Nirat Ram, Kullu V. ITO, Kullu

ITA 897/CHANDI/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9067 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 10-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGENDRA MITTALDR
• Assessee Lawyers: R R THAKUR
• Keywords: Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO.897/CHD/2016 ASSESSMENT YEAR : 2008-09 SHRI NIRAT RAM, VS THE ITO, PROP. M/S OCEAN BLUE HOTEL, KULLU (HP). V & PO ALOE, TEHSIL MANALI, DISTT. KULLU (HP). PAN: AETPR9482C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.R.THAKUR RESPONDENT BY : SHRI YOGENDRA MITTAL,DR DATE OF HEARING : 22.09.2016 DATE OF PRONOUNCEMENT : 26.09.2016 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST ORDER OF LD. CIT(APPEALS)-I, AMRITSAR CAMP AT PALAM PUR DATED 20.05.2016 FOR ASSESSMENT YEAR 2008-09 CHALLENGING THE REJECTION OF THE BOOKS OF ACCOUNT O N THE BASIS OF VALUATION OF BUILDING AND ADDITION OF RS. 1,78,679/- ON ACCOUNT OF ESTIMATE MADE BY THE DEPARTMENTAL VALUATION OFFICER. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF RUNNING HOTEL UNDER THE NAME AND STYLE OF OCEAN BLUE HOTEL. THE ASSESSEE 2 PRODUCED BOOKS OF ACCOUNT AND SUPPORTING VOUCHERS BEFORE ASSESSING OFFICER. THE ASSESSING OFFICER NO TED THAT ASSESSEE HAS SHOWN INVESTMENT IN BUILDING WHIC H WAS UNDER CONSTRUCTION. DURING ASSESSMENT YEAR UND ER APPEAL, THE INVESTMENT WAS SHOWN AT RS. 4,01,044/-. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE HAS A LSO MADE INVESTMENT IN FURNITURE AND FIXTURES AND PLANT AND MACHINERY. THEREFORE, IN ORDER TO ASCERTAIN THE COR RECT AMOUNT OF INVESTMENT MADE IN THE HOTEL BUILDING, TH E CASE WAS REFERRED TO DEPARTMENTAL VALUATION OFFICER (DVO) UNDER SECTION 142A OF THE ACT WHO HAS GIVEN H IS REPORT. THE ASSESSING OFFICER, ON GOING THROUGH TH E REPORT OF THE DVO FOUND THAT ASSESSEE HAS DECLARED LESS COST OF CONSTRUCTION BY RS. 1,78,679/- AND REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE UNDER SECTION 145( 3) AND MADE THE ADDITION OF RS. 1,78,679/-. 3. THE ASSESSEE CHALLENGED REJECTION OF BOOKS OF ACCOUNT AND ABOVE ADDITION BEFORE LD. CIT(APPEALS). THE WRITTEN SUBMISSION OF THE ASSESSEE IS REPRODUCED IN THE IMPUGNED ORDER IN WHICH THE ASSESSEE BRIEFLY EXPLAI NED THAT FATHER OF THE ASSESSEE CONSTRUCTED THE BUILDIN G OF THIRD FLOOR IN EARLIER YEAR AND ASSESSEE COMPLETED THE REMAINING WORK OF THE BUILDING STARTING FROM 2005 T O 2007. THE ASSESSEE GOT VALUATION FROM APPROVED VAL UER WHICH WAS FILED BEFORE AUTHORITIES BELOW BUT WAS IG NORED WITHOUT ANY REASONS. THE VALUATION OFFICER HAS APP LIED ALL INDIA RATES OF CONSTRUCTION APPLICABLE TO METRO 3 CITIES. IN HIMACHAL PRADESH, PWD HAS FIXED LOW RAT E OF CONSTRUCTION, KEEPING IN VIEW THE MATERIAL AVAILABL E AT LOWER RATE. IN HIMACHAL PRADESH, RATES OF SAND, BA JRI AND WATER USED AND CONSTRUCTION ARE AVAILABLE AT LO WER RATES AS COMPARED TO METRO CITIES. SO THE PRICE IND EX OF THE CONSTRUCTION IS LOWER IN HIMACHAL PRADESH AND R ATE OF METRO CITIES IS HIGH. THEREFORE, DVO HAS INCREAS ED THE VALUATION OF COST OF CONSTRUCTION WITHOUT ANY REASO NS. THE DVO HAS ALSO CONSIDERED OLD CONSTRUCTION AS NEW CONSTRUCTION. THE LD. CIT(APPEALS), CONSIDERING TH E DIFFERENCE IN VALUATION REPORTED BY ASSESSEE AND DV O EXCEEDING 20% OF THE COST DEBITED TO THE BUILDING ACCOUNT, CONFIRMED THE ADDITION AND DISMISSED APPEA L OF THE ASSESSEE. 4. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM OF THE VIEW THAT MATTER REQUIRES RE-CONSIDERATION AT THE L EVEL OF THE ASSESSING OFFICER. THE LD. COUNSEL FOR THE ASS ESSEE SUBMITTED THAT PWD RATES OF HIMACHAL PRADESH MAY BE APPLIED AS WAS ARGUED BEFORE THE AUTHORITIES BELOW. ON THE OTHER HAND, LD. DR RELIED UPON ORDERS OF AUTHOR ITIES BELOW. THE ASSESSEE SPECIFICALLY PLEADED BEFORE LD. CIT(APPEALS) THAT HE HAS GOT THE VALUATION OF THE CONSTRUCTED PORTION FROM APPROVED VALUER WHICH HAS NOT BEEN ADVERSELY COMMENTED BY THE AUTHORITIES BELOW. THE ASSESSEE ALSO PLEADED BEFORE LD. CIT(APPEALS) T HAT DVO HAS APPLIED ALL INDIA RATE OF CONSTRUCTION APPLICABLE TO METRO CITIES. HE HAS ALSO PLEADED TH AT IN 4 HIMACHAL PRADESH, PWD HAS FIXED LOWER RATE OF CONSTRUCTION BECAUSE OF THE BUILDING MATERIAL AVAIL ABLE AT LOWER RATES AS COMPARED TO THE METRO CITIES. TH ESE SUBMISSIONS OF THE ASSESSEE HAVE NOT BEEN REBUTTED BY THE LD. CIT(APPEALS) IN ANY MANNER. THE LD. COUNSE L FOR THE ASSESSEE ALSO SUBMITTED THAT VALUATION REPORT SUBMITTED BY ASSESSEE WAS BASED ON PWD RATES. IN T HE CASE OF CIT VS RAJ KUMAR, HON'BLE ALLAHABAD HIGH CO URT IN 182 ITR 436 CONSIDERING THE ORDER PASSED BY THE TRIBUNAL FOUND THAT THE TRIBUNAL WHILE FIXING THE C OST OF CONSTRUCTION HAS TAKEN INTO CONSIDERATION THE RATES TO BE APPLIED FOR ESTIMATE OF COST OF CONSTRUCTION SHO ULD BE UP, PWD RATES AND NOT THE CENTRAL PWD RATES. THEREFORE, REFERENCE WAS REJECTED. 5. IN THE PRESENT CASE, THE ASSESSEE PLEADED THAT I N HIMACHAL PRADESH, PWD HAS FIXED LOWER RATES OF CONSTRUCTION, THEREFORE, THESE WERE RELEVANT TO BE CONSIDERED BY THE AUTHORITIES BELOW. I, THEREFORE, SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND RESTORE T HE MATTER IN ISSUE I.E. ESTIMATE OF COST OF CONSTRUCTI ON, TO THE FILE OF ASSESSING OFFICER WITH DIRECTION TO RE- DECIDE THIS ISSUE ESTIMATING THE COST OF CONSTRUCTION AS P ER PWD RATES FIXED IN HIMACHAL PRADESH. THE ASSESSING OFFICER SHALL GIVE REASONABLE SUFFICIENT OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. NO OTHER POINT IS ARG UED BY LD. COUNSEL FOR THE ASSESSEE. THE APPEAL OF THE 5 ASSESSEE IS, THEREFORE, PARTLY ALLOWED FOR STATISTI CAL PURPOSES. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED 26 TH SEPTEMBER, 2016. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD