ITO, Ward-10(1), Hyd, Hyderabad V. M.Laxman Reddy, Sec'bad, Secunderabad

ITA 915/HYD/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5870 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 06-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: N O N E
• Keywords: Rejection of books of accounts; Income from undisclosed sources; Valuation report
• Section: 148

Judgement Text

ITA NO 915 OF 2015 M LAXMAN REDDY SECUNDERABAD PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.915/HYD/2015 (ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER WARD 10(1) HYDERABAD VS SHRI M. LAXMAN REDDY SECUNDERABAD PAN: ADTPM 0709 Q FOR REVENUE : SHRI K.J. RAO, DR FOR ASSESSEE : N O N E O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS REVENUES APPEAL FOR THE A.Y 2009-10. IN TH IS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUND S OF APPEAL: 2. THE CIT (A) ERRED IN ALLOWING THE REBATE OF 15% FROM THE COST OF CONSTRUCTION DETERMINED BY THE VALUATION OFFICER BY FOLLOWING THE CPWD RATES. 2. INITIALLY, THE REVENUE HAD FILED THREE GROUNDS O F APPEAL WHICH ARE AS UNDER: 1. THE LEARNED CIT (A) OUGHT TO HAVE CONFIRMED THE ADDITIONS MADE BY THE AO VIDE ORDER PASSED BY HIM DATED 30.12.2010. 2. THE LEARNED CIT (A) OUGHT TO HAVE GIVEN THE OPPORTUNITY TO THE AO UNDER RULE 46A TO VERIFY THE DATE OF HEARING : 22.12.2016 DATE OF PRONOUNCEMENT : 30.12.2016 ITA NO 915 OF 2015 M LAXMAN REDDY SECUNDERABAD PAGE 2 OF 9 ACTUAL FACTS BEFORE PROCEEDING TO DECIDE TO GRANT A REBATE OF 15% ON THE TOTAL COST OF CONSTRUCTION. 3. THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE COST OF CONSTRUCTION HAS BEEN ARRIVED AT BY THE DEPARTMENTAL VALUATION OFFICER, AFTER FOLLOWING DUE PROCESS AND THE PRESCRIBED STANDARDS AND RATES AND AFTER ALLOWING ALL ELIGIBLE DEDUCTIONS. 3. SUBSEQUENTLY, IT WAS NOTICED THAT THE AUTHORIZAT ION OF THE CIT FOR THE ABOVE GROUNDS WAS NOT FILED. THEREF ORE, THE DR WAS DIRECTED TO FILE THE AUTHORIZATION OF THE CIT FOR F ILING OF THE GROUNDS OF APPEAL. SUBSEQUENTLY, THE REVISED FORM-3 6 ALONG WITH THE AUTHORIZATION HAS BEEN FILED BEFORE US RAISING ONLY ONE GROUND OF APPEAL WHICH HAS BEEN REPRODUCED AS ABOVE. THOUG H NOTICE HAS BEEN SERVED ON THE ASSESSEE, NONE APPEARED ON BEHAL F OF THE ASSESSEE. THE DR HAS FILED THE PROOF OF SERVICE OF NOTICE BEFORE US VIDE LETTER DATED 20.12.2016. THEREFORE, THE APPEAL IS TAKEN UP FOR HEARING. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE A.Y 2 009-10 ON 30.06.2010 ADMITTING TOTAL INCOME OF RS.8,22,300 AN D AGRICULTURAL INCOME OF RS.1,50,000. DURING THE COUR SE OF SEARCH, A DOCUMENT VIDE ANNEXURE A/MLR/01 CONTAINING DETAILS OF ITA NO 915 OF 2015 M LAXMAN REDDY SECUNDERABAD PAGE 3 OF 9 CONSTRUCTION OF BUILDING AT SURVEY NO.102, DHULAPAL LY VILLAGE, R.R DISTRICT AND ITS LEASE TO CHAITANYA EDUCATIONAL COM MITTEE WAS FOUND AND SEIZED. IT WAS STATED THAT AN AMOUNT OF R S.4.65 CRORES WAS INCURRED FOR CONSTRUCTION OF THE BUILDING AND S OURCES WERE SHOWN AS RS.3.00 CRORES LOAN FROM BANK, RS.1.5 CROR ES RENTAL DEPOSIT AND A SUM OF RS.50.00 LAKHS AS CONTRIBUTED BY SRI RAJASEKHAR REDDY, S/O THE ASSESSEE. THE AMOUNT OF R S.50.00 LAKHS CONTRIBUTED BY SHRI RAJASEKHAR REDDY WAS OFFE RED AS INCOME IN HIS HANDS AS UNACCOUNTED INCOME FOR THE A .Y 2009-10. TO VERIFY THE EXACT COST OF CONSTRUCTION, THE PROPE RTY WAS REFERRED TO THE DISTRICT VALUATION OFFICER, HYDERABAD WHO IN FORMED THAT THE VALUATION REPORT COULD NOT BE SUBMITTED BEFORE THE END OF DECEMBER, 2010. THEREFORE, THE ASSESSMENT U/S 143(3 ) WAS COMPLETED ON 31.12.2010 BY ACCEPTING THE COST OF CO NSTRUCTION RETURNED BY THE ASSESSEE. SUBSEQUENTLY, THE VALUATI ON REPORT WAS RECEIVED BY THE AO ON 5.1.2012. THEREFORE, A NOTICE U/S 148 WAS ISSUED ON 1.2.2012 FOR REOPENING OF THE ASSESSMENT. DURING THE RE-ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE VA LUATION CELL HAS ESTIMATED THE COST OF CONSTRUCTION AT RS.6,54,0 8,103 AFTER ALLOWING SELF SUPERVISION @3% AGAINST THE COST ON C ONSTRUCTION SHOWN BY THE ASSESSEE AT RS.4,65,00,000. AO FOUND T HAT THERE IS A DIFFERENCE OF RS.1,89,08,103 AND THEREFORE, THE A SSESSEE WAS ITA NO 915 OF 2015 M LAXMAN REDDY SECUNDERABAD PAGE 4 OF 9 ASKED TO EXPLAIN THE DIFFERENCE IN THE COST OF CONS TRUCTION AND OTHER DISCREPANCIES FOUND BY THE VALUATION CELL. TH E AO ASKED THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNT, VALUATION REPORT OF THE REGISTERED VALUERS AND THE RECEIPTS AND PAYMENTS, S TATEMENT OF AFFAIRS AND YEAR-WISE BREAK-UP OF COST OF CONSTRUCT ION. THE ASSESSEE FURNISHED THE SAID DETAILS, BUT HOWEVER, T HE AO WAS NOT CONVINCED WITH THE SAID VALUATION. THE ASSESSEE CLA IMED 15% OF THE COST AS ATTRIBUTABLE TO SELF SUPERVISION, WHERE AS THE VALUATION CELL HAS ALLOWED 3% FOR SUPERVISION. THE AO HOWEVER, ALLOWED 7% FOR SUPERVISION ON COST OF CONSTRUCTION AND TAKING THE ASSESSEES SHARE ON THE PROPERTY TO BE 1/4 TH , HE COMPUTED THE COST OF CONSTRUCTION AND MADE AN ADDITION OF RS.32,53,978 A ND BROUGHT IT TO TAX. AGGRIEVED, THE ASSESSEE PREFERRED AN APP EAL BEFORE THE CIT (A) WHO PARTLY ALLOWED THE APPEAL AND THE REVEN UE IS IN APPEAL BEFORE US AGAINST THE RELIEF GRANTED BY THE CIT (A). 