Rajesh Tomar, Roorkee V. ACIT, Haridwar

ITA 2390/DEL/2010

• Counselvise Citation: 239020114 RSA 2010
• Duration Of Justice: 4 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 22-10-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 20-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAMEER SHARMA
• Assessee Lawyers: P K MISRA
• Keywords: Unexplained investment; Gift; Depreciation; Opportunity of being heard; Valuation report; Competent authority; Revised return
• Section: 133A; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F NEW DELHI BEFORE SHRI H.S. SIDHU, J .M. AND SHRI J.SUDHAKAR REDDY, A.M. ITA NOS.212,2390/DEL/2010 ASSESSMENT YEARS : 2000-01, 2003-04 SHRI RAJESH TOMAR PROP. VS. ACIT, M/S. HOTEL RAJ PALACE & RESTAURANT CIRCLE 3KM MILE STONE, HARIDWAR ROAD, HARIDWAR ROORKEE ACJPT8527A (APPELLANT) (RESPONDENT) ASSESSEE BY :- SHRI P. K. MISRA, CA DEPARTMENT BY:- SH. SHAMEER SHARMA, SR. DR O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER BOTH THESE APPEALS ARE FILED BY THE ASSESSEE D IRECTED AGAINST AN IDENTICAL ORDER OF THE COMMISSIONER OF INCOME TAX(A) DATED 26 .11.2009 FOR THE ASSTT. YEAR 2000-01 AND ASSTT. YEAR 2003-04. THE ASSESSEE FILED THE FOLLOWING ABRIDGED GROUNDS OF APPEAL:- ITA NO. 212/DEL/2010 ASSTT. YEAR 2000-01 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN SUSTAINING THE ADDITION OF RS. 91,987/ - ON ACCOUNT OF LOANS AND GIFTS IGNORING THE FACT THAT T HESE RECEIPTS HAVE ALREADY BEEN SURRENDERED AS THEY ARE APPEARING IN THE BANK ACCOUNTS OF THE ASSESSEE. 3(A) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN ALLOWING PARTIAL RELIEF TO THE EXTENT OF 15% AND SUSTAINING THE REMAINING ADDITION MADE BY THE LD. ASSESSING OFFICER ON ACCOUNT OF ESTIMATED COST OF CONSTRUCTION BASED ON DEPARTMENT VALUERS REPORT WH EREIN CPWD RATES HAD BEEN CONSIDERED INSTEAD OF PWD RATES IN ITA NOS. 212,2390/DEL/2010 AYS 2000-1, 2003-04 SHRI RAJESH TOMAR PROP.VS. ACIT PAGE 2 OF 11 SPITE OF SPECIFIC CONTENTION OF THE APPELLANT THAT THE CPWD RATES WERE NOT APPLICABLE TO THE PROPERTY IN QUESTI ON AS THE SAME IS LOCATED ON THE OUTSKIRTS OF THE CITY. (B) THAT THE LEARNED CIT(APPEALS) ERRED IN SUSTAINING A DDITION OF RS. 94,566/-ON ACCOUNT OF ARCHITECT FEES IN SPIT E OF THE REITERATION OF ASSESSEE THAT NO ARCHITECT HAD BEEN EMPLOYED. ITA NO. 2390/DEL/2010 ASSTT. YEAR 2003-04 2(A) THAT THE LEARNED COMMISSIONER OF INCO ME-TAX (APPEALS) HAS ERRED IN LAW AND ON THE FACTS IN MAKING ADDITION OF RS. 12,02,319/- ON ACCOUNT OF UNDISCLOSED INVESTMENT UN DER SECTION 69 OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF ALLEGE D DIFFERENCE BETWEEN COST ESTIMATED BY DEPARTMENT VALUATION OFFI CER AND ONE SHOWN BY THE ASSESSEE. (B) THAT THE LD. COMMISSIONER OF INCOME-TAX (APPEA LS) HAS ERRED IN LAW AND ON THE FACTS IN SUSTAINING THE ACTION OF LD . AO OF COMMISSION/ REFERRING THE MATTER OF DETERMINATION O F INVESTMENT TO VALUATION OFFICER AT THE ELEVENTH HOUR AND HE HA S FURTHER ERRED IN RELYING UPON VALUATION OFFICERS REPORT AND MAKI NG ADDITION BASED THEREUPON AND ALSO PARTLY SUSTAINING THE VALU ATION OFFICERS REPORT WITHOUT ALLOWING AN OPPORTUNITY TO CROSS EXAMINE THE DPV IN SPITE OF WRITTEN REQUEST OF THE APPELLAN T BEFORE THE LD. AO. (C) THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN ALLOWING PARTIAL RELIEF TO THE EXTENT OF 15% AND SUSTAINING THE REMAINING ADDITION MADE BY THE LD. ASSESSING OFFICE R ON ACCOUNT OF ESTIMATED COST OF CONSTRUCTION BASED ON DEPARTME NT VALUERS REPORT WHEREIN CPWD RATES HAD BEEN CONSIDERED INSTE AD OF PWD RATES IN SPITE OF SPECIFIC CONTENTION OF THE APPELL ANT THAT THE CPWD RATES WERE NOT APPLICABLE TO THE PROPERTY IN QUESTI ON AS THE SAME IS LOCATED ON THE OUTSKIRTS OF THE CITY. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE LEARNED ASSESSING OFFICER HAS ERRED IN LAW AND ON F ACTS IN CHARGING INTEREST UNDER SECTION 234B, 234C AND 220 (2). 2. FACTS IN BRIEF : THE ASSESEE IS AN INDIVIDUAL AND A PROPRIETOR OF M/S. HOTEL RAJ PALACE & RESTAURANT. A SURVEY U/S 133A O F THE ACT WAS CONDUCTED ON THE BUSINESS PREMISES OF THE ASSESEE ON 21/01/20 04. AS THE ASSESEE WAS FOUND TO HAVE BEEN INVESTED MONEY IN THE CONSTRUCTI ON OF BUILDING, THE AO ITA NOS. 212,2390/DEL/2010 AYS 2000-1, 2003-04 SHRI RAJESH TOMAR PROP.VS. ACIT PAGE 3 OF 11 REFERRED THE VALUATION OF THE HOTEL BUILDING, TO TH E DEPARTMENTAL VALUATION OFFICER FOR THE PURPOSE OF QUANTIFYING THE INVESTME NT. THE DEPARTMENTAL VALUER IN HIS REPORT QUANTIFIED THE INVESTMENT OF R S. 31,650/- FOR THE ASSTT. YEAR 2000-01. THE DEPARTMENTAL VALUATION OFFICER ES TIMATED THE COST OF CONSTRUCTION AS FOLLOWS :- A.Y. COST OF CONSTRUCTION DETERMINED BY THE DVO COST OF THE CONSTRUCTION DISCLOSED BY THE ASSESSE DIFFERENCE 2000 - 01 RS. 367291/ - RS. 174200/ - RS. 193091/ - 2001 - 02 RS. 1096633/ - RS. 520115/ - RS. 576518/ - 2002 - 03 RS. 126682/ - RS. 60083/ - RS. 66599/ - 2003 - 04 RS. 2482594/ - RS. 1177454/ - RS. 1305140/ - TOTAL RS. 4073200/- RS. 1931852/- RS. 2141348/- 3. THE AO PROPOSED TO TAX THE DIFFERENCE OF TH E COST OF CONSTRUCTION DETERMINED BY THE D.V.O. AND COST OF CONSTRUCTION D ISCLOSED BY THE ASSESSEE AS AN UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. THE ASSESSEE DISPUTED THE SAME BY MAKING VARIOUS SUBMISSIONS AND MADE AN ADDI TION AS PER THE REPORT OF THE DVO. THE ASSESSEE CARRIED THE MATTER IN APPEAL. BEFORE THE FIRST APPELLATE AUTHORITY THE ASSESSEE CONTENDED THAT HE WAS NOT GIVEN PROPER OPPORTUNITY OF BEING HEARD BY THE AO. THE ASSESEE F URTHER SUBMITTED THAT THE REPORT OF THE DVO WAS NOT GIVEN TO THE ASSESEE. 4. THE ASSESSEE MADE A NUMBER OF CONTENTIONS B EFORE THE FIRST APPELLATE AUTHORITY. THE FIRST APPELLATE AUTHORITY AT PARA 6. 5 FOR THE ASSTT. YEAR 2003- 04 HELD AS FOLLOWS :- ITA NOS. 212,2390/DEL/2010 AYS 2000-1, 2003-04 SHRI RAJESH TOMAR PROP.VS. ACIT PAGE 4 OF 11 6.5 HAVING REGARD TO THE ABOVE FINDING THE VAL UATION ARRIVED AT BY THE DVO IS REVISED AS UNDER :- VALUE DETERMINED ON THE BASIS OF PA RATE FOR GROUND FLOOR (FLOOR HEIGHT 3.50 M), FIRST FLOOR (FLOOR HEIGHT 3.30 M), 2 ND FLOOR (FLOOR HEIGHT 3.30 M) : RS. 36,67,836/- LESS : 15% ON ACCOUNT PWD RATES : RS. 5,50,175/- _________________ RS. 31,17,661/- ADD : COST OF SERVICES & EXTRA ITEMS RS. 3,88,125/- _________________ RS. 35,05,786/- DEDUCT 10% FOR SELF SUPERVISION THROUGH THE FATHER OF THE APPELLANT RS. 3,50,578/- _________________ RS. 31,55,208/- ADD: 3% FOR ARCHITECTS FEES RS. 94,656/- __________________ TOTAL RS. 32,49,864/- ___________________ 6.6. THE ABOVE TOTAL COST OF INVESTMENT IN THE P ROPERTY IS BEING ALLOCATED YEAR-WISE AS UNDER ON THE BASIS OF RATIO OF INVESTMENT ACTUALLY DECLARED BY THE APPELLANT. S.NO. F.Y. INVESTMENT DECLARED BY THE APPELLANT (IN RS.) ESTIMATED YEAR-WISE INVESTMENT BASED ON THE ABOVE VALUATION (IN RS.) 1. 1999-2000 1,74,200/- 2,93,048/- 2. 2000-2001 5,20,115/- 8,74,964/- 3. 2001-2002 60,083/- 1,01,075/- 4. 2002-2003 11,77,454/- 19,80,773/- 19,31,852/- 32,49,860/- 6.7 ACCORDING TO THE ABOVE ALLOCATION OF INVEST MENT TOWARDS THE COST OF CONSTRUCTION OF THE PROPERTY, THE INVESTMENT DET ERMINED FOR THE YEAR UNDER CONSIDERATION IS ARRIVED AT RS. 19,80,773/- A ND SINCE THE APPELLANT HAS ALREADY DECLARED INVESTMENT OF RS. 11 ,77,454/- AS PER REVISED RETURN, THE UNDISCLOSED INVESTMENT IN SUCH PROPERTY FOR THE YEAR UNDER CONSIDERATION IS WORKED OUT AT (RS. 19,80,773 RS. 11,77,454/-) I.E RS. 8,03,319/-. ACCORDINGLY, THE APPELLANT WILL GET RELIEF OF (RS. 13,05,140/- - RS. 8,03,319/-) I.E. RS. 5,01,821/- O N THIS ACCOUNT. ITA NOS. 212,2390/DEL/2010 AYS 2000-1, 2003-04 SHRI RAJESH TOMAR PROP.VS. ACIT PAGE 5 OF 11 FOR THE ASSESSMENT YEAR 2000-01 THE FIRST APPELLATE AUTHORITY SUSTAINED AN ADDITION OF RS. 91,897/- ON ACCOUNT OF LOAN AND GIF T ALLEGEDLY RECEIVED BY THE ASSESEE. THE ASSESSEE IS ALSO AGGRIEVED THE SAME. 5. WE HAVE HEARD SHRI P.K. MISRA THE LD. COUNSE L FOR THE ASSESSE AND SHRI SHAMEER SHARMA, LD. SR. DR ON BEHALF OF THE RE VENUE. FOR THE ASSTT. YEAR 2000-01 THERE ARE FACTUALLY TWO GROUNDS. THE F IRST IS AGAINST THE SUSTAINANCE OF AN ADDITION OF RS. 91,897/- ON ACC OUNT OF LOANS AND GIFTS. BEFORE US THE ASSESSEE HAS FILED DETAILS OF GIFTS R ECEIVED ON THE OCCASION OF RING CEREMONY OF SON ON 2.10.99. THE TOTAL GIFTS AM OUNT TO RS. 70,412/-. THE ADDITION HAS BEEN MADE ON THE GROUND THAT THESE GIF TS HAVE NOT BEEN SUBSTANTIATED. AS THESE ARE CUSTOMARY GIFTS AND ARE A SMALL AMOUNTS, WE HAVE NO REASON TO DISBELIEF THE CLAIM OF THE ASSESS EE. THUS WE ACCEPT THE CONTENTION OF THE ASSESSEE AND DIRECT THE DELETION OF ADDITION OF RS. 70,412/- FROM RS. 91,897/- . THE DIFFERENCE OF RS. 21485/- IS SUSTAINED ON THE GROUND THAT THE ASSESSEE HAS NOT SUBSTANTIATED THE SAME. THIS BRINGS US TO THE SECOND ISSUE OF ADDITION MADE BASED ON DVOS REPORT. THE LD. CIT(A) HAS GRANTED RELIEF OF AN AMOUNT OF 15% ON ACCOUNT OF DIFFERENCE BETWEEN PWD AND CPWD RATES. HE FURTHER GRANTED DEDUCTION OF 10% FOR SELF SUPERVISION, AS THE FATHER OF THE ASSESSEE WAS AN E XECUTIVE ENGINEER IN PWD AND THE WORK WAS CARRIED ON UNDER HIS GUIDANCE. THE REGISTERED VALUER ESTIMATED THE COST OF CONSTRUCTION OF RS. 17,60,600 /- AS AGAINST THE COST OF CONSTRUCTION ESTIMATED BY THE DEPARTMENTAL VALUATIO N OFFICER AT RS. 36,67,836/- AND INVESTMENT OF RS. 19,31,852/- DECLA RED BY THE ASSESSEE. ITA NOS. 212,2390/DEL/2010 AYS 2000-1, 2003-04 SHRI RAJESH TOMAR PROP.VS. ACIT PAGE 6 OF 11 6. THE CONTENTIONS OF THE ASSESEEE OF THE ISSUE OF VALUATION ARE AS FOLLOWS :- A. THAT THE ASSESSEES FATHER IS EXECUTIVE ENGINEER IN PWD AND IS IN A BETTER POSITION TO REAP BENEFITS OF ECONOMIES OF SC ALE. THEREFORE, AND AGGREGATE REDUCTION OF 30% MAY BE ALLOWED. THE LD. VO ESTIMATED YEAR WISE COST OF CONSTRUCTION JUST BY DOUBLING THE N SHOWN BY THE ASSESSEE. B. THAT THE VALUATION OFFICER APPLIED RATE OF CPWD WHE REAS THE BUILDING IS SITUATED IN UTTARANCHAL EARLIER UP WHERE UPPWD R ATES ARE APPLICABLE. THE PLINTH AREA RATE OF CPWD AS DETERMI NED 63% HIGHER THAN THE PWD RATES IN THE CASE OF ASSESEE AND 27.50 % HIGHER THAN PWD BY VO IN THE CASE OF SACHIN HOTEL, HARIDWAR, PW D RATES AS PER LETTER DATED 26.2.1997 (WHICH ARE APPLICABLE FOR 5 YEARS COPY OF SCHEDULE RATES ENCLOSED) ARE AS UNDER :- CPWD R ATES PWD RATES DETERM INED BY VO AS PER SCHEDULE 1. PLINTH AREA RATE 6159.00 3760.00 OF GROUND FLOOR 2. PLINTH AREA RATE 6341.00 3600.00 OF FIRST FLOOR 3. PLINTH AREA RATE 6341.00 3760.00 OF FIRST FLOOR ALL GOVT. BUILDINGS ARE CONSTRUCT ED ON THE BASIS OF UPPWD SCHEDULE RATES AND ALSO PRIVATE WORKS BY THE CONTRA CTORS KEEPING IN VIEW UPPWD SCHEDULE RATES. LD. VO SHOULD HAVE MADE LOCAL ENQUIRIES IN THIS REGARD BEFORE ESTIMATING THE COST OF BUILDI NG. HENCE HE IS NOT JUSTIFIED TO APPLY CPWD RATES IN THE CASE OF [CIT V S. RAJKUMAR 1990 182 ITR 426 (ALLD.) ] AND CIT VS. HOTEL JOSHI 2 000-199 (RAJ.) MAYUR TALKIES VS. ITO, MEERUT OF DELHI BENCH. THE HONBLE HIGH COURT HELD THAT IF THE BUILDING IS SITUATED IN THE STATE, RATE S OF THAT STATE PWD SHOULD BE APPLIED FOR AND NOT CPWD SCHEDULE RATES. HENCE THE APPLICATION OF CPWD SCHEDULE RATES IS NOT CORRECT. THE LD. VO WORKED OUT VALUE AS PER 92 CPWD SCHEDULE RATES WHICH IS WR ONG WHEREAS CPWD SCHEDULE RATES OF 2002 WERE AVAILABLE AND COPY OF THE SAME WAS SUBMITTED BEFORE AO. THE LD. VO WORKED OUT THE VALU E AS PER RATES AND INDEX PRESCRIBED IN THE MANUAL BUT HE DID NOT APPLI ED HIS MIND THAT THE PARAMETERS PROVIDED ARE ON ALL INDIA BASIS WITHOUT TAKING INTO ACCOUNT THE LOCAL CONDITIONS. IT IS VERY OBVIOUS THAT THE C OST OF CONSTRUCTION IN A VILLAGE SITUATED 3 KM, STONE FROM ROORKEE IS TO BE BOUND MUCH LESS THAN WHAT IT WILL BE IN A BIG METROS LIKE DELHI AND MUMB AI. HENCE THE COST ESTIMATED BY LD. VO IS NOT CORRECT. THE ASSESSEE FI XED VALUATION REPORT OF THE REGISTERED VALUER SHRI RAKESH SANGAL WHO EST IMATED THE COST AT ITA NOS. 212,2390/DEL/2010 AYS 2000-1, 2003-04 SHRI RAJESH TOMAR PROP.VS. ACIT PAGE 7 OF 11 15,80,100.00. THE LD. AO WAS REQUESTED DURING THE C OURSE OF ASSTT. PROCEEDINGS TO CROSS EXAMINE THE VO BUT NO OPPORTUN ITY WAS PROVIDED TO THE ASSESEE. THE SECOND VALUATION REPORT OF SHRI RAKESH MOHAN GUPTA REGISTERED VALUER OF SAHARANPUR IS ALSO SUBMI TTED BEFORE YOUR GOODSELF WHO ESTIMATED THE COST OF BUILDING AT RS. 17,60,600.00. THE ASSESSEE COULD NOT SUBMIT THE SECOND VALUATION REPO RT BEFORE AO AS NO REASONABLE OPPORTUNITY OF BEING HEARD WAS GIVEN TO HIM. BESIDES THE ABOVE FACTS GOVERNMENT WORKS ARE DONE B Y THE CONTRACTORS WHETHER IT IS CPWD OR PWD WHICH INCLUDES PROFIT OF CONTRACTOR THAT IS 10-15%, 4% TDS OF LOCAL TAXES, 2.24% IT TDS, 2.5% R OYALTY AND OTHER GOVT. MISC. EXPENSES ARE TO BE BORNE BY THE CONTRAC TOR AND EVEN THOUGH THE CONTRACTS ARE TAKEN BY THE CONTRACTOR 20% BELOW THE SCHEDULE RATES WHICH RESULTS THAT CASE OF ASSESSEE NO CONTRACTOR H AS BEEN ENGAGED NOR ST, IT, ROYALTY AND OTHER MISC. EXPENSES HAVE BEEN INCURRED BY THE ASSESSEE. THE LD. VO HAS NOT CONSIDERED THESE FACTS WHILE ESTIMATING THE COST OF BUILDING. HENCE THE ESTIMATION OF BUILD ING COST BY THE LD. VO IS NOT CORRECT. C. THAT LD. VO HAS ALLOWED TO 2.5% FOR SEL F SUPERVISION DONE THROUGH THE FATHER OF THE ASSESEE WHO IS XEN, PWD U A. IN THIS CONNECTION IT IS SUBMITTED THAT LD. VO HAS HIMSELF ADMITTED THAT THE SUPERVISION HAS BEEN CARRIED OUT BY THE FATHER OF T HE ASSESEE AND NO ONE HAS BEEN EMPLOYED. LD. VO SHOULD HAVE ALLOWED 1 0% TOWARDS SUPERVISION CHARGES KEEPING IN VIEW THE JUDGMENT OF SMT. PROMILA GROVER VS. CIT-25-TTJ-186 WHICH HAS ALSO THE REFERR ED IN THE CASE OF SHRI RAM PRAKASH HALWAI BEFORE THE HONBLE ITAT NEW DELHI WHO ALSO ALLOWED 10% SUPERVISION CHARGES. HENCE THE ASSESSEE MAY ALSO BE ALLOWED 10% REBATE TOWARDS SELF SUPERVISION CHARGES INSTEAD OF 2.5% (COPY ENCLOSED FOR READY REFERENCE) (ANNEXURE-3) D. THAT LD. VO ADDED 3% FOR ARCHITECTS FEE. IN THIS CONNECTION IT IS SUBMITTED THAT THE ASSESSEE HAS NOT ENGAGED ANY ARC HITECT (AN AFFIDAVIT IS ENCLOSED) (ANNEXURE -4). BESIDES THE ABOVE FAC TS IT IS ALSO SUBMITTED THAT THE LD. VO HAS HIMSELF STATED IN THE REPORT TH AT SUBMITTED THAT THE LD. VO HAS HIMSELF STATED IN THE REPORT THAT SUPERV ISION HAS BEEN CARRIED OUT BY THE FATHER OF THE ASSESEE WHO IS XEN PWD AND ON THE OTHER HAND IS ADDING 3% OR ARCHITECT FEE WHEREAS BU ILDING IS PLAIN AND NO ARCHITECTURAL WORK HAS BEEN CARRIED OUT IN THE B UILDING NOR LD. VO HAS STATED IN THE REPORT. HENCE THE ADDITION OF 3% IS NOT JUSTIFIED. E. VO HAS TAKEN 12.5% FOR INTERNAL ELECTRIF ICATION WHEREAS AS PER UPPWD SCHEDULE RATES CHARGES ARE 9% (COPY ENCLOSED) IN THE CASE OF M/S. SACHIN HOTEL IT HAS BEEN TAKEN AT 7% BY HONBL E CIT(APPEALS) DEHRADUN. LD. VO HAS NOT GIVEN ANY BASIS FOR ADDING 12.5% FOR INTERNAL ELECTRIFICATION NOR ANY EVIDENCE HAS BEEN PLACED ON RECORD. F. LD. VO HAS TAKEN 3% FOR EXTERNAL SERVICES C ONNECTIONS. IN THIS CONNECTION, IT IS SUBMITTED THAT THESE CHARGES ARE ONLY APPLICABLE IF THE BUILDING IS IN DEEP. IN THE CASE OF ASSESEE BUILDIN G IS SITUATED ON ROAD ITA NOS. 212,2390/DEL/2010 AYS 2000-1, 2003-04 SHRI RAJESH TOMAR PROP.VS. ACIT PAGE 8 OF 11 AND LINE IS GOING FROM THERE ITSELF AND HENCE THE A DDITION OF 3% ON THIS ACCOUNT IS NOT JUSTIFIED AS THE ASESSEE HAS NOT PAI D ANY CONNECTION SERVICE CHARGES TO THE DEPARTMENT. THIS MAY BE GOT VERIFIED BEFORE MAKING THE ADDITION. G. THAT LD. VO HAS TAKEN 15% FOR SANITATION WORK. IN THIS CONNECTION IT IS SUBMITTED THAT THE BUILDING IS SIT UATED IN UA AND 6% SANITATION CHARGES ARE APPLICABLE UNDER UPAWD RATES (COPY ENCLOSED). VO HAS NOT PLACED ANY DOCUMENTARY EVIDENCE ON RECOR D WHICH SHOULD PROVED THAT THE RATES ARE 15% (COPY OF PWD SCHEDULE ENCLOSED) ANNEXURE-5) SINCE THE HOTEL BUILDING WAS COMPLETED IN DEC. 2002 AND NO DISPUTE IS ON THIS POINT. THE ASSESSEE SHOULD HAVE BEEN GIVEN DEPRECIATION ON THE BUILDING OF THE HOTEL AS PER PR OVISION OF THE ACT WHICH HAS NOT BEEN ALLOWED BY LD. AO. LIKEWISE, THE DEPRECIATION ON FURNITURE AND FIXTURE IS TO BE GIVEN TO THE ASSESEE . THAT THE MATERIAL, LABOUR AND TRANSPORTATION COST I N BIG CITIES IS MORE COSTLIER THAN THE SMALL CITIES. HOWEVER, HONB LE CIT(PPEALS) DDN IN THE CASE OF SACHIN HOTEL ALLOWED 12% DEDUCTION IN T HIS ACCOUNT WHEREAS IN THE CASE OF ASSESEE THE BUILDING IS SITU ATED IN A VILLAGE 3 KM. STONE FROM RORKEE. THE MATERIAL COST, LABOUR, T RANSPORTATION IS MUCH LESS THAN THE HARIDWAR. THE ASSESSEE MAY BE AL LOWED 15% DEDUCTION IN THIS ACCOUNT. H. LD. VO IN PARA 7.3 OF THE REPORT STATED THAT T HE BUILDING HAS BEEN PROVIDED WITH SOME RICHER SPECIFICATIONS. IN THIS C ONNECTION IT IS SUBMITTED THAT THE BUILDING HAS NOT BEEN PROVIDED W ITH ANY RICHER SPECIFICATION. THE BUILDING CONSIST OF IRON CHAUKAT A, CHIP MOSAIC, AND DOORS OF PLYWOOD WHICH ARE MUCH CHEAPER THAN SHISHU M TEAK AND SALL WOOD. VO HAS NOT CONSIDERED THIS FACT WHILE ESTIMAT ING THE COST OF BUILDING. THE MARBLE STONE HAS NOT BEEN USED IN TH E FLOORING OF THE BUILDING. I. LD. VO HAS SEPARATELY ESTIMATED THE COST O F M.S. RAILILNG OF ANGLE AND FABRIC JAIL, FLAT BRICK FLOOR, COLLAPSIBLE GATE , ALUMINUM DOOR, GLAZED TILES, RCC PROJECTION WITH MOSAIC FLOOR. IN THIS CO NNECTION IT IS SUBMITTED THAT THE LD. VO SHOULD EITHER HAVE DEDUCTED THE COS T OF THESE ITEMS FROM PLINTH AREA COST OR OTHERWISE THE COST OF THESE ITE MS IS ALREADY INCLUDED IN THE PLINTH AREA OR SHOULD HAVE REDUCED THE RATE OF PLINTH AREA ACCORDINGLY OF THESE OPENINGS. J THE LD. VO HAS STATED IN THE REPORT THAT THE APPROVED VALUER HAS TAKEN PLINTH AREA RATES ON LOWER SIDE WHICH IS WRON G AND UNJUST. THE APPROVED VALUER HAS TAKEN THE PLINTH AREA RATES ON THE BASIS OF 1997 UPPWD SCHEDULE (COPY ENCLOSED) WHICH ARE DULY APPRO VED BY THE COMPETENT AUTHORITY WHEREAS LD. VO HAS TAKEN 92 RAT ES WITH INDEX COST. HENCE THE REPORT OF APPROVED VALUER IS MORE A UTHENTICATED. ITA NOS. 212,2390/DEL/2010 AYS 2000-1, 2003-04 SHRI RAJESH TOMAR PROP.VS. ACIT PAGE 9 OF 11 THAT LD. VO HAS TAKEN RS. 3,88,125/- AS INVESTMENT ON EXTRA ITEMS THE REPLY IS AS UNDER :- 1. PORCH AT G.F.WITH R.C.C. PILLAR :- HE HAS TAKEN RS. 55440.00 AS INVESTMENT CONSIDE RING 18 SQ.M. @ 3080.00 PER SQ. M. IN THIS CONNECTION IT IS SUBMI TTED THAT THE SAME IS CALCULATED IN CU.M AND NOT IN SQ.M. 2. M.S.GATE :- HE HAS TAKEN COST AT RS. 4955.00 @ 1101.00 OF 4.5 S Q.M. IN THIS CONNECTION IT IS SUBMITTED THAT THE SAME IS CALCULA TED IN WEIGHT AND NOT IN SQ.M. 3. BOUNDARY WALL OF HALF BRICK MESONARY OF 1.10M. HEIGHT :- THAT TOTAL INVESTMENT IS TAKEN RS. 22,707.00 @ 783.00 PER SQ.M OF 29 M IN THIS CONNECTION IT IS SUBMITTED THAT THE SAME IS CALCULATED IN CU.M. AND NOT IN SQ.M. 4. CEMENT CONCRETE FLOORING:- HE HAS TAKEN COST AT RS. 3565.00 @115 SQ.M. OF 31 S Q.M. IN THIS CONNECTION IT IS SUBMITTED THAT THE SAME IS CALCULA TED IN CU.M. AND NOT IN SQ.M. 5. M.S. RAILING OF ANGLE & FABRIC JALLI 1.00 M. HEIG HT :- HE HAS TAKEN COST AT RS.. 7884.00 @ 438.00 OF 18 SQ.M. IN THIS CONNECTION IT IS SUBMITTED THAT THE SAME IS CA LCULATED IN WEIGHT AND NOT IN SQ.M. 6. FLAT BRICK FLOORING:- HE HAS TAKEN COST AT RS. 9936.00 @ 144 SQ.M. OF 69 SQ.M. IN THIS CONNECTION IT IS SUBMITTED THAT THE SAME IS CALCULA TED IN CU.M. AND NOT IN SQ.M. 7. COLLASIBLE GATE :- HE HAS TAKEN COST AT RS. 15475.00 @ 1629.00 O F 9.50 SQ.M. IN THIS CONNECTION IT IS SUBMITTED THAT THE SAME IS CA LCULATED IN WEIGHT AND NOT IN SQ.M. 8. ALLUMINIUM DOOR WITH GLAZING:- HE HAS TAKEN COST AT RS. 22220.00 @ 2222.00 OF 10 SQ.M. IN THIS CONNECTION IT IS SUBMITTED THAT THE MARKET RAT E IS NOT MORE THAN 100.00 OF PER SQ.F. 9. GLAZED TILES :- HE HAS TAKEN COST AT RS. 5670.00 @ 378.00 OF 1 5 SQ.M. IN THIS CONNECTION IT IS SUBMITTED THAT THE SAME IS CALCULA TED IN CU.M. AND NOT IN SQ.M. 10. R.C.C. PROJECTION WITH MOSAIC FLOORING & RAILING : - HE HAS TAKEN COST AT RS. 68064.00 @ 1418.00 OF 48 SQ.M. IN THIS CONNECTION IT IS SUBMITTED THAT THE MARKET RAT E IS NOT MORE THAN 710.00 OF PER CU.M. AND NOT IN SQ.M. 11. DECORATEIVE (MARAL) TYPE PLASTER WITH COLOURED PIGMENT :- HE HAS TAKEN COST AT RS. 13500.00 @ 500.00 OF 27 SQ.M. IN THIS CONNECTION IT IS SUBMITTED THAT THE MARKET RATE IS NOT MORE THAN 199.00 OF 27 SQ.M. ITA NOS. 212,2390/DEL/2010 AYS 2000-1, 2003-04 SHRI RAJESH TOMAR PROP.VS. ACIT PAGE 10 OF 11 12. ADD FOR PROVIDING MOSAIC FLOORING INSTEAD OF PROVISION IN PAR:- HE HAS TAKEN COST AT RS. 26312.00 @ 104.00 OF 253 SQ.M IN THIS CONNECTION IT IS SUBMITTED THAT THE MARKET RAT E IS NOT MORE THAN 60.00 PER SQ.M. 13. STAIR CASE FROM 2 ND FLOOR TO 3 RD FLOOR :- HE HAS TAKEN COST AT RS. 82433.00 @ 6341.00 OF 1 3 SQ.M. IN THIS CONNECTION IT IS SUBMITTED THAT THE STAIR CASE AREA IS ALWAYS INCLUDED IN THE PLINTH AREA. THE RATE IS CALCULATED IN CU.M. AND NOT IN SQ.M. 14. EARTH FILLING :- HE HAS TAKEN COST AT RS. 26751.00 @ 111.00 OF 2 41 CU.M. IN THIS CONNECTION IT IS SUBMITTED THAT NO EARTH FILLI NG HAS BEEN DONE. 15. BRICK WORK IN FOUNDATION:- HE HAS TAKEN COST AT RS. 18213.00 @ 1401.00 OF 13 CU.M. IN THIS CONNECTION IT IS SUBMITTED THAT THE BUILDING I S BASED ON PILE FOUNDATION AND HENCE NO BRICK WORK IN FOUNDATION IS CARRIED OUT. I. THAT THE BUILDING IS SITUATED ON THE MAIN ROAD ITS ELF, THEREFORE, A CARTAGE OF MATERIAL IS CHEAPER AS ALL THE CONSTRUCT ION MATERIAL AND LABOUR IS FREQUENTLY AVAILABLE IN ROORKEE MARKET. T HIS WILL FURTHER REDUCE THE COST OF BUILDING. IN THE CASE OF M/S. SA CHIN HOTEL, HARIDWAR HONBLE CIT DEHRADUN AFTER CONSIDERING ALL THESE FA CTS ALLOWED THE APPEAL OF THE ASSESSEE. II. IT IS ALSO SUBMITTED THAT THE LD. VO HAS TAKEN THE COST OF 1 ST AND 2 ND FLOOR MORE THAN 10% OF THE GROUND FLOOR WHEREAS THE COST OF 1 ST FLOOR IS ALWAYS LESS THAN THE GROUND FLOOR AND OF SECOND FLO OR IS EQUAL TO GROUND FLOOR AS PER PWD RATE. IT IS, THEREFORE, SUBMITTED THAT THE REPORT OF THE LD. VO IS ABOVE 63% THAN THE PWD RATES, SANITATION AND ELECTRIFICATION RATES ARE ALSO NOT AT PAR WITH THE PWD RATES, DEDUCTION OF SELF SUPERVISI ON @ 10% BE ALLOWED AND CHARGES OF ARCHITECT FEES BE REDUCED AS NO ARCHITECT WAS APPOINTED. 7. ON A CAREFUL CONSIDERATION OF THESE CONTENTI ONS WE DIRECT AS FOLLOWS :- A) KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF TH E CASE WE DIRECT THAT THE COST OF SERVICE EXTRA ITEMS AND AMOUNT EST IMATED AT 3% ARCHITECTS FEE BE DELETED FROM THE ESTIMATED COST O F INVESTMENT. FURTHER REBATE OF 15% ON THE TOTAL INVESTMENT ESTIM ATED BY THE DEPARTMENTAL VALUATION OFFICER IS TO BE GIVEN FOR T HE REASON THAT PLINTH AREA RATES HAVE BEEN ADOPTED FOR VALUATION B Y THE DEPARTMENTAL ITA NOS. 212,2390/DEL/2010 AYS 2000-1, 2003-04 SHRI RAJESH TOMAR PROP.VS. ACIT PAGE 11 OF 11 VALUATION OFFICER AND IT HAS BEEN DECIDED IN VARIOU S ORDERS OF THE TRIBUNALS THAT THERE WOULD BE A VARIATION OF 15% IN THE VALUE WHEN PLINTH AREA RATES ARE APPLIED AS COMPARED TO DETAIL ED VALUATION ON THE BASIS OF QUANTITIES. THUS WE GRANT FURTHER REDUCTIO N OF 15% OF THE COST ESTIMATED BY DVO. 8. WE FURTHER DIRECT DEDUCTION OF 10% IN THE C OST OF CONSTRUCTION FOR THE VARIOUS FACTORS POINTED OUT BY THE ASSESSEE IN THE CONTENTIONS REPRODUCED ABOVE. THE RELIEF IS GRANTED ACCORDINGLY. THUS GROU ND NO. 3(A) FOR THE ASSTT. YEAR 2000-01 AND GROUND NO. 2 FOR THE ASSTT. YEAR 2 003-04 ARE ALLOWED IN PART. GROUND NO. 3(B) FOR THE ASTTT. YEAR 2000-01 I S ALLOWED. GROUND NO. 3 FOR THE ASSTT. YEAR 2003-04 IS CONSEQUENTIAL IN NAT URE. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE A RE ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OCTOBER, 2014. SD/- SD/- (H.S. SIDHU) ( J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH OCTOBER, 2014 *VEENA COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR