ACIT, Circle -12(1), Hyderabad V. M/s Sri Satya Venkata Ramana Telidevara, Hyderabad

ITA 376/HYD/2012

• Counselvise Citation: 37622514 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 08-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND S HRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.309/HYD/2012 ASSESSMENT YEAR 2007-08. SRI SATYA VENKATA RAMANA, -V- ADDL. CIT, RANGE-12, HYDERABAD. HYDERABAD. PAN:ABYPT1487D (APPELLANT) (RESPONDENT) ITA NO.376/HYD/2012 ASSESSMENT YEAR 2007-08. ACIT, CIR-12(1) -V- SRI SATYA VENKATA RAMANA HYDERABAD. HYDERABAD. PAN:ABYPT1487D (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI A. SRINIVAS DEPARTMENT BY SHRI JEEVAN LAL LAVID IYA DATE OF HEARING 17-02-2014 DATE OF PRONOUNCEMENT 21-02-2014 ORDER PER SAKTIJIT DEY, J.M: THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND T HE DEPARTMENT ARE DIRECTED AGAINST THE ORDER OF THE OR DER DATED 2-12- 2 ITA NOS. 309 & 376 OF 2012 SRI SATYA VENKATA TELIDEVERA. HYD. 2011 OF CIT (A) II, HYDERABAD PERTAINING TO THE AS SESSMENT YEAR 2007-08. 2. THE ONLY ISSUE IN THESE APPEALS IS WITH REGARD TO THE COST OF CONSTRUCTION ADOPTED BY THE CIT (A) RS.400 PER SFT IN RESPECT OF THE PROPERTY AT BHAGYA NAGAR, KUKATPALLY MUNICIPALITY, H YDERABAD, WHILE THE ASSESSEE WANTS COST OF CONSTRUCTION TO BE ADOPTED AT THE RATE OF RS.250 PER SFT, REVENUE, ON THE OTHER HAND SEEKS REST ORATION OF RS.800 PER SFT ADOPTED BY THE ASSESSING OFFICER. 3. BRIEFLY STATED, THE ASSESSEE IS AN INDIVIDUAL. FOR THE ASSESSMENT YEAR, THE ASSESSEE FLED HIS RETURN OF INCOME ON 31-7-2 007 DECLARING TOTAL INCOME OF RS.70,21,630/-. IN ADDITION TO AGRICULTU RAL INCOME OF RS.1,50,000/-. DURING THE SCRUTINY ASSESSMENT PROCE EDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS SHOWN R ENT FROM FIVE PROPERTIES, ONE OF THEM BEING A PROPERTY AT BHAGYANAG AR SOCIETY, PHASE-II, KUKATPALLY GIVEN ON LEASE TO M/S NARAYANA EDUCATIONAL SOCIETY FOR RUNNING ITS NARAYANA COACHING CENTRE . A FTER EXAMINING THE SALE DEEDS, SOURCES OF INVESTMENT MADE ALONG WITH BALANCE-SHEET, RECEIPTS AND PAYMENTS ETC., THE ASSESSING OFFICER N OTED THAT AS PER THE LEASE DEED, THE ASSESSEE HAS GIVEN ON LEASE BUILT UP AREA ADMEASURING 19,824 SFT BEING ASSESSEES 40% SHARE OUT OF TOTAL B UILT UP AREA OF 49,560 SFT. HE FURTHER NOTED THAT IN THE BALANCE-SH EET THE ASSESSEE HAS SHOWN THE VALUE OF THE PROPERTY AT RS.45,50,000/- OUT OF WHICH THE ASSESSEES SHARE OF COST OF CONSTRUCTION BEING 40% COMES TO RS.34,18,000/- WHICH WORKED OUT TO ABOUT RS.172.4 PER SFT. THE ASSESSING OFFICER HOWEVER WAS NOT CONVINCED WITH THE E XPLANATION OF THE ASSESSEE WITH REGARD TO THE COST OF CONSTRUCTION. THE ASSESSING OFFICER OBSERVED THAT REGISTRARS VALUE FOR CONSTRUCTI ON THE DISCLOSED 3 ITA NOS. 309 & 376 OF 2012 SRI SATYA VENKATA TELIDEVERA. HYD. VALUES OF PROPERTIES REPORTED IN PRESS AND TO VARIOUS AU THORITIES DURING THAT PERIOD WAS AT A MINIMUM OF RS.600 TO A HIGH OF RS .1500 PER SFT. HE NOTED THAT PARKING LOTS ADMEASURING ABOUT 200 SFT WER E SOLD FOR RS.1 LAKH TO RS.2.50 LAKHS IN THAT AREA I.E., RS.500 PER SFT TO RS.1250 PER SFT OF PARKING SPACE. HE THEREFORE CONCLUDED THAT THE C OST OF CONSTRUCTION OF THE PROPERTY IS RS.800 PER SFT AND ACCORDINGLY DETE RMINED THE COST OF CONSTRUCTION AT RS.1,58,59,200. 4. THE ASSESSEE HAVING SHOWN RS.34,18,000 THE DIFFE RENTIAL AMOUNT OF RS.1,24,41,200 WAS TREATED AS UNEXPLAINED INVESTM ENT AND ADDED TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED OF SUCH A DDITION, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A). 5. THE CIT (A) CONSIDERING THE FACT THAT NEITHER THE ASSESSEE NOR THE ASSESSING OFFICER WAS ABLE TO SUBSTANTIATE THE COST OF CONSTRUCTION ADOPTED BY THEM, RELIED ON SROS ESTIMATE AND ADOPTED THE RATE OF RS.400 PER SFT. THE RELEVANT PORTION FROM THE ORDER OF THE CIT (A) IS EXTRACTED HEREUNDER:- ON THE COST OF CONSTRUCTION OF THE BUILDING, THE CO NTENTION OF THE APPELLANT THAT THE TOTAL AREA AS PER THE LEASE DEED SHOULD NOT HAVE BEEN ADOPTED BY THE ASSESSING OFFICER IS NOT ACCEPT ABLE IN VIEW OF THE FACT THAT IT IS THE ACTUAL AREA WHICH WAS LEA SED OUT TO THE LESSEE AND THEREFORE, THE AREA OF 19824 SFT., I.E. 40% OF ASSESSEES SHARE FROM THE TOTAL AREA OF 49560 SFT IS HELD TO BE THE TOTAL AREA FOR THE PURPOSE OF VALUATION OF THE COST OF CONSTRUCTION OF THE ASSESSEES SHARE OF PROPERTY. THE APPELLANTS CONTENTION THAT THE COST OF CONSTRUCTION IS RS.250/- PER SFT AND THIS ASSERTION HAS BEEN MADE BY THE APPELLANT WITHOUT ANY BASIS. NEITHER AT ASSESS MENT STAGE NOR AT THE STAGE OF APPELLATE/REMAND PROCEEDINGS, THE APPE LLANT FILED ANY RELEVANT DETAILS, COPIES OF SUPPORTING DETAILS, BIL LS ETC., SUBSTANTIATING 4 ITA NOS. 309 & 376 OF 2012 SRI SATYA VENKATA TELIDEVERA. HYD. HIS CLAIM THAT HE INCURRED VERY LESS ON CONSTRUCTIO N OF HIS SHARE OF THE SAID PREMISES. IT IS NOT KNOWN WHY THE APPELLANT C OULD NOT FURNISH THE FULL DETAILS OF CONSTRUCTION, INSTEAD RELIED ON THE ESTIMATE OF CONSTRUCTION. SIMILARLY, THE ASSESSING OFFICER S ESTIMATION OF THE COST OF CONSTRUCTION AT RS.800/- PER SFT HAS ALSO N O BASIS AND IT WAS DONE ONLY ON HEARSAY AND MEDIA ADVERTISEMENTS. IN VIEW OF THE ABOVE, BOTH THE ESTIMATES ARE REJECTED AND IT IS NO TED THAT IT IS ONLY T HE SROS ESTIMATE WHICH WAS BASED ON SOME CONTEMPOR ANEOUS EVIDENCE. THE ASSESSING OFFICER HAS ONLY LISTED OU T THE VARIOUS RATES OF CONSTRUCTION, I.E. AS PER THE ASSESSEE, AS PER S ROS ESTIMATE AND AS PER ADVERTISEMENTS AND HAS NOT COMMENTED ANYTHING O N THE RELIABILITY OF ANY OF THESE ESTIMATES. THE APPELLA NTS CONNECTION THAT THE SROS ESTIMATE WAS WITH REFERENCE TO DECENT RES IDENTIAL PROPERTIES, WHEREAS THE PROPERTY IN QUESTION IS ONL Y A SHELL STRUCTURE, THEREFORE THE SROS RATE DOES NOT APPLY TO THIS CAS E IS NOT BASED ON ANY CONTEMPORANEOUS EVIDENCE. THEREFORE, I AM CONS TRAINED TO ACCEPT THE SROS VALUATION AT RS.400/- PER SFT INCL UDING LAND COST AS THE RATE FOR CONSTRUCTION OF THE PROPERTY. ACCORDI NGLY, THE ASSESSING OFFICER IS DIRECTED TO ADOPT THE VALUE AS GIVEN BY THE SRO AT RS.400/- AND CALCULATE THE COST OF CONSTRUCTION. 6. HAVING HEARD THE CONTENTIONS OF THE PARTIES AND PER USED THE MATERIALS ON RECORD, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT (A). UNDISPUTEDLY, THE ASSESSEE HAS NOT MAINTAINED ANY ACCOUNTS WITH REGARD TO COST OF CONSTRUCTION OF THE PROPERTY. HE HAS NOT BEEN ABLE TO ESTABLISH BY BRINGING EVIDENCE ON RECORD THE COST OF CONSTRUCTION AT RS.250 ADOPTED BY HIM. SIMILARLY THOUGH THE ASSESSIN G OFFICER HAS ADOPTED THE COST OF CONSTRUCTION AT RS.800 BY REFERRING TO SOME MEDIA ADVERTISEMENT ETC., BUT NO COGENT MATERIAL HAS BEEN BROUGHT BY HIM 5 ITA NOS. 309 & 376 OF 2012 SRI SATYA VENKATA TELIDEVERA. HYD. TO BACK THE COST OF CONSTRUCTION OF RS.800. IF THE ASSES SING OFFICER WAS NOT ACCEPTING THE COST OF CONSTRUCTION ADOPTED BY THE ASS ESSEE OR IF THERE WAS NO MATERIAL BEFORE HIM TO DETERMINE THE COS T OF CONSTRUCTION HE COULD HAVE SOUGHT THE ASSISTANCE OF THE DVO. WITHOU T DOING THAT, THE ASSESSING OFFICER CANNOT RELY UPON SOME MEDIA ADVE RTISEMENT TO DETERMINE THE COST OF CONSTRUCTION. EVEN BEFORE US AL SO, NEITHER THE LEARNED AR NOR THE LEARNED DR COULD DEMONSTRATE THAT THE COST OF CONSTRUCTION ADOPTED BY THE ASSESSEE AND ASSESSING O FFICER WAS ON THE BASIS OF ANY SUBSTANTIVE EVIDENCE. THAT BEING TH E CASE, THE CLAIM OF THE ASSESSEE AND CONCLUSION OF THE ASSESSING OFFICER C ANNOT BE ACCEPTED. THEREFORE, WHEN THERE IS NO MATERIAL ON REC ORD TO DETERMINE THE COST OF CONSTRUCTION THEN IT HAS TO BE ARRIVED AT ON A REASONABLE BASIS. AS CAN BE SEEN FROM THE OBSERVATION MADE BY THE CIT (A), SHE HAS ADOPTED THE COST OF CONSTRUCTION ON THE BASI S OF SROS ESTIMATE WHICH AT LEAST HAS SOME BASIS. IN THE AFORE SAID CIRCUMSTANCES, IN OUR VIEW, THE CONCLUSION ARRIVED AT BY THE CIT (A) IS FAIR AND REASONABLE AND NEEDS NO INTERFERENCE. ACCORDINGLY WE CONFIRM THE ORDER OF THE CIT (A) AND DISMISS THE GROUND RAISED BY THE ASSESSEE AND DEPARTMENT. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE AS WELL AS DEPARTMENT STAND DISMISSED. ORDER PRONOUNCED IN THE COURT ON 21-02-2014. SD/ - (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 21 ST FEBRUARY, 2014. JMR* 6 ITA NOS. 309 & 376 OF 2012 SRI SATYA VENKATA TELIDEVERA. HYD. COPY TO:- 1) SRI SATYA VENKATA RAMANA TELIDEVERA, JAYA PRAKASH NAGAR, YELLAREDDYGUDA,HYDERABAD. 2) ADDL. CIT, RANGE-12, HYDERABAD. 3) CIT(A)-II, HYDERABAD. 4) CIT-I, HYDERABAD.. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABA D.