Appellate Tribunal rules in favor of assessee in cost of construction dispute

The Appellate Tribunal ITAT JODHPUR dismissed the Department's appeal and the assessee's cross-objection regarding the addition in the cost of construction invested by the assessee. The Tribunal found that the cost of investment in the factory building was properly accounted for in the books of account, and the AO did not object to the investment details provided by the assessee. Relying on previous decisions of the Hon'ble Rajasthan High Court, the Tribunal ruled in favor of the assessee, citing precedents like CIT vs. Pratapsingh Amrosingh Rajendra Singh and CIT vs. Hotel Joshi.

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Issues:
1. Addition in the cost of construction based on DVO's report.

Analysis:
The judgment by the Appellate Tribunal ITAT JODHPUR involved an appeal and a cross-objection against the CIT(A)'s order, both concerning the same assessee and common issues, thus being disposed of together for convenience. The main issue raised in the appeal was whether an addition made in the cost of construction invested by the assessee, based on the DVO's report and CPWD rates, without being referred to by the AO during the assessment proceedings, could be legally sustained.

Upon reviewing the evidence, it was established that the cost of investment in the factory building by the assessee was properly accounted for in its books of account for the first assessment year of 1989-90. The AO did not raise any objections to the year-wise investment details provided by the assessee, and the DVO's report was not referred to during the assessment proceedings of the previous year, 1988-89.

The Tribunal, considering the facts presented, relied on previous decisions of the Hon'ble Rajasthan High Court in cases like CIT vs. Pratapsingh Amrosingh Rajendra Singh (1993) 200 ITR 788 (Raj) and CIT vs. Hotel Joshi (1999) 157 CTR (Raj) 369 : (2000) 242 ITR 478 (Raj) to rule in favor of the assessee. The Tribunal consistently followed the same view as the High Court decisions, ultimately dismissing the Department's appeal and the assessee's cross-objection, which was not pressed during the proceedings.

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