5. UPON HEARING THE LEARNED DR, WE FIND THAT THE CI T (A) HAS ADOPTED THE CPWD STANDARD RATE AS AGAINST THE R ATES PRESCRIBED BY THE STATE PWD FOR VALUATION OF THE CO ST OF CONSTRUCTION AND TAKING INTO CONSIDERATION VARIOUS DECISIONS RELIED UPON BY THE ASSESSEE, HE ALLOWED THE REBATE OF 15%. WE HAVE ALSO GONE THROUGH THE DECISION OF THE COORDINA TE BENCH OF ITA NO 915 OF 2015 M LAXMAN REDDY SECUNDERABAD PAGE 5 OF 9 THE TRIBUNAL IN THE CASE OF SRI KRISHNA VENTURES P LTD VS. INCOME TAX OFFICER IN ITA NOS.781 TO 785/HYD/2009 AND FIND THAT THE TRIBUNAL HAS ANALYZED THE DIFFERENCE BETWEEN THE CP WD RATE AND THE STATE PWD RATE AND HAS GIVEN JUSTIFICATION FOR ALLOWING 15% REBATE ON ACCOUNT OF RATE VARIATION BETWEEN THE CPW D AND STATE PWD RATE. FOR THE SAKE OF READY REFERENCE, THE RELEV ANT PARAGRAPHS ARE REPRODUCED HEREUNDER: 11. GROUND NOS. 6 AND 7 ARE WITH REGARD TO CLAIM FO R ALLOWANCE FOR DEDUCTION ON ACCOUNT OF SELF SUPERVISION AND TH E BENEFIT TOWARDS RATE VARIANCE BETWEEN THE CPWD RATES AND ST ATE PWD RATES FOR CONSTRUCTION OF THE PROJECT BUILDING AT H YDERABAD. 12. THE LEARNED AR SUBMITTED BEFORE US THAT THE DVO WHILE ESTIMATING THE COST OF CONSTRUCTION HAS ADOPTED THE CPWD RATES BASED ON COEFFICIENT OF CBRI, ROORKIE WHICH CANNOT BE TAKEN AS A YARDSTICK TO DETERMINE THE COST OF CONSTRUCTION AT HYDERABAD. THE LEARNED AR SUBMITTED THAT THERE BEING DIFFERENC E IN RATES BETWEEN THE CPWD AND STATE PWD BENEFIT SHOULD HAVE BEEN GIVEN TO THE ASSESSEE IN THIS REGARD. IN SUPPORT OF SUCH CONTENTION, THE LEARNED AR RELIED UPON A DECISION O F THE INCOME- TAX APPELLATE TRIBUNAL DELHI BENCH IN THE CASE OF S HEKHAR CHAND JAIN V/S. INSPECTING ACIT (32 TTJ 570) AND A DECISI ON OF INCOME-TAX APPELLATE TRIBUNAL HYDERABAD BENCH IN CA SE OF G. PULLA REDDY V/S. ACIT (ITA NOS. 65 TO 71/HYD/2003 D ATED 29- 10- 2004. THE LEARNED AR SUBMITTED THAT THOUGH THE DVO IN THE VALUATION REPORT HAS SPECIFICALLY MENTIONED THAT TH E PROPERTY WAS DEVELOPED UNDER THE DIRECT SUPERVISION OF THE A SSESSEE, HE NEVERTHELESS HAS NOT ALLOWED ANY DEDUCTION TOWARDS SELF SUPERVISION. THE LEARNED AR SUBMITTED THAT THIS ASP ECT HAS NOT ALL BEEN CONSIDERED BY THE REVENUE AUTHORITIES. 13. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUBMITTED THAT THE DVO HAVING ESTIMATED THE COST OF CONSTRUCTION BY APPLYING THE ACCOUNTS METHOD, NO FURTHER DEDUCTI ON TOWARDS SELF SUPERVISION IS TO BE ALLOWED. SO FAR THE BENEF IT TOWARDS RATE VARIANCE BETWEEN CPWD AND STATE PWD IS CONCERNED, T HE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE DVO HAVING TAKEN THE COST OF MATERIALS AS DISCLOSED BY THE ASSESSEE ITA NO 915 OF 2015 M LAXMAN REDDY SECUNDERABAD PAGE 6 OF 9 THERE WAS NO NEED TO ALLOW FURTHER BENEFIT TOWARDS RATE VARIANCE. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS ON THE ISSU E AND ALSO PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO APPLIE D OUR MIND TO THE DECISIONS CITED BEFORE US. THOUGH THE ASSESS ING OFFICER REJECTED THE BOOKS OF ACCOUNTS BY OBSERVING THAT TH EY CANNOT BE RELIED UPON FOR ARRIVING AT A CONCLUSION ON THE QUA NTUM OF MATERIAL CONSUMED AND THE COST INCURRED THEREON BUT , THE DVO WHILE ESTIMATING THE COST OF CONSTRUCTION HAS ADOPT ED THE ACCOUNTS METHOD BY RELYING UPON THE SAME SET OF BOO KS OF ACCOUNTS AND OBSERVING THAT THE ASSESSEE HAS MAINTA INED BOOKS OF ACCOUNTS FOR EACH AND EVERY MATERIAL SUPPORTED W ITH VOUCHERS. HOWEVER, THE DVO WHILE CONSIDERING THE QU ANTITY OF MATERIALS LIKE STEEL, CEMENT, BRICKS, STONE, SAND E TC., HAS NOT GONE BY THE BOOKS OF ACCOUNTS BUT HAS ARRIVED AT THE COS T ON THE BASIS OF STANDARD COEFFICIENT AS PER THE HAND BOOK OF CBR I, ROORKIE. SIMILARLY, IN PARA 5.8 OF THE VALUATION REPORT THOU GH THE DVO HIMSELF HAS OBSERVED THAT THE ASSESSEE IS IN THE BU SINESS OVER A PERIOD OF 30 YEARS AND HAS CONSTRUCTED OVER AN AREA OF 10 LAKHS SFT AS A BUILDER AND THE PRESENT PROPERTY HAS ALSO BEEN DEVELOPED UNDER THE DIRECT SUPERVISION OF THE ASSESSEE BUT WH ILE CONSIDERING THE DEDUCTIONS TOWARDS SELF SUPERVISION THE DVO HAS NOT ALLOWED SUCH DEDUCTION BY OBSERVING THAT DEDUCTION TOWARDS SELF SUPERVISION IS NOT REQUIRED SINCE ACCOUNTS METHOD H AS BEEN FOLLOWED. SUCH PREVARICATIONS STAND BY THE DVO IS N OT ACCEPTABLE. IF THE FVO HAS FOUND THE BOOKS OF ACCOU NT TO BE CORRECTLY MAINTAINED AND HAS FOLLOWED THE ACCOUNTS METHOD BY RELYING UPON THEM, THEN HE SHOULD NOT HAVE DEVIATED FROM BOOKS OF ACCOUNTS AND RESORTED TO ESTIMATION BY APPLYING COEFFICIENT IN CASE OF CERTAIN SPECIFIC ITEMS LIKE STEEL, SAND, BR ICKS ETC. 15. THE DVO CANNOT ACCEPT AND REJECT THE BOOK RESUL TS ACCORDING TO HIS WILL AND CONVENIENCE. WHILE ESTIMATING THE QUANTUM AND COST OF CERTAIN MATERIALS CONSUMED HE HAS APPLIED C OEFFICIENTS AS PER THE HAND BOOK OF THE CBIR WITHOUT ACCEPTING THE ENTRIES IN THE BOOKS OF ACCOUNTS, WHEREAS WHEN IT COMES TO ALL OWING BENEFIT FOR SELF SUPERVISION, THE DVO HAS NOT ALLOWED SUCH DEDUCTION BY OBSERVING THAT DEDUCTION TOWARDS SELF SUPERVISION C ANNOT BE ALLOWED AS THE ACCOUNTS METHOD IS FOLLOWED. THE DVO CERTAINLY CANNOT TAKE SUCH CONTRADICTORY STAND WHILE ESTIMATI NG THE COST OF CONSTRUCTION. WHEN THE DVO HAS ACCEPTED THE FACT TH AT THE BUILDING PROJECT HAS BEEN CONSTRUCTED UNDER DIRECT SUPERVISION OF THE ASSESSEE HE SHOULD HAVE ALLOWED DEDUCTION TOWAR DS SELF SUPERVISION. IT IS ALSO A FACT THAT THE DVO HAS WOR KED OUT THE QUANTITIES OF CERTAIN MATERIALS CONSUMED IN THE CON STRUCTION OF THE BUILDING ON THE BASIS OF STANDARD COEFFICIENT A S PROVIDED IN THE HAND BOOK OF CBRI, STANDARD BOOKS/ VALUATION JO URNAL ITA NO 915 OF 2015 M LAXMAN REDDY SECUNDERABAD PAGE 7 OF 9 WHEREAS THE ASSESSEE HAS ESTIMATED COST OF CONSTRUC TION AS PER THE STATE PWD RATES. THEREFORE, WHILE ESTIMATING TH E COST OF CONSTRUCTION, CPWD RATE CANNOT BE UNIFORMLY APPLIED BY TOTALLY IGNORING THE STATE PWD RATES. THE INCOME-TAX APPELL ATE TRIBUNAL, DELHI BENCH IN CASE OF SHEKHAR CHAND JAIN V/S. IAC (SUPRA) HAS HELD THAT WHEN RATE NOTIFIED BY A LOCAL AUTHORITY IS AVAILABLE THEN THAT RATE SHOULD BE GIVEN MORE CREDE NCE THAN AN AUTHORITY LIKE CPWD. THE INCOME-TAX APPELLATE TRIBU NAL, HYDERABAD BENCH IN THE CASE OF SRI G. PULLA REDDY V /S. JCIT (SUPRA) WHILE CONSIDERING A SIMILAR ISSUE OF APPLIC ABILITY OF STATE PWD RATES AND DEDUCTION FOR SELF SUPERVISION CHARGE S HAS OBSERVED IN THE FOLLOWING MANNER:- ' PLINTH AREA RATE AS PRESCRIBED BY CBDT OF CURSE C ONTAIN PROVISIONS FOR COST INDEXING AND ADJUSTMENT OF LOCA TION VARIATION TO ARRIVE AT COST OF CONSTRUCTION OF A PARTICULAR L OCATION. BUT THE FACTS REMAINS THAT SUCH VALUATION RESTS CPWD RATES FIXED ON UNIFORM BASIS. AS OBSERVED IN THE CASE OF ITO VS. TEK CHAN , 52 ITD 1995 BY THE JAIPUR BENCH THAT CPWD RATES ARE GE NERAL IN THEIR NATURE AND PURPOSE IN VIEW OF THE WIDE AREA O F THEIR APPLICABILITY, THE STATE PWD RATES TAKE INTO ACCOUNT THE SPECIAL CONDITIONS IN A PARTICULAR AREA IN THE TERRITORIES OF THE STATE. THE AVAILABILITY OF COST OF CONSTRUCTION MATERIAL, THE AVAILABILITY OF LABOUR AND WAGES TO BE PAID TO THEM AND OTHER LIKE FACTORS DO AFFECT THE COST OF CONSTRUCTION AND, THEREFORE, IT WAS QUITE LOGICAL FOR THE PERSON CONCERNED TO FOLLOW THE STATE PWD RAT ES WHILE ESTIMATING THE COST OF CONSTRUCTION OF BUILDING IN DIFFERENT AREA. HOWEVER, THE FACTS REMAINS THAT THE PWD RATES ARE F OR THE PURPOSE OF DETERMINING FAIR MARKET RENT OF A PROPER TY, WHENEVER THE STATE PWD AWARDS A CONTRACT FOR CONSTRUCTION OF A PARTICULAR PROPERTY, VERY SPECIFIC PARAMETERS ARE SENT IN THE CONTRACT FOR THE PURPOSE OF EACH INDIVIDUAL PROJECT AND, HENCE, IT I S NOT CORRECT TO SAY THAT THE STATE PWD RATES ARE THE PROPER BASIS TO ARRIVE AT THE COST OF CONSTRUCTION. THE APPLICABILITY OF CPWD RAT E WITH LOCAL INDEXING CAME UP BEFORE THE TRIBUNAL IN THE CASE OF SMT. SALMA A. MEHDI, IN ITA NOS. 697 & 698/HYD/93 FOR ASST. YEARS 1985-86 AND 1986-87 WHEREIN THE TRIBUNAL VIDE PARAS 10 OF T HIS ORDER HELD THAT IN ARRIVING AT PROPER COST OF CONSTRUCTION, IT WOULD BE JUSTIFIED IF A DISCOUNT OF 15% IS GIVEN FOR HIGHER CPWD RATE AND FURTHER RATE OF 10% FOR PERSONAL SUPERVISION IS ALLOWED. THE SAI D PARAGRAPH-10 READS AS UNDER:- 'THE DVO ESTIMATED THE COST OF CONSTRUCTION FOLLOWI NG THE PLINTH AREA METHOD OF VALUATION. HE APPLIED THE BASIC PLIN TH AREA RATES APPROVED BY THE CEDT. .HE APPLIED THE PLINTH AREA O F NEW DELHI AS FIXED IN 1976 AND APPROVED BY THE GOVERNMENT OF INDIA BY DULY ENHANCING THE BASIC RATE OF SIMILAR STRUCTURES WITH APPROPRIATE COST INDEX AS APPLICABLE TO THE LOCALITY DURING THE PERIOD OF ITA NO 915 OF 2015 M LAXMAN REDDY SECUNDERABAD PAGE 8 OF 9 CONSTRUCTION. THE VALUATION DID NOT APPEAR TO HAVE TAKEN INTO CONSIDERATION THE LOCAL RATES THAT ACTUALLY EXISTED DURING THE PERIOD FOR CONSTRUCTION. IT IS COMMON KNOWLEDGE CPW D RATES OF NEW DELHI ARE FAR HIGHER THAN LOCAL RATES. KEEPING THAT FACTOR IN VIEW THE FIRST APPELLATE AUTHORITY WOULD APPEAR TO HAVE ALLOWED SOME AD HOC DEDUCTION IN THE COST OF BASIC CONSTRUC TION. TAKING INTO CONSIDERATION THE FACT THAT THE CPWD RATES OF NEW DELHI ARE ALWAYS HIGHER THAN THE LOCAL RATES, WE FEEL THAT IT WOULD BE JUST AND REASONABLE TO GIVE AN OVERALL REDUCTION OF 15% ON T HE COST OF CONSTRUCTION ESTIMATED BY THE DVO IN ORDER TO COMPE NSATE THE HIGHER ESTIMATE ON ACCOUNT OF THE ADOPTION OF HIGHE R RATE OF CPWD OF NEW DELHI. FURTHER, THE VALUATION OFFICER D ID NOT ALLOW ANY DEDUCTION TOWARDS PERSONAL SUPERVISION. THE FIR ST APPELLATE AUTHORITY ALLOWED 10% REDUCTION ON ACCOUNT OF SAVIN GS BY PERSONAL SUPERVISION APPEARS TO BE QUITE REASONABLE . IF WE DEDUCT 10% TOWARDS PERSONAL SUPERVISION AND 15% ON ACCOUNT OF THE HIGHER RATE ADOPTED BY THE VALUATION OFFICER, THE E STIMATE OF COST OF CONSTRUCTION DETERMINED BY THE VALUATION OFFICER CO MES DOWN TO RS.5,16,750/-. EVEN IF WE TAKE AVERAGE OF COST OF C ONSTRUCTION OF RS.68900 DETERMINED BY THE DVO ON THE BASIS OF PLIN TH AREA METHOD WORKS OUT TO RS.5,22,000/-. IN THAT VIEW OF THE MATTER, THE COST OF CONSTRUCTION OF RS.5,16,750/- ARRIVED A T BY US AFTER GIVING 15% REDUCTION FOR HIGHER CPWD RATES AND 10% DEDUCTION FOR PERSONAL SUPERVISION, APPEARS TO BE QUITE REASO NABLE. IT CAN BE ROUNDED TO RS.5,16,000/-. 24. WE ARE IN RESPECTFUL AGREEMENT WITH THE AFORESA ID ORDER OF THE TRIBUNAL AND HOLD THAT CIT(A) WAS JUSTIFIED IN UPHO LDING PLINTH AREA BASIS FOR DETERMINING COST OF CONSTRUCTION OVE R THE CPWD RATES AND FURTHER REDUCTION OF 10% ON ACCOUNT OF PE RSONA! SUPERVISION. WE DO NOT FIND FORCE IN DEPARTMENT'S S UBMISSION THAT THE OBJECT OF DETERMINING THAT RATE OF 10% FOR PERS ONAL SUPERVISION WAS GIVEN ONLY BECAUSE, THE ASSESSEE IN THAT CASE HIMSELF WAS AN ENGINEER. THAT MAY BE A FACT WHEN A BUT PROPERTY BEING CONSTRUCTED, EVERY PERSON TAKES CARE AND SUPE RVISES THE PROPERTY PERSONALLY, AND THE RATE ALLOWED BY THE TR IBUNAL BY 10% WOULD BE APPLICABLE IN ALL SUCH CASES. WE MAY, HOWE VER, SAY HERE THAT THE PROPERTY IN CASE OF SMT. SALMA A. MEHDI, WAS OF ABOUT 3000 SQ.FT., WHICH IS A VERY SMALL AREA, AS COMPARE D TO 1,22.985 SQ. FT., AREA IN THE PRESENT' CASE. IT IS AN ADMITT ED FACT THAT WHEN A LARGER AREA IS BEING CONSTRUCTED, THERE WILL BE COS T ECONOMY IN MANY WAYS FOR BULK PURCHASES AND A BETTER BARGAININ G POWER AND THE DISCOUNT WHICH IS GIVEN IN CASE OF SMALLER AREA MAY NOT BE SUFFICIENT. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND A VERY HUGE AREA CONSTRUCTED IN THIS APPEAL, WE ARE OF THE OPINION THAT A FURTHER DISCOUNT AT 5% WOULD BE REASONABLE I N ESTIMATING THE COST OF CONSTRUCTION. WE DIRECT ACCORDINGLY.' ITA NO 915 OF 2015 M LAXMAN REDDY SECUNDERABAD PAGE 9 OF 9 16. CONSIDERING THE TOTALITY OF FACTS AND THE CIRCU MSTANCES IN THE LIGHT OF THE DECISIONS OF THE INCOME-TAX APPELLATE TRIBUNAL REFERRED TO ABOVE, WE ARE OF THE VIEW THAT THE ASSE SSEE IS ENTITLED FOR DEDUCTION OF 15% ON ACCOUNT OF RATE VARIATION B ETWEEN CPWD AND STATE PWD AND 10% TOWARDS SELF SUPERVISION. IF THE AFORESAID DEDUCTIONS ARE ALLOWED, THEN THE COST OF CONSTRUCTION SHOWN BY THE ASSESSEE AT RS.6,59,57,184/- WOULD BE MORE THAN THE COST OF CONSTRUCTION DETERMINED BY THE DVO AND THERE WILL BE NO CASE FOR ADDITION ON ACCOUNT OF EXCESS COST OF E XPENDITURE INCURRED BY THE ASSESSEE. IN AFORESAID VIEW OF THE MATTER, THE ADDITIONS OF RS.13,99,255/- CANNOT BE SUSTAINED, HE NCE WE DIRECT FOR DELETING THE SAME. HENCE THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. RESPECTFULLY FOLLOWING THE SAME, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT (A). REVENUES APPEAL IS ACCORDINGLY DISMISSED. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DECEMBER, 2016. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 30 TH DECEMBER, 2016. VINODAN/SPS COPY TO: 1 INCOME TAX OFFICER WARD 10(1) ROOM NO.516 AC GUAR DS, I.T. TOWERS HYDERABAD 2 SRI M. LAXMAN REDDY, PLOT NO.48, SOUJANYA COLONY, BOWENPALLY, SECUNDERABAD 3 CIT (A) 4 HYDERABAD 4 CIT (CENTRAL) HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER