M/s. Vishnu Apartments Private Limited, New Delhi V. DCIT, New Delhi

ITA 5665/DEL/2014

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0044 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 20-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Valuation report; Set aside
• Section: 195; 250

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 NO.5665/DEL./2014 (ASSESSMENT YEAR : 2010-11) M/S. VISHNU APARTMENTS PVT. LTD., VS. DCIT, CENTRA L CIRCLE 7, 4/17B, MGF HOUSE, ASAF ALI ROAD, NEW DELHI. NEW DELHI 110 002. (PAN : AAACV6397E) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI I.P. BANSAL, ADVOCATE SHRI VIVEK BANSAL, ADVOCATE MS. SUMAN SAPRA, CA REVENUE BY : SHRI J.K. MISHRA, CIT DR DATE OF HEARING : 18.12.2019 DATE OF ORDER : 31.12.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER APPELLANT, M/S. VISHNU APARTMENTS PVT. LTD. (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESEN T APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 14.08.2014 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, NEW DELHI Q UA THE ASSESSMENT YEAR 2010-11 ON THE GROUNDS INTER ALIA T HAT :- GROUND NO.1: THE LD. COMMISSIONER OF INCOME TAX (APPEALS) -1, NE W DELHI (HEREINAFTER REFERRED TO AS 'CIT(A)'} HAS ERRED IN LAW AND IN THE FACT & ITA NO.5665/DEL./2014 2 CIRCUMSTANCES OF THE CASE BY PASSING THE ORDER DATE D 14.08.2014 UNDER SECTION 250 OF THE INCOME TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS 'THE ACT'). GROUND NO.2: A) THE CIT(A} HAS ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ADDITION AMOUNTING TO 1,60,41,193 (I .E., RS.13,94,459 ON ACCOUNT OF THE COST OF MALL PLUS RS.1,46,46,734 ON ACCOUNT OF THE COST OF HOTEL) ON THE BASIS OF THE VALUATION REPORT OF THE DISTRICT VALUATION OFFICER, JAIPUR ('DVO'). B) THE CIT(A) HAS ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE IN RELYING ON THE VALUATION REPORT OF DVO. C) THE CIT(A) HAS ERRED ON FACTS AND CIRCUMSTANCES IN NOT APPRECIATING THE FACT THAT DVO HAS DETERMINED THE C OST OF MALL AND HOTEL ON THE BASIS OF PLINTH AREA RATES AND COST IN DEX METHOD FOR THE BASIC STRUCTURAL WORK OF THE BUILDING AND ACCOUNTS METHOD FOR FINISHING ITEMS IN THE BUILDING, HOWEVER THE DETERM INATION OF COST BY THE APPELLANT IS BASED ON ACTUAL COST WHICH HAS ACT UALLY BEEN INCURRED AND CLAIMED BY THE APPELLANT IN ITS AUDITED FINANCI AL STATEMENTS. D) THE CIT(A} HAS ERRED ON FACTS AND CIRCUMSTANCES IN NOT APPRECIATING THE FACT THAT THE DIFFERENCE BETWEEN T HE COST OF CONSTRUCTION AS PER THE BOOKS OF ACCOUNTS AND THE E STIMATED COST OF CONSTRUCTION (ACCORDING TO THE OVA'S REPORT) IS ONL Y A MARGINAL, AND AN ACCEPTABLE ONE, THEREFORE, THE COST DETERMINED BY T HE APPELLANT SHOULD BE CONSIDERED IN VIEW OF THE DECISION OF HON'BLE DE LHI 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 OF RS.1,60,41,193 (RS. 13,94,459 PLUS RS. 1,46,46,734) IS ONLY ON SURMISES CONJECTURES AND SHOULD BE DELETED. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE COMPANY IS INTO THE BUSINESS OF REAL ESTATE DEVELOPMENT AS IT HAS DEVELOPED COMMERC IAL SHOPPING COMPLEX-CUM-HOTEL COMPLEX AT JAIPUR AND PART OF THE SHOPPING COMPLEX HAVE BEEN SOLD AND PARTLY LEASED OUT. ASSES SING OFFICER (AO) NOTICED THAT THE ASSESSEE HAS COMPLETED THE PA RT OF THE PROJECT IN JAIPUR PERTAINING TO SHOPPING MALL. AO MADE ADD ITION OF ITA NO.5665/DEL./2014 3 RS.2,54,44,286/- BEING DIFFERENCE IN THE COST OF CO NSTRUCTION DECLARED BY THE ASSESSEE AT RS.85,22,37,406/- AND T HE COST VALUED BY DISTRICT VALUATION OFFICER (DVO) AT RS.82,67,93, 120/- BY RELYING UPON THE REPORT GIVEN BY THE DVO TO ASCERTA IN THE COST OF CONSTRUCTION INCURRED BY THE ASSESSEE ON CONSTRUCTI ON OF INTEGRATED PROJECT AT JAIPUR COMPRISING OF SHOPPING MALL AND H OTEL. AO NOTICED THAT OUT OF EXCESS COST OF RS.2,54,44,286/- , SOME OF THE AMOUNTS HAVE ALREADY BEEN TAXED IN FY 2007-08 RELAT ING TO AY 2008-09 AND BALANCE THEREOF AMOUNTING TO RS.1,63,93 ,392/- HAS BEEN ADDED TO THE TOTAL INCOME OF THE ASSESSEE ON A CCOUNT OF EXCESS CLAIM OF COST OF INTEGRATED PROJECT. 3. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT (A) BY WAY OF FILING THE APPEAL WHO HAS CONFIRMED THE ADDI TION BY PARTLY ALLOWING THE APPEAL. FEELING AGGRIEVED, THE ASSESS EE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT AP PEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. AT THE VERY OUTSET, IT IS BROUGHT TO OUR NOTICE BY THE LD. AR FOR THE ASSESSEE THAT THE IDENTICAL ISSUE HAS ALREA DY BEEN DECIDED BY THE COORDINATE BENCH OF THE TRIBUNAL IN ITS OWN CAS E IN AY 2008-09 ITA NO.5665/DEL./2014 4 AND 2009-10 IN ITA NOS.1087 & 5309/DEL/2013 VIDE OR DER DATED 10.10.2019 IN FAVOUR OF THE ASSESSEE. 6. LD. DR FOR THE REVENUE, ON THE OTHER HAND, RELIE D UPON THE ORDERS PASSED BY THE LOWER REVENUE AUTHORITIES. 7. WE HAVE PERUSED THE ORDER PASSED BY THE COORDINA TE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AYS 2008-09 AND 2009-10 (SUPRA) WHEREIN IDENTICAL ISSUE HAS BEEN DECIDED B Y RELYING UPON THE DECISION OF HONBLE SUPREME COURT IN CASE OF SARGAM CINEMA VS. CIT 328 ITR 513 AND THE ORDER PASSED BY THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS. AMBIENC E DEVELOPERS AND INFRASTRUCTURE (P) LTD. 210 TAXMAN 1 87 . 8. UNDISPUTEDLY, BOOKS OF ACCOUNT OF THE ASSESSEE H AVE NEVER BEEN REJECTED BY THE LOWER REVENUE AUTHORITIES. SO, IT IS SETTLED PRINCIPLE OF LAW THAT WITHOUT REJECTING BOOKS OF AC COUNT, AO IS NOT EMPOWERED TO CALL UPON THE REPORT OF THE DVO. OPER ATIVE PART OF THE JUDGMENT PASSED BY HONBLE SUPREME COURT IN CAS E OF SARGAM CINEMA (SUPRA) IS EXTRACTED FOR READY PERUSAL AS UNDER :- '4. IN THE PRESENT CASE, WE FIND THAT THE TRIBUNAL DECIDED THE MATTER RIGHTLY IN FAVOUR OF THE ASSESSEE INASMUCH A S THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSING AUTHORITY COULD NOT HAVE REFERRED THE MATTER TO THE DEPARTMENTAL VALUAT ION OFFICER (DVO) WITHOUT THE BOOKS OF ACCOUNT 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 CONSIDERED BY THE HIGH COURT. IN THE CIRCUMSTANCES, RELIANCE PLACED ON THE REPORT OF THE DVO WAS MISCONCEIVED. ITA NO.5665/DEL./2014 5 5. FOR THE ABOVE REASONS, THE IMPUGNED JUDGMENT OF THE HIGH COURT IS SET ASIDE AND THE ORDER PASSED BY THE TRIBUNAL STANDS RESTORED TO THE FILE. ACCORDINGLY, THE ASSES SEE SUCCEEDS.' 9. FURTHERMORE, WHEN WE EXAMINE THE DIFFERENCE OF R S.2.54 CRORES IN THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE (ON RS.85.22 CRORES AND THE VALUE DETERMINED BY THE DVO AT RS.82.68 CRORES), IT IS LESS THAN 3% OF THE TOTAL COST OF CO NSTRUCTION WHICH HAS BEEN ACCEPTED AS MINOR VARIATION BY THE HONBLE DEL HI HIGH COURT IN CASE OF AMBIENCE DEVELOPERS AND INFRASTRUCTURE (P) LTD. (SUPRA) BY RETURNING FOLLOWING FINDINGS :- 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 FROM A COMPARISON OF THE VALUATION BY THE ASSESSEE, WITH T HAT OF THE DVO, THE VARIATION IS 3.86 %. THIS IS A VERY MINOR VARIATION, HAVING REGARD TO THE LARGE AMOUNTS INVOLVED. BESIDE S, THE FACT THAT THE AO DID NOT EXAMINE THE VARIATIONS, WITH SP ECIFIC REFERENCE TO ANY ITEMS OF EXPENDITURE THAT WERE UNR EASONABLE, OR SHOWED WIDE VARIATION, THESE DIFFERENCES CAN ALSO B E PUT DOWN TO DIFFERING PERCEPTIONS, AND THE PRACTICE ADOPTED BY THE CONCERNED BUSINESS ACTIVITY. 17. IN VIEW OF THE ABOVE DISCUSSION, AND HAVING REG ARD TO THE FACT THAT THE VARIATION IN VALUATION, IN THIS CASE BETWEEN WHAT WAS DISCLOSED BY THE ASSESSEE AND WHAT WAS INDICATED BY THE DVO IS NOT SIGNIFICANT, THIS COURT IS OF OPINION THAT THER E IS NO INFIRMITY IN THE FINDINGS CONTAINED IN THE IMPUGNED ORDER OF THE TRIBUNAL. NO SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDERA TION. THE APPEALS ARE, THEREFORE, DISMISSED. 10. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE AND FO LLOWING THE ORDER PASSED BY THE COORDINATE BENCH OF THE TRIBUNA L IN ASSESSEES OWN CASE FOR AY 2008-09 (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT WHEN ASSESSEE HAS DULY MAINTAINED HIS BOOKS OF ACCOUNT ITA NO.5665/DEL./2014 6 CORROBORATED WITH BILLS AND VOUCHERS FOR THE CONSTR UCTION OF MALL AND HOTEL AND FINANCIALS OF THE ASSESSEE ARE AUDITE D ONE AND SAME HAS NEVER BEEN REJECTED BY THE AO AND THE REPORT OF THE DVO CANNOT BE LOOKED INTO. MOREOVER, VARIATION IN THE V ALUE DETERMINED BY THE DVO AND COST OF CONSTRUCTION DECLARED BY THE ASSESSEE IS LESS THAN 3% WHICH IS INSIGNIFICANT TO MAKE THE ADD ITION IN QUESTION. CONSEQUENTLY, ADDITION MADE BY THE AO AN D CONFIRMED BY THE LD. CIT (A) IS NOT SUSTAINABLE IN THE EYES O F LAW, HENCE ORDERED TO BE DELETED. RESULTANTLY, THE APPEAL FIL ED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 31 ST DAY OF DECEMBER, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 31 ST DAY OF DECEMBER , 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-I, NEW DELHI 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.