS.4,19,58,219/- ON ITS MERIT. WE FIND T HAT THE AO HAS NOT GONE INTO THIS ISSUE OF ESTIMATING THE FAIR VALUE OF COST OF CONSTRUCTION OF THE BUILDING IN QUESTION, AND HAS RESTED HIS ASSESSMENT ORDER ON TH E BASIS OF DVOS REPORT FOR VALUATION OF THE COST OF CONSTRUCTION ONLY. THE AO WAS OBVIOUSLY, WHILE FRAMING THE ASSESSMENT IN THIS CASE, UNDER THE IMPR ESSION THAT THE VALUATION OF COST OF CONSTRUCTION MADE BY THE DVO, BEING ON THE BASIS OF A VALID REFERENCE MADE BY HIM TO THE DVO, IS BINDING ON HIM FOR THE P URPOSE OF FRAMING THE ASSESSMENT IN THIS CASE. IN THESE FACTS OF THE CAS E, WE ARE OF THE CONSIDERED OPINION THAT IN ALL FAIRNESS TO BOTH THE PARTIES, O NCE THE DVOS REPORT IS HELD AS NOT VALID, THE REVENUE SHOULD BE GIVEN OPPORTUNITY TO CONSIDER THE CORRECTNESS OR OTHERWISE OF THE VALUE OF THE COST OF CONSTRUCTI ON SHOWN BY THE ASSESSEE IN ITS ACCOUNTS BOOKS, AND THAT WHETHER THE ASSESSEE HAS U NDER-STATED THE SAME, AND HAS MADE UNDISCLOSED INVESTMENT. IN THIS VIEW OF T HE MATTER, WE, WHILE DIRECTING THE AO TO IGNORE THE DVOS REPORT, RESTOR E THE ISSUE OF VALUATION OF COST OF CONSTRUCTION OF BUILDING IN QUESTION TO THE FILE OF THE AO, WITH DIRECTION TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW, A FTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE DIRECT THE AO TO CONSIDER THE CORRECTNESS OF THE ACCOUNTBOOKS OF THE ASSESSEE AND THE SUPPORTING VOUCHERS AND THE SPECIFICATIONS OF THE BUILDING CONSTRUCTED BY T HE ASSESSEE, AND APPLICABLE STATE PUBLIC WORKS DEPARTMENT RATES OF CONSTRUCTION DURING THE RELEVANT PERIOD, AND REGARDING ADDITION FOR EXTRA ITEMS, AND TO COMP ARE THE RATE OF COST OF CONSTRUCTION AS DECLARED BY THE ASSESSEE, AS PER IT S ACCOUNT BOOKS, AND ALL OTHER RELEVANT MATERIAL. THE ASSESSEE SHALL BE AT LIBERT Y TO FILE ANY EVIDENCE IN SUPPORT OF ITS CASE BEFORE THE AO. WE DIRECT ACCORDINGLY. 6. THE GROUND NO.3 OF THE ASSESSEE IS AS UNDER: 3. IN NOT APPRECIATING THE FACT THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80IB IN THE RETURN OF INCOM E FILED AND ALSO FILED ITA NO.1214/AHD/2013 -5- REQUIRED AUDIT REPORT IN PRESCRIBED FORM NO.3CB AND 10CCB, AND THEREFORE, WITHOUT PREJUDICE AND IN ALTERNATE CLAIM U/S.80IB MAY PLEASE BE ALLOWED, IF THE ADDITION HAS BEEN CONFIRMED. 7. THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT MAD E ANY ARGUMENT ON THIS ISSUE, AND ACCORDINGLY, THE GROUND NO.3 OF THE ASSE SSEE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( # ## # . .. . # ## # . . . . % % % % /N.S.SAINI) &' ( &' ( &' ( &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD