M/S MITTAL HOSPITAL LTD., AJMER V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, AJMER

ITA 747/JPR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3585 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 04-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SEEMA MEENA JCIT DHK
• Keywords: Valuation report

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,O A JH HKKXPUN KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA- @ ITA NO. 747/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2013-14. M/S. MITTAL HOSPITAL LTD., PUSHKAR ROAD, AJMER. CUKE VS. THE ACIT, CIRCLE 2, AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AABCM 1115 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SANDEEP JHANWAR (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SMT. SEEMA MEENA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 02.05.2018. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 03/05/2018. VKNS'K@ ORDER PER VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 13 TH JULY, 2017 OF LD. CIT (A), AJMER FOR THE ASSESSMENT YEAR 2013-14. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- (1) THAT THE LEARNED COMMISSIONER OF INCOME-TAX ( APPEALS), AJMER HAS GROSSLY ERRED IN LAW AS WELL AS ON FACTS IN UPH OLDING THE ADDITION OF BOUNDARY WALL OF RS. 8,55,750/- TO THE COST OF CONSTRUCTION OF MITTAL COLLEGE OF NURSING, AJMER. (2) THAT AS PER BOOKS OF ACCOUNTS OF THE APPELLANT COMPANY, THE VALUE OF CIVIL CONSTRUCTION OF NURSING COLLEGE COME S TO RS. 4,30,17,650/- BEFORE ADDING EXPENDITURE ON ELECTRIF ICATION OF RS. 9,11,871/- IN THE COST OF CONSTRUCTION OF NURSING C OLLEGE OF RS. 4,30,17,650/-, THE VALUATION COMES TO RS. 4,39,29,5 21/-. 2 ITA NO. 747/JP/2017 MITTAL HOSPITAL, AJMER. (2)(II) THE VALUER HAS GIVEN THE VALUATION OF BUILD ING OF MITTAL COLLEGE OF NURSING AT RS. 4,24,09,061/- AND IF WE ADDED BOU NDARY COST OF RS. 8,55,750/- IN IT, THE TOTAL VALUATION COMES TO RS. 4,32,64,810/- AS AGAINST BOOKS OF ACCOUNTS, IT IS R S. 4,39,29,521/-. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE ADDITION OF RS. 8,55,750/- ARE CONTRARY TO THE FACTS AND BAD -IN-LAW AND DESERVE TO BE DELETED. THEREFORE, IT IS PRAYED THAT THE ADDITION OF RS. 8,55,750/- WHICH IS ALREADY INCLUDED IN COST OF MITTAL COLLEGE OF NURSING BUILDING MAY PLEASE BE DELETED. (3) THE APPELLANT FURTHER BEGS TO LEAVE, TO ADD, TO ALTER, AMEND OR DELETE ANY GROUNDS ON OR BEFORE THE DATE OF HEARING OF THE APPEAL. 2. THE ONLY ISSUE ARISES IN THIS APPEAL OF THE ASSE SSEE FOR OUR CONSIDERATION AND ADJUDICATION IS THE ADDITION MADE BY THE AO ON ACCO UNT OF THE COST OF CONSTRUCTION OF THE BUILDING OF MITTAL NURSING COLLEGE TO THE EXTEN T OF RS. 8,55,750/- BEING THE COST OF BOUNDARY WALL. 3. WE HAVE HEARD THE LD. A/R AS WELL AS THE LD. D/R AN D CONSIDERED THE RELEVANT MATERIAL ON RECORD. DURING THE COURSE OF ASSESSMEN T PROCEEDINGS, THE AO NOTED THAT THE ASSESSEE HAS MADE AN ADDITION OF RS. 11,30 ,44,635/- IN THE BUILDING ACCOUNT. AS PER THE DETAILS FURNISHED BY THE ASSESS EE AND VALUATION REPORT DATED 8.3.2016 PREPARED BY THE APPROVED VALUER, THE COST OF CONSTRUCTION AS SHOWN IN THE BOOKS OF ACCOUNTS AND AS PER THE VALUATION REPORT I S GIVEN BY THE AO IN PARA 4.3 AS UNDER :- AS PER APPROVED VALUER AS PER BOOKS/CA DIFFERENCE TOTAL ASSESSMENT OF COST LESS SUPERVISION CHARGES/CHEAPER MATERIAL @ 5% NET VALUE OF PROPERTY NURSING COLLEGE 4,46,41,116/ - 22,32,056/ - 4,24,09,060/ - 4,30,17,650/ - ( - ) 6,08,590/ - HOSPITAL BUILDING 4,37,48,717/ - 21,87,436/ - 4,15,61,281/ - 4,08,24,869/ - 7,36,412/ - 3 ITA NO. 747/JP/2017 MITTAL HOSPITAL, AJMER. THE DISPUTE IS ONLY REGARDING THE COST OF CONSTRUCT ION OF BOUNDARY WALL OF NURSING COLLEGE OF ASSESSEE. AS PER THE DETAILS GIVEN IN T HE ABOVE TABLE, THE ASSESSEE HAS SHOWN THE COST OF CONSTRUCTION OF THE BUILDING AT R S. 4,30,17,650/- WHICH WAS SHOWN IN THE VALUATION REPORT OF THE APPROVED VALUER AT R S. 4,24,09,060/-. THUS THERE WAS A DIFFERENCE OF RS. 6,08,590/- WHICH IS SHOWN BY TH E ASSESSEE MORE IN THE BOOKS OF ACCOUNTS IN COMPARISON TO THE COST OF CONSTRUCTION ESTIMATED BY THE APPROVED VALUER. THE AO FURTHER NOTED THAT THE VALUER HAS N OT TAKEN INTO CONSIDERATION THE COST OF BOUNDARY WALL WHILE ESTIMATING THE COST OF CONSTRUCTION AND ACCORDINGLY THE AO HAS MADE AN ADDITION OF RS. 8,55,750/- ON ACCOUN T OF THE COST OF CONSTRUCTION OF COMPOUND/BOUNDARY WALL OF NURSING COLLEGE. THE ASS ESSEE CHALLENGED THE ACTION OF THE AO BEFORE LD. CIT (A) BUT COULD NOT SUCCEED. W E FIND THAT WHEN THE AO HAS ACCEPTED THE VALUATION REPORT OF THE APPROVED VALUE R, THEN THE ADDITION MADE BY THE AO OF RS. 8,55,750/- WITHOUT GIVING THE CREDIT OF RS. 6,08,590/-, WHICH IS MORE AS PER THE BOOKS OF ACCOUNTS OF THE ASSESSEE IN COM PARISON TO THE COST OF CONSTRUCTION ESTIMATED BY THE APPROVED VALUER IS NO T JUSTIFIED. OUR ATTENTION WAS ALSO INVITED TO THE DETAILS OF THE EXPENDITURE INCU RRED BY THE ASSESSEE ON COST OF CONSTRUCTION AND AS PER THE LEDGER ACCOUNTS MAINTAI NED FOR CONSTRUCTION PURPOSE, WE FIND THAT THE ASSESSEE HAS SEPARATELY SHOWN THE COS T OF ELECTRICAL ITEMS TO THE EXTENT OF RS. 9,89,587/- WHICH IS NOT PART OF THE COST OF CONSTRUCTION OF RS. 4,30,17,650/- SHOWN BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS IN R ESPECT OF NURSING COLLEGE BUILDING. WHEREAS AS PER THE VALUATION REPORT THE A PPROVED VALUER HAS ESTIMATED THE COST OF CONSTRUCTION BY INCLUDING THE COST OF E LECTRICAL ITEMS AT 10% OF THE TOTAL COST OF CONSTRUCTION. THUS WHEN THE ASSESSEE HAS S EPARATELY INCLUDED MORE THAN RS. 9.00 LACS AS COST OF ELECTRICAL ITEMS APART FROM TH E COST OF CONSTRUCTION OF BUILDING, 4 ITA NO. 747/JP/2017 MITTAL HOSPITAL, AJMER. THEN THE TOTAL COST OF CONSTRUCTION INCLUDING THE E LECTRICAL ITEMS SHOWN BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS WOULD COME TO ABO UT RS. 4.40 CRORES IN COMPARISON TO THE COST OF CONSTRUCTION ESTIMATED BY THE APPROVED VALUER AT RS. 4.24 CRORES. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANC ES OF THE CASE, WE FIND THAT THE ADDITION MADE BY THE AO ON ACCOUNT OF COST OF CONST RUCTION OF THE BOUNDARY WALL WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS SHOWN MORE COST OF CONSTRUCTION IN THE BOOKS OF ACCOUNTS THAN THE COST OF CONSTRUCT ION ESTIMATED BY THE AO. THUS THE SAID ADDITION IS NOT JUSTIFIED. EVEN OTHERWISE, THE ADDITION MADE BY THE AO IS WITHIN THE TOLERANCE RANGE AS THE DIFFERENCE IS ONL Y AROUND 2% AND, THEREFORE, WHEN THE AO HAS ACCEPTED THE VALUATION REPORT OF THE APP ROVED VALUER, NO FURTHER ADDITION IS CALLED FOR. ACCORDINGLY, WE DELETE THE ADDITION MADE BY THE AO ON THIS ACCOUNT. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 03/05/20 18. SD/- SD/- HKKXPUN FOT; IKY JKWO (BHAGCHAND) ( VIJAY PAL RAO ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED :- 03/05/2018. DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. MITTAL HOSPITAL, AJMER. 2. IZR;FKHZ@ THE RESPONDENT-THE ACIT CIRCLE-2, AJMER. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 747/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR 5 ITA NO. 747/JP/2017 MITTAL HOSPITAL, AJMER.