DCIT, New Delhi V. M/s. Vishnu Apartment (P) Ltd., New Delhi

ITA 1903/DEL/2013

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8494 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 10-07-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 02-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIVEK BANSAL S; SUMAN SAPRA; I P BANSAL
• Keywords: Search and seizure; Question of law; Valuation report; Set aside
• Section: 195; 250; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : D : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NOS.1087 & 5309/DEL/2013 ASSESSMENT YEARS: 2008-09 & 2009-10 VISHNU APARTMENTS PVT. LTD., 4/17B, MGF HOUSE, ASAF ALI ROAD, NEW DELHI. PAN: AAACV6397E VS ACIT, CENTRAL CIRCLE-7, NEW DELHI. ITA NO.1903/DEL/2013) ASSESSMENT YEAR: 2008-09 DCIT, CENTRAL CIRCLE-7, NEW DELHI. VS . VISHNU APARTMENTS PVT. LTD., 4/17B, MGF HOUSE, ASAF ALI ROAD, NEW DELHI. PAN: AAACV6397E (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI I.P. BANSAL & SHRI VIVEK BANSAL, ADVOCATES & MS SUMAN SAPRA, CA REVENUE BY : SHRI J.K. MISHRA, CIT, DR DATE OF HEARING : 12.09.2019 DATE OF PRONOUNCEMENT : 10.10.2019 ORDER PER R.K. PANDA, AM: ITA NOS.1087/DEL/2013 AND 1903/DEL/2013 ARE CROSS A PPEALS. THE FIRST ONE IS FILED BY THE ASSESSEE AND THE SECOND ONE IS FILE D BY THE REVENUE AND ARE DIRECTED ITA NOS.1087, 5309 & 1903/DEL/2013 2 AGAINST THE ORDER DATED 16 TH JANUARY, 2013 OF THE CIT(A)-1, NEW DELHI, RELATING TO ASSESSMENT YEAR 2008-09. 2. ITA NO.5309/DEL/2013 FILED BY THE ASSESSEE IS DI RECTED AGAINST THE ORDER DATED 11 TH SEPTEMBER, 2013 OF THE CIT(A)-1, NEW DELHI FOR ASS ESSMENT YEAR 2009- 10. SINCE COMMON ISSUES ARE INVOLVED IN ALL THE TH REE APPEALS, THEREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS.1087/DEL/2013 (BY THE ASSESSEE) & ITA NO.19 03/DEL/2013 (BY THE REVENUE. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY. A SEARCH AND SEIZURE OPERATION U/S 132 OF THE IT ACT, 1961 WAS C ARRIED OUT IN THE CASE OF THE ASSESSEE ON 12 TH SEPTEMBER, 2007. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS C OMPLETED PART OF THE PROJECT IN JAIPUR PERTAINING TO THE MALL AND APPORTIONED THE C OST OF THE MALL AND HOTEL THE DETAILS OF WHICH ARE GIVEN AT PARA 4 OF THE ASSESSM ENT ORDER. WHILE GOING THROUGH THE APPORTIONMENT OF EXPENSES BETWEEN THE MALL AND THE HOTEL PROJECT, THE ASSESSING OFFICER NOTED THE FOLLOWING ANOMALIES:- (I) THE COST OF LAND AT VILLAGE TIGRA-MAIDAWAS AN D SHIKHOPUR AMOUNTING TO RS.477.84 LAC AND RS.28.85 LAC RESPECTIVELY HAS NOT BEEN REDUCED FROM THE COST OF THE PROJECT. (II) IN TERMS OF BUILT UP AREA THE RATIO OF MALL A ND HOTEL IS APPROXIMATELY 65.35 WHEREAS 83% OF CONSTRUCTION COST HAS BEEN ALL OCATED TO THE MALL ONLY. IN CASE OF INDIRECT COST 90% OF THE ENTIRE COST HAS BE EN ALLOCATED TO THE MALL. ITA NOS.1087, 5309 & 1903/DEL/2013 3 SUCH ALLOCATION HAS NO BASIS EXCEPT ONE CERTIFICATE DATED 16.11.2008 ISSUED BY ONE M L MUTNEJA & CO., WHICH IS A CHARTERED ACCOUNT ANT FIRM (THE SAME IS ENCLOSED WITH THE ORDER AS ANNEXURE B). HOW CAN A C HARTERED ACCOUNTANT ALLOCATE COST IN A PROJECT, IS BEST KNOWN TO THE AS SESSEE. MOREOVER, NO WORKING/DOCUMENT WAS FURNISHED EVIDENCING THE BASIS ON WHICH THE ALLOCATION WAS MADE. (III) AS A RESULT OF THE ABOVE ALLOCATION WHAT HAS HAPPENED IS THAT COST PER SQUARE FEET OF BUILT UP AREA OF MALL WORKS OUT TO B E RS.2316 WHEREAS FOR HOTEL SAME WORKS OUT AT RS.1013 PER SQ. FT. OF BUILT UP A REA. IN OTHER WORDS, THE COST OF PER SQ. FT OF BUILT UP AREA OF MALL IS 2.3 TIMES THAT OF THE HOTEL FOR WHICH THERE IS ABSOLUTELY NO BASIS. 4. HE, THEREFORE, ALLOCATED THE COST OF THE MALL AN D THE HOTEL BY MAKING HIS OWN CALCULATION WHICH IS AS UNDER:- OPENING STOCK AS ON 01.04.2007 4165.43 LACS ADD: CONSTRUCTION EXPENSES 1440.95 LACS INDIRECT EXPENSES 245.00 LACS 1685.95 LACS 5851.38 LACS LESS: LAND AT SHIKHOPUR 26.85 LACS LAND AT VILLAGE TIGRA AND MAIDAWAS (NOTE 1) 477.84 LACS 504.69 LACS 5346.69 LACS HENCE, THE TOTAL COST ATTRIBUTABLE TO THE METROPOLI TAN PROJECT, JAIPUR WHICH INCLUDES BOTHT HE MALL AND THE HOTEL IS 5346.69 LAC S. THE PROPORTIONATE ALLOCATION OF COST ON THE BASIS OF THE BUILT UP AREA IS AS UND ER:- COST ALLOCATED TO MALL 5346 LACS X 203945/315279 = 3458.62 LACS COST ALLOCATED TO HOTEL 5346.69 LACS X 111334/31527 9 = 18888.08 LACS TOTAL SALEABLE AREA OF MALL 136778 SQ. FT. COST PER SQ. FEET 3458.62 LACS/136773 = 2528 SAY 2530/- PER SQ. FT. SOLD AREA 2430 X 114504 = 28,96,95,120/- ITA NOS.1087, 5309 & 1903/DEL/2013 4 5. HE REDUCED THE COST OF THESE LANDS FROM THE COST OF CONSTRUCTION. SINCE THE COST CHARGED TO THE P&L ACCOUNT AS PER THE ASSESSEE S COMPUTATION WAS RS.39,45,73,993/-, WHEREAS THE COST OF SALES COMPUT ED BY THE ASSESSING OFFICER WAS RS.28,96,95,120/-, THE ASSESSING OFFICER MADE A DDITION OF RS.10,57,78,873/- BEING THE DIFFERENCE ON ACCOUNT OF EXCESS COST CHAR GED FOR THE PROJECT. 6. IN APPEAL, THE LD.CIT(A), ON THE BASIS OF THE RE PORT OF THE DVO WHICH WAS NOT OBTAINED AT THE TIME OF MAKING THE ASSESSMENT, BUT, WAS OBTAINED DURING THE COURSE OF APPEAL PROCEEDINGS, SUSTAINED AN ADDITION OF RS.90,50,894/- AND DELETED THE ADDITION OF RS.9,67,27,979/-. AGGRIEVED WITH S UCH PART RELIEF GRANTED BY THE CIT(A), THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL:- ASSESSEES APPEAL (ITA NO.1087/DEL/2013) GROUND NO. 1: THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 1, N EW DELHI (HEREINAFTER REFERRED TO AS 'CIT(A)') HAS ERRED IN LAW AND IN TH E FACT & CIRCUMSTANCES OF THE CASE BY PASSING THE ORDER DATED 16.01.2013 UNDER SE CTION 250 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT' ). THE ORDER PASSED BY THE CIT(A) IS ILLEGAL BEING AGAINST THE PRINCIPLES OF N ATURAL JUSTICE AND AGAINST THE PROVISIONS OF THE ACT. GROUND NO. 2: A) THE CIT(A) HAS ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ADDITION AMOUNTING TO RS. 90,50,894 ON THE BASIS OF THE VALUATION REPORT OF THE DISTRICT VALUATION OFFI CER, JAIPUR ('DVO'). B) THE CIT(A) HAS ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE IN RELYING ON THE VALUATION REPORT OF DVO. ITA NOS.1087, 5309 & 1903/DEL/2013 5 C) THE CIT(A) HAS ERRED ON FACTS AND CIRCUMSTANCES IN NOT APPRECIATING THE FACT THAT DVO HAS DETERMINED THE COST OF MALL A ND HOTEL ON THE BASIS OF PLINTH AREA RATES AND COST INDEX METHOD FO R THE BASIC STRUCTURAL WORK OF THE BUILDING AND ACCOUNTS METHOD FOR FINISHING ITEMS IN THE BUILDING, HOWEVER THE DETERMINATION OF COST BY THE APPELLANT IS BASED ON ACTUAL COST WHICH HAS ACTUALL Y BEEN INCURRED AND CLAIMED BY THE APPELLANT IN ITS AUDITED FINANCIAL S TATEMENTS. D) THE CIT(A) HAS ERRED ON FACTS AND CIRCUMSTANCES IN NOT APPRECIATING THE FACT THAT THE DIFFERENCE BETWEEN THE COST OF CO NSTRUCTION AS PER THE BOOKS OF ACCOUNTS AND THE ESTIMATED COST OF CONSTRU CTION (ACCORDING TO THE DVO'S REPORT) IS ONLY A MARGINAL, AND AN ACC EPTABLE ONE, THEREFORE, THE COST DETERMINED BY THE APPELLANT SHO ULD BE CONSIDERED IN VIEW OF THE DECISION OF HON'BLE DELHI HIGH COURT I.E., COMMISSIONER OF INCOME-TAX VS. AMBIENCE DEVELOPERS AND INFRASTRUCTURE (P.) LTD. (IT APPEAL NOS. 195 TO 199 & 203 OF 2012) JULY 27, 2012. HENCE, THE APPELLANT PRAYS THAT THE TOTAL ADDITION CONFIRMED AT RS. 90,50,894 IS ONLY ON SURMISES CONJECTURES AND SHOULD BE DELETED. GROUND NO.3: THE APPELLANT PRAYS THAT HE MAY BE ALLOWED TO ADD, AMEND, ALTER OR FOREGO ANY OF THE ABOVE GROUNDS OF APPEAL AS THE CIRCUMSTANCES MAY WARRANT. GROUND NO.4: THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTH ER. REVENUES APPEAL (ITA NO.1903/DEL/2013) 1. THE ORDER OF LD. CIT(A) IS NOT CORRECT IN LAW A ND FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.9,67,27,979/- MADE BY T HE A.O. ON ACCOUNT OF EXCESS COST CHARGED FOR THE PROJECT. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL THE GROUND OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEA L. ITA NOS.1087, 5309 & 1903/DEL/2013 6 7. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, REFERRED TO THE COPY OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2010-11 AND DR EW THE ATTENTION OF THE BENCH TO PARA 6.12 OF THE ORDER WHICH READS AS UNDER:- 6.12 IN THIS, THE DEPARTMENT HAS REFERRED CASE TO THE DISTRICT VALUATION OFFICER TO ASCERTAIN THE COST OF CONSTRUCTION INCUR RED BY THE ASSESSES ON THE CONSTRUCTION OF INTEGRATED PROJECT AT JAIPUR COMPRI SING OF SHOPPING MALL & HOTEL. THE DVO VIDE ITS REPORT DATED 02.11.2012, VA LUED THE COST OF CONSTRUCTION OF THE TOTAL PROJECT AT RS. 82,67,93,1 20/-, AS AGAINST THE TOTAL COST DECLARED BY THE ASSESSES AT RS.85,22,37,406/-. THUS , THE ASSESSEE HAVE OVER STATED THAT COST TO THE EXTENT OF RS.2,54,44,286/-, WHICH HAS BEEN CLAIMED IN THE INCOME TAX RETURN AS COST/EXPENDITURE BUT NOT S UPPORTED WITH THE TANGIBLE ACCRETION IN THE ASSETS. THEREFORE, THIS EXCESS COS T OF RS,2,54,44,286/- CLAIMED BY THE ASSESSEE ARE TO BE DISALLOWED. THE PART OF T HIS AMOUNT HAS ALREADY BEEN TAXED IN THE F.Y. 2007-08, RELEVANT TO A.Y. 2008-09 AND THE BALANCE AMOUNT OF RS. 1,63,93,392/- IS PERTAIN TO TOTAL PROJECT WH ICH HAS CULMINATED/COMPLETED DURING THE CURRENT FINANCIAL YEAR AND LIABLE TO BE TAXED DURING THE YEAR, EXCESS CLAIM OF COST AND TO BE DISALLOWED. THEREFORE, THE AMOUNT OF RS.1,63,93,392/- IS ADDED TO THE INCOME OF THE ASSESSEE ON ACCOUNT O F EXCESS CLAIM OF COST OF INTEGRATED PROJECT. 8. HE SUBMITTED THAT THE REPORT OF THE DVO WAS NOT AVAILABLE AT THE TIME OF ASSESSMENT ALTHOUGH THE ASSESSING OFFICER HAD REFER RED THE MATTER TO THE DVO. THE REPORT OF THE DVO WAS OBTAINED BEFORE THE APPEAL WA S HEARD BY THE CIT(A) AND THE COPY OF THE SAME WAS FORWARDED TO THE ASSESSING OFF ICER FOR HIS COMMENTS. AFTER CONSIDERING THE REPORT OF THE DVO, THE LD.CIT(A) GA VE RELIEF TO THE ASSESSEE TO THE EXTENT OF RS.9,67,27,979/-, BUT, SUSTAINED THE ADDI TION OF RS.90,50,894/-. HE SUBMITTED THAT SINCE THE ASSESSING OFFICER IN THE O RDER FOR ASSESSMENT YEAR 2010-11 HAS ALREADY ACCEPTED THE DVOS REPORT, THEREFORE, W HEN THE CIT(A) HAD GRANTED RELIEF ON THE BASIS OF THE DVO, THE REVENUE SHOULD NOT HAVE ANY GRIEVANCE. ITA NOS.1087, 5309 & 1903/DEL/2013 7 9. SO FAR AS THE ADDITION SUSTAINED BY THE CIT(A) I S CONCERNED, HE SUBMITTED THAT THE SAME IS NOT JUSTIFIED UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE SINCE THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE NOT REJECTED A ND THE ADDITION HAS BEEN SUSTAINED BY THE CIT(A) ON THE BASIS OF THE REPORT OF THE DVO WHICH IS ON ESTIMATE BASIS. REFERRING TO THE DECISION OF THE HON'BLE SU PREME COURT IN THE CASE OF SARGAM CINEMA VS. CIT, 328 ITR 513, HE SUBMITTED THAT THE HON'BLE SUPREME COURT IN THE SAID DECISION HAS HELD THAT AN ASSESSI NG AUTHORITY CANNOT REFER ANY MATTER TO THE DVO WITHOUT REJECTING THE BOOKS OF AC COUNT. REFERRING TO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CAS E OF CIT VS. AMBIENCE DEVELOPERS AND INFRASTRUCTURE (P) LTD., 210 TAXMAN 187, HE SUBMITTED THAT THE HON'BLE HIGH COURT IN THE SAID DECISION HAS HELD TH AT FOR INSIGNIFICANT DIFFERENCE BETWEEN COST OF CONSTRUCTION AS PER BOOKS OF ACCOUN T AND THAT ESTIMATED BY THE DVO, ADDITION ON THE BASIS OF DVOS REPORT IS NOT J USTIFIED. HE SUBMITTED THAT IN THE INSTANT CASE, THE COST OF CONSTRUCTION OF THE T OTAL PROJECT WAS SHOWN BY THE ASSESSEE AT RS.85,22,37,406/- WHEREAS THE DVO HAD D ETERMINED THE COST OF CONSTRUCTION OF THE TOTAL PROJECT AT RS.82,67,93,12 0/-. THUS, THE DIFFERENCE IN OVER STATEMENT OF COST TO THE EXTENT OF RS.2,54,44,286/- IS ONLY 2.99% OF THE TOTAL COST OF CONSTRUCTION DECLARED BY THE ASSESSEE WHICH IS VERY INSIGNIFICANT. HE ACCORDINGLY SUBMITTED THAT THE ADDITION SUSTAINED BY THE CIT(A) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE IS NOT JUSTIFIED. ITA NOS.1087, 5309 & 1903/DEL/2013 8 10. THE LD. DR, ON THE OTHER HAND, STRONGLY SUPPORT ED THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE LD.CIT(A) WAS NOT JU STIFIED IN DELETING THE ADDITION OF RS.9,67,27,979/- MADE BY THE ASSESSING OFFICER O N ACCOUNT OF EXCESS COST CHARGED FOR THE PROJECT BY SIMPLY RELYING ON THE RE PORT OF THE DVO. 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSING OFFICER, IN THE INSTANT CASE, MADE ADDITI ON OF RS.10,57,78,873/- TO THE TOTAL INCOME ON THE GROUND THAT THE ASSESSEE HAS OV ER STATED THE COST OF CONSTRUCTION. WE FIND THE LD.CIT(A), AFTER CONSIDE RING THE REPORT OF THE DVO AND THE REMAND REPORT OF THE ASSESSING OFFICER TO SUCH DVOS REPORT SUSTAINED THE ADDITION OF RS.90,50,894/- AND DELETED AN ADDITION OF RS.9,67,27,979/-. THE REASONS FOR SUCH PART RELIEF GRANTED BY THE CIT(A) HAVE ALREADY BEEN REPRODUCED IN THE PRECEDING PARAGRAPHS. IT IS THE SUBMISSION OF THE LD. COUNSEL THAT WHEN THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE NOT REJECTED A ND THE DIFFERENCE BETWEEN THE VALUE DETERMINED BY THE DVO AND THE VALUE DECLARED BY THE ASSESSEE IS INSIGNIFICANT, NO ADDITION ON ACCOUNT OF SUCH DIFFE RENCE IN COST OF CONSTRUCTION CAN BE MADE. 12. WE FIND SOME FORCE IN THE ABOVE ARGUMENT OF THE LD. COUNSEL. AS MENTIONED IN THE EARLIER PARAGRAPH, THE ASSESSING OFFICER WHI LE PASSING THE ORDER FOR ASSESSMENT YEAR 2010-11 HAS HIMSELF ACCEPTED THE VA LUE DETERMINED BY THE DVO ITA NOS.1087, 5309 & 1903/DEL/2013 9 AND HAS MADE PROPORTIONATE ADDITION FOR ASSESSMENT YEAR 2010-11. THEREFORE, WHEN THE LD.CIT(A), FOLLOWING THE REPORT OF THE DVO HAS REDUCED THE DISALLOWANCE, THE REVENUE SHOULD NOT HAVE ANY GRIEV ANCE. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 12.1 NOW, COMING TO THE GRIEVANCE OF THE ASSESSEE, IT IS AN ADMITTED FACT THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE HAVE NOT BEEN REJE CTED BEFORE REFERRING THE MATTER TO THE DVO FOR DETERMINATION OF THE COST OF CONSTRU CTION. THE HON'BLE SUPREME COURT IN THE CASE OF SARGAM CINEMA (SUPRA), HAS HELD THAT AN ASSESSING AUTHORITY CANNOT REFER ANY MATTER TO THE DVO WITHOUT REJECTIN G THE BOOKS OF ACCOUNT. THE RELEVANT OBSERVATION OF THE HON'BLE SUPREME COURT A T PARA 4 AND 5 OF THE ORDER READS AS UNDER:- '4. IN THE PRESENT CASE, WE FIND THAT THE TRIBUNAL DECIDED THE MATTER RIGHTLY IN FAVOUR OF THE ASSESSEE INASMUCH AS THE TRIBUNAL CAM E TO THE CONCLUSION THAT THE ASSESSING AUTHORITY COULD NOT HAVE REFERRED THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER (DVO) WITHOUT THE BOOKS OF ACCOUN T BEING REJECTED. IN THE PRESENT CASE, A CATEGORICAL FINDING IS RECORDED BY THE TRIBUNAL THAT THE BOOKS WERE NEVER REJECTED. THIS ASPECT HAS NOT BEEN CONSI DERED BY THE HIGH COURT. IN THE CIRCUMSTANCES, RELIANCE PLACED ON THE REPORT OF THE DVO WAS MISCONCEIVED. 5. FOR THE ABOVE REASONS, THE IMPUGNED JUDGMENT OF THE HIGH COURT IS SET ASIDE AND THE ORDER PASSED BY THE TRIBUNAL STANDS R ESTORED TO THE FILE. ACCORDINGLY, THE ASSESSEE SUCCEEDS.' 13. SINCE, IN THE INSTANT CASE, IT IS AN ADMITTED F ACT THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE NOT REJECTED AND THE ASSESSEE HAS MAINTAINED ALL BILLS AND VOUCHERS WHICH ARE NOT FOUND TO BE FALSE OR UNTRUE, THEREFOR E, WITHOUT REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE, THE ASSESSING OFFICER COUL D NOT HAVE REFERRED THE MATTER TO ITA NOS.1087, 5309 & 1903/DEL/2013 10 THE DVO FOR DETERMINATION OF THE COST OF CONSTRUCTI ON AND THEREBY MAKING ADDITION ON THE BASIS OF SUCH DIFFERENCE. 14. EVEN OTHERWISE ALSO, IT IS AN ADMITTED FACT THA T THE DIFFERENCE BETWEEN THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE AT RS .85.22 CRORES AS AGAINST THE VALUE DETERMINED BY THE DVO OF RS.82.68 CRORES IS ONLY 2. 54 CRORES WHICH IS LESS THAN 3% OF THE TOTAL COST OF CONSTRUCTION DECLARED BY TH E ASSESSEE. THUS, THE DIFFERENCE BEING LESS THAN 3% IS VERY INSIGNIFICANT. WE FIND THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. AMBIENCE DEVELOPERS AND INFRASTRUCTURE (P) LTD., (SUPRA) HAS HELD THAT FOR INSIGNIFICANT DIFFERENCE BETWEEN COST OF CONSTRUCTION AS PER BOOKS OF ACCOUNT AND THAT ESTIMATED BY THE DVO, ADDITION ON THE BASIS OF DVOS REPORT IS NOT JUSTIFIED. THE RELEVANT OBSERVATION OF THE HON 'BLE HIGH COURT READS AS UNDER:- 16. IN VIEW OF THE ABOVE, IT IS EVIDENT THAT THE VALUATION IN THIS CASE WAS UNCRITICALLY ACCEPTED BY THE AO. AS CAN BE SEEN FRO M A COMPARISON OF THE VALUATION BY THE ASSESSEE, WITH THAT OF THE DVO, TH E VARIATION IS 3.86 %. THIS IS A VERY MINOR VARIATION, HAVING REGARD TO THE LAR GE AMOUNTS INVOLVED. BESIDES, THE FACT THAT THE AO DID NOT EXAMINE THE V ARIATIONS, WITH SPECIFIC REFERENCE TO ANY ITEMS OF EXPENDITURE THAT WERE UNR EASONABLE, OR SHOWED WIDE VARIATION, THESE DIFFERENCES CAN ALSO BE PUT DOWN T O DIFFERING PERCEPTIONS, AND THE PRACTICE ADOPTED BY THE CONCERNED BUSINESS ACTI VITY. 17. IN VIEW OF THE ABOVE DISCUSSION, AND HAVING REG ARD TO THE FACT THAT THE VARIATION IN VALUATION, IN THIS CASE BETWEEN WHAT W AS DISCLOSED BY THE ASSESSEE AND WHAT WAS INDICATED BY THE DVO IS NOT SIGNIFICAN T, THIS COURT IS OF OPINION THAT THERE IS NO INFIRMITY IN THE FINDINGS CONTAINE D IN THE IMPUGNED ORDER OF THE TRIBUNAL. NO SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDERATION. THE APPEALS ARE, THEREFORE, DISMISSED. 15. SINCE, IN THE INSTANT CASE, THE ASSESSEE HAS MA INTAINED THE BOOKS OF ACCOUNT SUPPORTED BY BILLS AND VOUCHERS FOR THE CONSTRUCTIO N OF THE MALL AND HOTEL, WHICH WAS NOT REJECTED BY THE ASSESSING OFFICER BEFORE SE NDING THE MATTER TO THE DVO FOR ITA NOS.1087, 5309 & 1903/DEL/2013 11 DETERMINATION OF THE COST OF CONSTRUCTION AND SINCE THE DIFFERENCE IN THE VALUE DECLARED BY THE ASSESSEE AND THE VALUE DETERMINED B Y THE DVO IS ALSO VERY INSIGNIFICANT BEING LESS THAN 3% OF THE TOTAL COST OF CONSTRUCTION DECLARED BY THE ASSESSEE, THEREFORE, IN VIEW OF OUR DISCUSSION IN T HE PRECEDING PARAGRAPHS, WE ARE OF THE CONSIDERED OPINION THAT THE CIT(A) WAS NOT J USTIFIED IN SUSTAINING THE ADDITION OF RS.90,50,894/-. ACCORDINGLY, THE ORDER OF THE CIT(A) IS SET ASIDE AND THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 16. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA NO.5309/DEL/2013 ( A.Y. 2009-10) 17. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- GROUND NO. 1: THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 1, N EW DELHI (HEREINAFTER REFERRED TO AS 'CIT(A)') HAS ERRED IN LAW AND IN TH E FACT & CIRCUMSTANCES OF THE CASE BY PASSING THE ORDER DATED 11.09.2013 UNDER SE CTION 250 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT' ). THE ORDER PASSED BY THE CIT(A) IS ILLEGAL BEING AGAINST THE PRINCIPLES OF N ATURAL JUSTICE AND AGAINST THE PROVISIONS OF THE ACT. GROUND NO. 2: E) THE CIT(A) HAS ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ADDITION AMOUNTING TO RS. 2,68,177/- ON THE BASIS OF THE VALUATION REPORT OF THE DISTRICT VALUATION OFFI CER, JAIPUR ('DVO'). F) THE CIT(A) HAS ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE IN RELYING ON THE VALUATION REPORT OF DVO. G) THE CIT(A) HAS ERRED ON FACTS AND CIRCUMSTANCES IN NOT APPRECIATING THE FACT THAT DVO HAS DETERMINED THE COST OF MALL A ND HOTEL ON THE BASIS OF PLINTH AREA RATES AND COST INDEX METHOD FO R THE BASIC STRUCTURAL WORK OF THE BUILDING AND ACCOUNTS METHOD FOR FINISHING ITEMS IN THE BUILDING, HOWEVER THE DETERMINATION OF COST BY THE ITA NOS.1087, 5309 & 1903/DEL/2013 12 APPELLANT IS BASED ON ACTUAL COST WHICH HAS ACTUALL Y BEEN INCURRED AND CLAIMED BY THE APPELLANT IN ITS AUDITED FINANCIAL S TATEMENTS. H) THE CIT(A) HAS ERRED ON FACTS AND CIRCUMSTANCES IN NOT APPRECIATING THE FACT THAT THE DIFFERENCE BETWEEN THE COST OF CO NSTRUCTION AS PER THE BOOKS OF ACCOUNTS AND THE ESTIMATED COST OF CONSTRU CTION (ACCORDING TO THE DVO'S REPORT) IS ONLY A MARGINAL, AND AN ACC EPTABLE ONE, THEREFORE, THE COST DETERMINED BY THE APPELLANT SHO ULD BE CONSIDERED IN VIEW OF THE DECISION OF HON'BLE DELHI HIGH COURT I.E., COMMISSIONER OF INCOME-TAX VS. AMBIENCE DEVELOPERS AND INFRASTRUCTURE (P.) LTD. (IT APPEAL NOS. 195 TO 199 & 203 OF 2012) JULY 27, 2012. HENCE, THE APPELLANT PRAYS THAT THE TOTAL ADDITION CONFIRMED AT RS. 90,50,894 IS ONLY ON SURMISES CONJECTURES AND SHOULD BE DELETED. GROUND NO.3: THE APPELLANT PRAYS THAT HE MAY BE ALLOWED TO ADD, AMEND, ALTER OR FOREGO ANY OF THE ABOVE GROUNDS OF APPEAL AS THE CIRCUMSTANCES MAY WARRANT. GROUND NO.4: THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTH ER. 18. AFTER HEARING BOTH THE SIDES, WE FIND THE GROUN DS RAISED BY THE ASSESSEE ARE IDENTICAL TO THE GROUNDS RAISED IN ITA NO.1087/DEL/ 2013 FOR ASSESSMENT YEAR 2008- 09. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROU NDS RAISED BY THE ASSESSEE HAVE BEEN ALLOWED. FOLLOWING SIMILAR REASONINGS, THE GR OUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 19. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 1 0.10.2019. SD/- SD/- (KULDIP SINGH) (R.K. PANDA) JUDICIAL MEMBER ACCO UNTANT MEMBER DATED: 10 TH OCTOBER, 2019 ITA NOS.1087, 5309 & 1903/DEL/2013 13 DK COPY FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI