Smt Uppu Srilaliltha, Rajahmundry V. The ITO, Ward-1, Rajahmundry

ITA 503/VIZ/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50249 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-03-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 12-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Assessee Lawyers: K S S SHARMA
• Section: 133A

Judgement Text

ITA NOS 502 & 503 OF 2010 ALLADA BUTCHI RAJU & UPPU SRILALITHA RAJAHMUNDRY PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.502/VIZAG/2010 ASSESSMENT YEAR:2004-05 ALLADA BUTCHI RAJU, RAJAHMUNDRY VS. ITO WARD-1, RAJAHMUNDRY (APPELLANT) PAN NO: AEFPA 6945 B (RESPONDENT) ITA NO.503/VIZAG/2010 ASSESSMENT YEAR:2004-05 UPPU SRILALITHA, RAJAHMUNDRY VS. ITO WARD-1, RAJAHMUNDRY (APPELLANT) PAN NO: AAQPN 8561 J (RESPONDENT) APPELLANT BY: SHRI K.S.S. SHARMA, RESPONDENT BY: SHRI D.S. SUNDER SINGH, SR.DR ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THESE APPEALS OF THE ASSESSEES ARE DIRECTED AGAINST THE RESPECTIVE ORDERS PASSED BY LEARNED CIT(A), RAJAHMUNDRY AND TH EY RELATE TO THE ASSESSMENT YEAR 2004-05. SINCE THE ISSUE URGED IN T HESE APPEALS IS BASED ON IDENTICAL FACTS, THEY WERE HEARD TOGETHER AND AR E BEING DISPOSED OF BY THIS COMMON ORDER. 2. THOUGH BOTH THE ASSESSEES HAVE RAISED MANY GROUN DS, ALL OF THEM ARE RELATED TO A SINGLE ISSUE VIZ., WHETHER THE LEA RNED CIT (A) IS JUSTIFIED IN CONFIRMING THE ADDITION OF RS.80,666/- IN THE HANDS OF BOTH THE ASSESSEES, BEING THE PROPORTIONATE SHARE OF THE DIFFERENCE IN THE COST OF CONSTRUCTION OF A COMMERCIAL BUILDING. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. BOTH THE ASSESSEES, ALONG WITH 4 OTHER PERSONS, CONSTRUCTED A COMMERCIA L COMPLEX NAMED ABR ITA NOS 502 & 503 OF 2010 ALLADA BUTCHI RAJU & UPPU SRILALITHA RAJAHMUNDRY PAGE 2 OF 5 COMPLEX AT DWARAKA NAGAR LOCATED IN VISAKHAPATNAM D URING THE PERIOD FROM 2002 TO 31.3.2004. THE COST OF CONSTRUCTION WA S SHOWN AT RS.84,90,000 IN THE BOOKS OF ACCOUNT MAINTAINED FOR THE PURPOSE. THE DEPARTMENT CARRIED OUT SURVEY OPERATIONS UNDER SECT ION 133A OF THE ACT ON 13.12.2004 IN THE HANDS OF ALLADA BUTCHI RAJU AND C O, ONE OF THE CO OWNERS OF THE COMPLEX. DURING THE COURSE OF SURVEY, THE CO OWNERS ADMITTED A SUM OF RS.9.00 LAKHS AS INCOME TOWARDS THE DIFFERENCE I N COST OF CONSTRUCTION. THUS, THE TOTAL COST OF CONSTRUCTION OF THE COMMERC IAL COMPLEX DECLARED BY THE CO-OWNERS HAS WORKED OUT TO RS.93.90 LAKHS. DUR ING THE COURSE OF SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER REFERRE D THE MATTER OF VALUATION TO THE DVO, WHO ESTIMATED THE COST OF CONSTRUCTION AT RS.116.21 LAKHS. THE ASSESSING OFFICER, AFTER HEARING THE OBJECTIONS OF THE ASSESSEES DETERMINED THE COST OF CONSTRUCTION AT RS.98.74 LAKHS AND THUS DETERMINED THE DIFFERENCE IN THE COST OF CONSTRUCTION OF THE COMME RCIAL COMPLEX AT RS.4,84,001/-. ACCORDINGLY THE ADDITIONAL INCOME T O BE ASSESSED IN THE HANDS OF EACH OF THE CO-OWNERS WAS WORKED OUT AT RS .80,666/-. THE WORKINGS GIVEN BY THE ASSESSING OFFICER ARE EXTRACT ED BELOW: TOTAL COST OF CONSTRUCTION AS PER S.E VALUATION CELLS REPORT BEFORE ALLOWING 6% TOWARDS SELF- SUPERVISION 1,17,12,342/- LESS: 10% REDUCTION TOWARDS MATERIAL COST DIFFERENCE AS DISCUSSED ABOVE 11,71,234/- 1,05,41,108/- LESS: 7.5% REDUCTION TOWARDS SELF SUPERVISION AS DISCUSSED ABOVE 7,90,583/- 97,50,525/- LESS: 5% REDUCTION TOWARDS HALL TYPE CONSTRUCTION 4,87,526/- 92,62,999/- ADD: ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS LOCAL TAXES ETC. 6,11,002/- 98,74,001/- LESS: THE COST OF CONSTRUCTION AS ADMITTED BY THE ASSESSEE 93,90,000/- DIFFERENCE IN COST OF CONSTRUCTION IN THE BUILDING CONSTRUCTED AT ABR COMPLEX, VISAKHAPATNAM 4,84,001/- ITA NOS 502 & 503 OF 2010 ALLADA BUTCHI RAJU & UPPU SRILALITHA RAJAHMUNDRY PAGE 3 OF 5 THE TOTAL DIFFERENCE IN COST OF CONSTRUCTION AT RS. 4,84,001/- IS DISTRIBUTED AMONG THE 6 CO-OWNERS WHICH COMES TO RS.80,666/- EACH. BOTH THE ASSESSEES HEREIN CHALLENGED THE ABOVE SAID ADDITION BY FILING APPEAL BEFORE THE LEARNED CIT (A), BUT COULD NOT SU CCEED. HENCE THEY ARE IN APPEAL BEFORE US. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSING OFFICER HAS GIVEN REDUCTION OF 10% TOWARDS IN DIFFE RENCE IN COST OF MATERIALS AND 7.5% FOR SELF SUPERVISION. HOWEVER, AS PER THE DECISION OF HON'BLE ITAT HYDERABAD IN THE CASE OF SALMA A MEHDI, VISAKHAPATN AM IN ITA NO.697 AND 698/HYD/93 DATED 20.06.1994, A REDUCTION OF 15% TOW ARDS DIFFERENCE IN COST OF MATERIALS AND 10% TOWARDS SELF SUPERVISION IS REQUIRED TO BE GIVEN AND IF SO GIVEN, THERE WILL BE NO DIFFERENCE IN THE COST OF CONSTRUCTION OF THE IMPUGNED COMPLEX BETWEEN THAT DECLARED BY THE ASSES SEES AND THAT DETERMINED BY THE ASSESSING OFFICER. HE FURTHER SU BMITTED THAT THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER IN THE HANDS OF OTHER FOUR CO-OWNERS HAS BEEN DELETED BY THE LEARNED CIT (A) I N THE APPEAL FILED BY THEM AND HENCE, IN ORDER TO MAINTAIN JUDICIAL UNIFO RMITY, THE ADDITION CONFIRMED IN THE HANDS OF THE ASSESSEES HEREIN SHOU LD ALSO BE DELETED. 5. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPRE SENTATIVE SUBMITTED THAT THE LEARNED CIT(A), IN THE CASE OF T HE ASSESSEES HEREIN, HAVE DISTINGUISHED THE DECISION OF SALMA A. MEHDI R ELIED UPON BY THE ASSESSEE AND HENCE THERE IS NO INFIRMITY IN THE SAI D ORDERS OF THE LEARNED CIT (A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORDS. WE NOTICE THAT THE IMPUGNED COMMERCIAL COM PLEX HAS BEEN CONSTRUCTED BY BOTH THE ASSESSEES HEREIN ALONG WITH THE FOLLOWING 4 PERSONS VIZ., M/S. UPPU SUNITHA; ALLADA VIJAYA BHARATHI; JIDAGAM ARUNA AND UPPU GANGADHARA RAO. ALL THE SIX CO-OWNERS HAVE CHALLEN GED THE IMPUGNED ITA NOS 502 & 503 OF 2010 ALLADA BUTCHI RAJU & UPPU SRILALITHA RAJAHMUNDRY PAGE 4 OF 5 ADDITION OF RS.80,666/- TOWARDS THE DIFFERENCE IN T HE COST OF CONSTRUCTION OF THE COMMERCIAL COMPLEX BEFORE LEARNED CIT(A), RAJAH MUNDRY. THE FIRST APPELLATE AUTHORITY, VIDE HIS ORDERS DATED 17.12.20 09, HAS DELETED THE IMPUGNED ADDITION MADE IN THE HANDS OF FOUR CO-OWNE RS. FOR THE SAKE OF CONVENIENCE, WE FURNISH BELOW THE DETAILS OF ITA NO S. (A) UPPU SUNITHA (ITA NO.67/W1,RJY/CIT(A),RJY/07-0 8) (B) ALLADA VIJAYA BHARATHI (ITA NO.168/W1,RJY/CIT( A),RJY/06-07) (C) JIDAGAM ARUNA (ITA NO.167/W1,RJY/CIT(A),RJY/06 -07) (D) UPPU GANGADHARA RAO (ITA NO.165/W1,RJY/CIT(A), RJY/06-07) HOWEVER, APPEALS FILED BY THE ASSESSEES HEREIN WERE HEARD BY A NEW CIT(A), WHO SUCCEEDED THE FIRST APPELLATE AUTHORITY WHO DISPOSED OF THE APPEALS IN THE HANDS OF THE FOUR PERSONS CITED ABOV E. THE INCUMBENT LEARNED CIT(A) DID NOT AGREE WITH THE VIEWS OF HIS PREDECESSOR AND ACCORDINGLY CONFIRMED THE IMPUGNED ADDITION IN THE HANDS OF THE ASSESSEES HEREIN. 7. IT IS TO BE NOTED HERE THAT THE DEPARTMENT HAS ACCEPTED THE ORDER OF LEARNED CIT(A) IN THE HANDS OF THE FOUR CO-OWNERS C ITED ABOVE, MEANING THEREBY, THE TOTAL AMOUNT OF COST OF CONSTRUCTION O F THE IMPUGNED COMMERCIAL COMPLEX HAS ATTAINED FINALITY IN THE HAN DS OF THE FOUR CO-OWNERS CITED ABOVE. IN THIS KIND OF SITUATION, THE ACTION OF THE INCUMBENT LEARNED CIT(A) IN DETERMINING THE COST OF CONSTRUCTION AT A DIFFERENT FIGURE WOULD ACTUALLY LEADS TO A CONFUSING SITUATION, WHICH COUL D HAVE BEEN AVOIDED. THE COST OF CONSTRUCTION OF THE IMPUGNED COMPLEX CANNOT BE DIFFERENT IN THE HANDS OF DIFFERENT CO-OWNERS. 8. WE NOTICE THAT THE ASSESSING OFFICER HAS DET ERMINED THE COST OF CONSTRUCTION OF THE IMPUGNED COMMERCIAL COMPLEX, AF TER GIVING REDUCTION OF 10% TOWARDS THE DIFFERENCE IN COST OF MATERIALS AND 7.5% TOWARDS THE DIFFERENCE IN PERSONAL SUPERVISION. HAD THE SAID D EDUCTIONS BEEN GIVEN AT 15% AND 10%, AS PRAYED BY THE ASSESSEE, THE COST OF CONSTRUCTION DECLARED BY THE CO-OWNERS WOULD WORK OUT TO BE A REASONABLE ONE. HENCE, CONSIDERING THE FACT THAT THE LEARNED CIT(A) HAS AC CEPTED THE CLAIM OF THE ASSESSEES IN THE HANDS OF OTHER CO-OWNERS, WE ARE I NCLINED TO FOLLOW THE ITA NOS 502 & 503 OF 2010 ALLADA BUTCHI RAJU & UPPU SRILALITHA RAJAHMUNDRY PAGE 5 OF 5 SAME IN THE HANDS OF BOTH THE ASSESSEES HEREIN ALSO . ACCORDINGLY, WE SET ASIDE THE ORDERS OF LEARNED CIT(A) ON THIS ISSUE AN D DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITION OF RS.80,66 6/- IN THE HANDS OF BOTH THE ASSESSEES HEREIN. 9. IN THE RESULT, THE APPEALS OF BOTH THE ASSESSEES ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 14 TH JUNE, 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 14-06-2011 COPY TO 1 SHRI ALLADA BUTCHI RAJU, SHOP NO.4 CENTRAL VEGETA BLE MARKET, RAJAHMUNDRY 2 SMT. UPPU SRILALITHA, SHOP NO.4, CENTRAL VEGETABL E MARKET, RAJAHMUNDRY 3 THE ITO WARD-1, RAJAHMUNDRY 4 5 THE CIT RAJAHMUNDRY THE CIT(A), RAJAHMUNDRY 6 THE DR, ITAT, VISAKHAPATNAM. 7 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM