Nerella Prasad Babu, Kurnuthala V. ITO, Guntur

ITA 203/VIZ/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2672 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-11-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 29-04-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J SIRI KUMAR
• Keywords: Valuation report; Revised return

Judgement Text

ITA 203/VIZAG/2009 NERELLA PRASAD BABU, KURNUTHALA IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 203 /VIZAG/ 20 09 ASSESSMENT YEAR : 2005 - 06 NERELLA PRASAD BA BU KURNUTHALA ITO WARD - 2(2) GUNTUR (APPELLANT) VS. (RESPONDENT) PAN NO.ABVPN 7296F APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI J. SIRI KUMAR, DR ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER : - THIS APPEAL IS PREFERRED BY THE ASSESSEE A GAINST THE ORDER OF THE CIT(A) ON VARIOUS GROUNDS BUT THEY ALL RELATE TO AN ADDITION MADE ON ACCOUNT OF DIFFERENCE VALUE OF THE COST OF CONSTRUCTION OF RS.6,14,864/ - . THE FACTS IN BRIEF BORNE OUT FROM THE ORDER OF THE LOWER AUTHORITIES ARE THAT THE ASSESS EE HAS CONSTRUCTED A RESIDENTIAL PROPERTY AND ADMITTED THE COST OF CONSTRUCTION AT RS.21,66,841/ - . THE ASSESSEE HOWEVER OBTAINED THE VALUATION REPORT FROM THE REGISTERED VALUER WHO DETERMINED COST OF CONSTRUCTION AT RS.21,66,841/ - . THE PROPERTY WAS REFER RED TO THE DVO FOR ITS VALUATION BY THE A.O. AND IT WAS VALUED AT RS.33,94,137/ - . MEANWHILE, THE ASSESSEE AGAIN GOT A VALUATION REPORT FROM THE REGISTERED VALUER WHO DETERMINED THE COST AT RS.21,93,000/ - . THE ASSESSEE ACCORDINGLY FILED THE REVISED RETURN ADDING THE AMOUNT OF RS.47,500/ - I.E. THE D IFFERENCE BETWEEN THE VALUE DETERMINED BY THE TWO REGISTERED VALUERS. THE A.O. HOWEVER ADOPTED THE COST OF CONSTRUCTION AS ARRIVED BY THE DVO AND MADE THE ADDITION OF RS.12,27,179/ - WHICH REPRESENTS THE DIFFEREN TIAL VALUE OF THE PROPERTY CONSTRUCTED BY THE ASSESSEES , AS DETERMINED BY THE DVO IN HIS REPORT AND AS ADMITTED BY THE ASSESSEE. 2. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WITH THE SUBMISSION THAT THE A.O. HAS NOT FOUND ANY MISTAKES IN THE BOOK S OF ACCOUNTS OF THE ASSESSEE AND MADE ADDITION ON THE DVO S REPORTS. IT HAS ALSO FILED THE WRITTEN SUBMISSIONS BEFORE THE CIT(A). THE CIT(A) HAS RE - EXAMINED THE ITA 203/VIZAG/2009 NERELLA PRASAD BABU, KURNU THALA 2 SAME IN DETAIL AND FINALLY CONCLUDED THAT THE ASSESSEE IS ENTITLED FOR RELIEF OF 15% ON ACCO UNT OF VARIATION IN RATES AND 10% ON ACCOUNT OF PERSONAL SUPERVISION. HE ACCORDINGLY ALLOWED THE RELIEF TO THE ASSESSEE AT RS.6,33,632/ - . THE RELEVANT OBSERVATIONS OF THE CIT(A) ARE EXTRACTED HEREUNDER: I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE AP PELLANT. THE APPELLANT HAS MAINTAINED CONSTRUCTION ACCOUNT AND HAS ALSO MAINTAINED THE BILLS AND VOUCHERS WITH REGARD TO THE CONSTRUCTION. IT IS THEREFORE NOT CLEAR WHY THE DVO RESORTED TO THE ESTIMATION ON PLINTH AREA METHOD. IT IS ALSO SEEN THAT THE D VO HAS ADOPTED CPWD RATES FOR WORKING OUT THE BASIC COST. THE APPELLANTS AUTHORIZED REPRESENTATIVE ARGUED THAT A RELIEF @ 20% SHOULD BE ALLOWED ON ACCOUNT OF DIFFERENCE IN CPWD AND LOCAL RATES. RELIANCE WAS PLACED ON THE DECISION OF THE RAJASTHAN HIGH C OURT IN THE CASE OF SMT. PREM KUMARI MUDRIA (166 TAXMAN 166). HOWEVER, THE QUESTION OF VALUATION IS ESSENTIALLY A QUESTION OF FACT. THE FACTS BEFORE THE TRIBUNAL IN THAT CASE, AS A RESULT OF WHICH RELIEF @20% WAS ALLOWED IS NOT CLEAR . WHEREAS, THE HY DERABAD & VISAKHAPATNAM BENCHES OF THE ITAT, HAVE BEEN CONSISTENTLY HOLDING THAT RELIEF @15% CAN BE GIVEN TO THE APPELLANT ON ACCOUNT OF DIFFERENCES BETWEEN CPWD AND LOCAL RATES. SINCE THE JURISDICTIONAL BENCHES OF THE TRIBUNAL HAVE ARRIVED AT THIS RATE A FTER TAKING INTO ACCOUNT THE LOCAL MARKET CONDITIONS AND PREVAILING LOCAL RATES, I RESPECTFULLY FOLLOW THE DECISIONS OF THE VISAKHAPATNAM AND HYDERABAD BENCHES OF THE ITAT WHILE DECIDING THE PERCENTAGE OF RELIEF AVAILABLE ON THIS. THE ITAT, IN SEVERAL DEC ISIONS HAS HELD THAT A REBATE OF 15% IS TO BE ALLOWED ON ACCOUNT OF DIFFERENCE IN RATES. THE REBATE ALLOWED FOR SELF SUPERVISIONS IS ALSO ONLY 6% WHEREAS THE APPELLANT HAS CLAIMED THAT THE CONSTRUCTION WAS CARRIED OUT DIRECTLY UNDER HIS OWN SUPERVISION, WHEREAS THE ITAT HYDERABAD BENCH, IN THE CASE OF SALMA A. MEHDI VS. ITO, (ITA NO.697 & 698/HYD/93) AND THE ITAT VIZAG BENCH IN THE CASE OF ITO GUNTUR VS. SMT. P. VIJAYALAKSHMI (ITA NO.212/V/97 DATED 8.1.2005) HAS HELD THAT THE REBATE FOR SELF SUPERVISION I S ALLOWABLE AT 10% OF THE COST OF CONSTRUCTION. IN FACT IN THE CASE OF ACIT VS. VINOD KUMAR AGARWAL IN ITA NO.1497/HYD/1996 FOR A.Y. 1989 - 90 THE ITAT HYDERABAD `B BENCH HELD THAT THE DVO, ARE NOT FOLLOWING THE JUDGEMENTS OF THIS TRIBUNAL. IF SO, HE WOU LD HAVE HIMSELF GIVEN 15% OVERALL REBATE ON ACCOUNT OF DIFFERENCE IN COST OF CONSTRUCTION DUE TO RATE VARIATIONS AMONG DIFFERENT PLACES. THIS ATTITUDE IS ENORMOUSLY INCREASING THE INFRUCTUOUS WORK OF THE DEPARTMENT AND THE TRIBUNAL AND ALSO CAUSING UNNECE SSARY HARASSMENT AND ANXIETY TO THE TAX PAYERS IN THIS CASE ALSO THE ITAT UPHELD ITA 203/VIZAG/2009 NERELLA PRASAD BABU, KURNU THALA 3 THE DECISION OF THE CIT(A) TO ALLOW 15% DEDUCTION ON ACCOUNT OF VARIATION OF RATES FROM PLACE TO PLACE AND ALSO TO ALLOW A DEDUCTION OF 10% TOWARDS PERSONAL SUPERVISION. R ESPECTFULLY FOLLOWING THE DECISIONS OF THE ITAT HYDERABAD AND THE ITAT VISAKHAPATNA CITED SUPRA, I ALLOW THE APPELLANT RELIEF OF 15% ON ACCOUNT OF VARIATION IN RATES AND 10% (I.E. A FURTHER 4% OVER THAT ALLOWED BY THE DVO) ON ACCOUNT OF PERSONAL SUPERVISIO N. IF THE APPELLANTS ELIGIBILITY TO RELIEF ON THESE COUNTS IS CONSIDERED, THE COST OF CONSTRUCTION IS REDUCED TO RS.27,60,505/ - . THE APPELLANT THEREFORE GETS RELIEF OF RS.6,33,632/ - . THE ASSESSING OFFICER IS DIRECTED TO ACCORDINGLY RECOMPUTED THE INCO ME OF THE APPELLANT. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE TRIBUNAL. BUT DURING THE COURSE OF HEARING, HE COULD NOT POINT OUT EVEN A SINGLE DEFECT IN THE ORDER OF THE CIT(A). 4. THE LD. D.R. ON THE OTHER HAND HAS PLACED A HEAVY REL IANCE UPON THE ORDER OF THE CIT(A) WITH THE SUBMISSIONS THAT THE CIT(A) HAS EXAMINED ALL CONTENTIONS RAISED BY THE ASSESSEES BEFORE HIM. 5. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDER OF THE CIT(A), WE FIND THAT CIT(A) HAS G IVEN A THOUGHTFUL CONSIDERATION TO THE ASSESSEES CONTENTIONS AND THERE AFTER ALLOWED A REASONABLE RELIEF TO THE ASSESSEES. WHILE DOING SO, CIT(A) HAS FOLLOWED THE TRIBUNALS ORDER OF THIS BENCH. WE THEREFORE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). WE ACCORDINGLY, CONFIRM THE SAME. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 18.11. 20 10 SD/ - SD/ - (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 18 TH NOVEMBER , 20 10 ITA 203/VIZAG/2009 NERELLA PRASAD BABU, KURNU THALA 4 COPY TO 1 M/S. N. KOTESWARA RAO & CO., CHARTERED ACCOUNTANTS, D.NO.23 - 6 - 17/2, PATNAM BAZAR, GUNTUR - 522 003 2 THE ITO, WARD - 2(2), GUNTUR 3 THE CI T, GUNTUR 4 THE CIT (A) , G UNTUR 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM