Dr. K. Raghotham Reddy, Warangal, Hyderabad V. ITO, Ward-3, Warangal, Warangal

ITA 1257/HYD/2016

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0581 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 18-05-2021
• Assessment Year: 2003-2004
• Appeal Filed On: 27-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S RAMA RAO
• Keywords: Depreciation; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 1257/HYD/2016 ASSESSMENT YEAR: 2003-04 DR.K.RAGHOTHAM REDDY, WARANGAL [PAN: ACTPK0626R] VS INCOME TAX OFFICER, WARD-2, WARANGAL (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S.RAMA RAO, AR FOR REVENUE : SHRI SUNIL KUMAR PANDEY, DR DATE OF HEARING : 18-05-2021 DATE OF PRONOUNCEMENT : 16-07-2021 O R D E R PER S.S.GODARA, J.M. : THIS ASSESSEES APPEAL FOR AY.2003-04 ARISES FROM TH E CIT(A)-10, HYDERABADS ORDER DATED 17-06-2016 PASSED IN APPEAL NO.0329/CIT(A)-10/2015-16, INVOLVING PROCEED INGS U/S.143(3) R.W.S.263 OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEE HAS PLEADED THE FOLLOWING SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL: 1)THE ORDER OF FIE LEARNED CIT(A) IS ERRONEOUS BOT H ON FACTS AND IN LAW. ITA NO. 1257/HYD/2016 :- 2 -: 2)THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION ON ACCOUNT OF HOUSEHOLD EXPENSES OF RS.38,000/-. 3)THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITI ON OF RS.16,09,048/- MADE BY THE ASSESSING OFFICER REPRES ENTING THE DIFFERENCE BETWEEN COST OF CONSTRUCTION AS ESTIMATE D BY THE VALUATION CELL AND THE COST OF CONSTRUCTION AS ADMITTED IN TH E BOOKS OF ACCOUNT. 4)THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT THE CO NSTRUCTION WAS COMPLETED BY 31.03.2002 AND THE ENTIRE EXPENDITURE OF RS.39,34,145/- WAS INCURRED UPTO 31.03.2002 AND, TH EREFORE, NO ADDITION CAN BE MADE FOR THE ASSESSMENT YEAR 2003-0 4. 5)THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT NEITHE R THE VALUATION CELL NOR THE ASSESSING OFFICER HAVE GIVEN RELIEF TO WARDS RATE DIFFERENCE BETWEEN THE CPWD AND PWD AND ALLOWED A D EDUCTION OF 15% OF THE COST. 6)THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT DEDUCT ION ON ACCOUNT OF SELF SUPERVISION IS 10% AND NOT 6% AS ALLOWED BY TH E VALUATION CELL. 7)THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT THE RA TES ADOPTED BY THE CPWD ARE TOWARDS COST OF CONSTRUCTION ALLOWED BY TH E CENTRAL GOVERNMENT TO THE CONTRACTORS AND THE PROFIT ELEMEN T OF THE CONTRACTOR IS MORE THAN 10% AND, THEREFORE, THE DEDUCTION TOWA RDS SELF SUPERVISION OF MORE THAN 10% IS TO BE ALLOWED. 8)THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN NOT ALLOWING DEPRECIATION ON THE BUILDIN G. 9) ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 3. LEARNED COUNSEL STATES AT THE OUTSET THAT THE ASSESSEE NO MORE WISHES TO PRESS FOR THE FIRST AND FOREMOST SUBSTANTI VE ISSUE OF ADDITION ON ACCOUNT OF HOUSE HOLD EXPENSES O F RS.38,000/- KEEPING IN MIND SMALLNESS THEREOF. REJEC TED ACCORDINGLY. 4. WE ARE NOW LEFT WITH THE LATTER ISSUE OF COST OF CONSTRUCTION ADDITION OF RS.16,09,048/- ON ACCOUNT OF THE ALLEGED DIFFERENCE BETWEEN THE DEPARTMENTS VALUATION C ELL AS AGAINST THE BOOKS OF ACCOUNTS MAINTAINED AT THE TAXPAYERS BEHEST. LEARNED COUNSEL SOUGHT TO INVITE OUR ATTENTION T O ITA NO. 1257/HYD/2016 :- 3 -: VARIOUS DISTINGUISHED FEATURES ADOPTED BY THE VALUATIO N CELL VIZ-A-VIZ ASSESSEES BOOKS OF ACCOUNT, CPWD AND THE S AID STATE PWD RATES AS WELL AS THE NECESSARY ADJUSTMENT REGARDING SELF- SUPERVISION. 5. COUPLED WITH THIS LEARNED COUNSEL HAS ALSO PLACED ON RECORD NECESSARY PROCEEDINGS RECORDS DT.25-09-2000 B EFORE THE COMMISSIONER, WARANGAL MUNICIPAL CORPORATION APPROVI NG THE CONSTRUCTION FOLLOWED BY HIS PERMIT DT.25-09-2000. THE SAID MUNICIPALITYS NOTICE FOR ASSESSMENT OF PROPERTY TAX AND THE NECESSARY INVITATIONS AFTER COMPLETION OF THE NURSING HO MES INAUGURATION DT.22-02-2002. ALTHOUGH THE LATTER SET OF DOCUMENTS HAVE COME BY WAY OF ADDITIONAL EVIDENCE, LE ARNED COUNSEL VEHEMENTLY CONTENDED IN VIEW THEREOF THAT BOTH TH E LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN A SSESSING THE ENTIRE COST OF CONSTRUCTION FY.2002-03 INVOLVING THE AY.2003-04 BEFORE US. 6. LEARNED DEPARTMENTAL REPRESENTATIVE HAS DRAWN A STRO NG SUPPORT FROM BOTH THE LOWER AUTHORITIES ACTION MAKING TH E IMPUGNED COST OF CONSTRUCTION ADDITION. 7. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL CONTENTIONS AGAINST AND IN SUPPORT OF THE IMPUGNED ADDITI ON AMOUNTING TO RS.16,09,048/-. CASE FILE PRIMA FACIE SUGGESTS THAT NEITHER THE VALUATION CELL NOR THE LEARNED LOWER AUTH ORITIES HAVE TAKEN INTO CONSIDERATION THE ALLEGED DIFFERENCE BE TWEEN THE STATE AND CPWDS RATES AS WELL AS ASSESSEES SELF-SUPERVISION AND COST OF RAW MATERIAL AT THE RELEVA NT POINT OF TIME. AND ALSO IT HAS COME ON RECORD FROM A PERUS AL OF THE MUNICIPAL CONSTRUCTION PERMISSIONS AS WELL AS HOUSE TA X ITA NO. 1257/HYD/2016 :- 4 -: ASSESSMENT PROCEEDINGS THAT THE IMPUGNED CONSTRUCTION HA D NOT BEEN COMPLETED IN THE IMPUGNED AY.2003-04 PRIMA FACIE . WE THEREFORE DEEM IT APPROPRIATE IN THESE PECULIAR FACTS AND CIRCUMSTANCES THAT A LUMPSUM ADDITION OF RS.3.5 LAKHS ONLY THAN THAT IN ISSUE AMOUNTING TO RS.16,09,048/- WOULD MEE T THE ENDS OF JUSTICE WITH A RIDER THAT THE SAME SHALL NOT BE TAKEN AS A PRECEDENT. THE ASSESSEE GETS RELIEF OF RS.12,59,048/- IN OTHER TERMS. ORDERED ACCORDINGLY. NECESSARY COMPUTATION TO FOLLOW AS PER LAW. NO OTHER GROUNDS BEEN PRESSED BEFORE US. 8. THIS ASSESSEES APPEAL IS PARTLY ALLOWED IN FOREG OING TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JULY, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.GO DARA) ACCOUNTANT MEMBER JUDICIAL MEMB ER HYDERABAD, DATED: 16-07-2021 TNMM ITA NO. 1257/HYD/2016 :- 5 -: COPY TO : 1.DR.K.RAGHOTHAM REDDY, C/O. C/O. SRI S.RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREET NO.9, HIMAYAT NAGAR, HYDERABAD. 2.THE INCOME TAX OFFICER, WARD-3, WARANGAL. 3.CIT(APPEALS)-10, HYDERABAD. 4.PR.CIT-3, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.