M.R.Krishnan, Salem V. ACIT, Salem

ITA 878/CHNY/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1201 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-01-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 04-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JUNIOR
• Assessee Lawyers: G BASKAR
• Keywords: Value adopted by valuation officer; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENNAI (BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER) ..... I.T.A. NO. 878/MDS/2010 ASSESSMENT YEAR : 2006-07 SHRI M.R. KRISHNAN, NO.8, IV CROSS, NEW FAIRLANDS, SALEM 636 016. PAN : AEEPK3805P (APPELLANT) V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE I, SALEM. (RESPONDENT) APPELLANT BY: SHRI G. BASKAR RESPONDENT BY: SHR I K.E.B. RENGARAJAN JUNIOR STANDING COUNSEL O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 20 06-07 IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), SALEM, DATED 26.3.2010. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS CARRYING ON THE BUSINESS OF GRANITES, CONSTRUCTION CONTRACT, ETC. THE ASSESSEE HAD CONSTRUCTED A RESIDENTIAL BUILDING AND ADMITTED THE COST I.T.A. NO. 878/MDS/10 2 OF THE SAME AS ` 80,53,677/-. THE MATTER WAS REFERRED TO DISTRICT VALUATION OFFICER (DVO) BY THE A.O. BUT IN THE MEAN TIME, HE ALSO DEPUTED HIS INSPECTOR TO VISIT THE SPOT TO ESTIMATE THE COST OF CONSTRUCTION OF THIS BUILDING. AS THE ASSESSMENT W AS GETTING BARRED BY LIMITATION, THE A.O. FIXED THE PROBABLE COST OF CONSTRUCTION AT ` 1.2 CRORES. HENCE, HE HAD ROUNDED OFF SUM ` 40,00,000/- BEING TENTATIVE DIFFERENCE BETWEEN THE COST OF CONSTRUCTION DECLARE D BY THE ASSESSEE AND AS ESTIMATED BY HIM. AGGRIEVED, THE ASSESSEE F ILED APPEAL BEFORE THE CIT(APPEALS) AND BY THAT TIME A COPY OF VALUATION REPORT WAS OBTAINED BY HIM AND WAS PRODUCED BEFORE THE CIT (APPEALS). THE COST OF CONSTRUCTION AS SHOWN IN THIS REPORT IS AT ` 1,00,42,860/-. THE DIFFERENCE THUS COMES TO ` 19,89,183/- AS AGAINST ` 40,00,000/- AS COMPUTED BY THE A.O. ON THE BASIS OF THIS REPO RT, THE LD. CIT(APPEALS) GAVE THE RELIEF TO THE ASSESSEE TO THE TUNE OF ` 20,10,817/- BEING THE DIFFERENCE BETWEEN THE COST O F CONSTRUCTION DECLARED BY THE ASSESSEE AND AS ESTIMATED BY THE DV O. THE ASSESSEE HAD PLEADED THAT THE REPORT OF THE DVO IS BASED ON CPWD RATES AND AS HELD BY VARIOUS COURTS, INSTEAD OF CPW D RATES, THE REPORT SHOULD HAVE BEEN BASED ON LOCAL PWD RATES. BUT, THE I.T.A. NO. 878/MDS/10 3 CIT(APPEALS) DID NOT GIVE FURTHER RELIEF TO THE ASS ESSEE. THE ASSESSEE IS IN APPEAL BEFORE US FOR THAT LIMITED PU RPOSE. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE CAREFUL LY PERUSED EVIDENCE ON RECORD. THE ASSESSEE HAS RAISED THE FO LLOWING GROUNDS:- (1) THE COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN RESTRICTING THE RELIEF IN RESPECT OF C OST OF CONSTRUCTION OF A RESIDENTIAL BUILDING TO ` 20,10,817/- WHICH ALONE WAS CONCEDED BY THE ASSESSING OFFICER. (2) ENTIRE ADDITION OF ` 40 LAKHS MADE TOWARDS PROBABLE ADDITIONAL COST OF CONSTRUCTION INCURRED, SHOULD HAVE BEEN DELETED ACCEPTING ADMITTED COST OF ` 80,53,677/-. (3) RATES OF STATE PUBLIC WORKS DEPARTMENT SHOULD HAVE BEEN DIRECTED TO BE ADOPTED, INSTEAD OF CPWD RATES. (4) IT IS TIRATE LAW THAT ONLY STATE PWD RATES HAVE TO BE ADOPTED INSTEAD OF CPWD RATES, WHILE ESTIMATING COST OF CONSTRUCTION (CHENNAI AT D BENCH IN ITA 510/2008 ORDER DATED 21.08.2009). (5) 52 ITD 197 JP, 107 TTJ 291 JAL, 242 ITR 478 RAJ, 265 ITR 344 RAJ HAVE ALL APPROVED STATE PWD RATES AGAINST CPWD RATES. (6) THE CIT(A) SHOULD HAVE DIRECTED REDUCTION OF INTEREST CHARGED UNDER SECTION 234 ON TAX ON UNANTICIPATED ADDITIONS MADE IN ASSESSMENT. 4. IN THE GROUNDS NO.(4) AND (5) ABOVE, RELIANCE HA S BEEN PLACED ON TWO DECISIONS, OUT OF WHICH ONE IS OF CHENNAI BE NCH. ON THE OTHER I.T.A. NO. 878/MDS/10 4 HAND, LEARNED D.R. HAS SUPPORTED THE FINDINGS OF TH E LEARNED CIT(APPEALS). 5. AFTER CONSIDERING RIVAL SUBMISSIONS, WE ARE CONV INCED THAT WE ARE BOUND TO FOLLOW THE DECISION OF CHENNAI BENCH A ND THE DVO REPORT, AS PER SETTLED LAW, HAS TO BE BASED ON LOCA L PWD RATES INSTEAD OF CPWD RATES. CONSEQUENTLY WE DIRECT THE A.O. TO ADOPT LOCAL PWD RATES AS AGAINST CPWD RATES ADOPTED BY TH E DVO AND GIVE THE ELIGIBLE RELIEF TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL STANDS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 20 TH JANUARY, 2011. SD/- SD/- (DR. O.K. NARAYANAN) (HARI OM MARATHA) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 20 TH JANUARY, 2011. KRI . COPY FORWARDED TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A), SALEM (4) CIT, SALEM (5) D.R. (6) GUARD FILE