TaxTMI 
TaxTMI 
2010 (3) TMI 754
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....Assessing Officer ('the AO') noticed that the assessee had debited an amount of Rs.18,55,500/- towards construction of a commercial building at Nagaur; and found that the building was in the joint name of the assessee Shri Suresh Dudi with his bother, the other assessee Shri Jagdish Dudi (the respondent in IT Appeal No.74/2009). It was also found that the building in question had already been constructed and let out to M/s. Dunac Motors wherein the said Shri Jagdish Dudi was a partner. The assessee Shri Suresh Dudi was asked to furnish the details of the construction together with sources; and, for want of complete details, the matter was referred to the Valuation Cell under Section 142-A of the Act for estimate on the investment made towards construction of the said building. The concerned Valuation Officer ('the DVO') submitted his report putting the estimate on the total value of investment in the building at Rs.1,65,75,000/- out of which, the assessee Shri Suresh Dudi's investment was estimated at Rs.44,76,604/- that was bifurcated at Rs.32,88,988/- for the financial year 2003-2004 and at Rs.11,87,614/- for the financial year 2004- 2005. The learned AO did not agree with the ex....
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.... of architect/engineer's fees that was not added by the approved valuer. The learned CIT(A) did not approve of the approach of the learned AO particularly when the report of approved valuer was not even referred nor the assessee was called for examination to verify the aspect of self-supervision and the aspect related with the architect/engineer's fees. The learned CIT(A) found that the estimate arrived at by the approved valuer on the total cost of construction had been Rs.98,75,000/- whereas the assessee and the others had declared the total cost of construction at Rs.93,50,873/-; and looking to the overall circumstances, while agreeing with the arguments on behalf of the assessee, proceeded to delete the addition of Rs.14,33,488/- as made by the AO on this score. In relation to the agriculture income, the learned CIT(A) observed that about 44 bighas of land was jointly owned by the assessee and his brother; and the assessee's brother had shown 24% expenses on agriculture operations whereas the assessee Shri Suresh Dudi had shown the expenses at 14% only. The learned CIT(A) found it proper to put the expenses on the agriculture operations at 24% of the total sale proceeds and hen....
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....er. This fact has not been disputed by the ld.D.R. Since Shri Jagdish, another co-owner, and the assessee in the present lot of appeals, is also civil engineer, relying on the judgment in the case of Ravi Mathur [supra], we hold that 12% rebate on account of self supervision charges is eligible. Further, the DVO has added 3% on account of architect/engineer fee separately. When the owner is himself an engineer, there is hardly any need for engaging the services of an architect or engineer. Moreover, there is no such requirement that an architect or engineer must be engaged before making any construction. Many a times construction is made without the assistance of an architect or engineer. We, therefore, hold that 3% addition by the DVO to the cost of construction is not justified. To sum up, the assessee is entitled to deduction of 20% on account of conversion from CPWD to PWD rates, 12% on account of self supervision charges and 3% on account of exclusion of architect/engineer fees. Total of these three items comes to 35%. If this percentage is applied to the estimate of the DVO, remaining valuation comes to Rs.21,37,842/-. As against this figure, the assessee has declared....
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....ion of crops; and when the agriculture expenses estimated by AO at 40% to 45% were indeed accepted by the Tribunal in various other cases, modification of such estimate to 29% was not justified. Having given thoughtful consideration to the submissions made and having examined the material placed on record, we are clearly of the view that the grounds urged on behalf of the appellant remain totally bereft of substance; and do not make out any substantial question of law worth consideration. The matter relating to the cost of construction has been dealt with and examined by the Tribunal from all the relevant angles and so far this appeal by the Revenue is concerned, we are unable to find any illegality if the Tribunal has allowed reduction of 20% from the estimate as made by the DVO for the purpose of scaling down the valuation from CPWD rates to PWD rates. In this very process of making a fair estimate, allowing of 12% rebate on account of selfsupervision charges cannot be said to be arbitrary or whimsical in the fact situation of this case particularly when the co-owner Shri Jagdish Dudi is admittedly a qualified engineer and it has been found as a fact that the construction....
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....g to the cost of construction of the same building and estimate on agriculture expenses are involved in this case too; and herein also, the Tribunal has modified the order of CIT(A) while allowing reduction of 35% from the value estimated by DVO in relation to the cost of construction and while putting the agriculture expenses at 29% of the total sale proceeds. For the very same reasons as foregoing, this appeal is also required to be dismissed. IT Appeal No.74/2009: CIT, Bikaner Vs. Jagdish Dudi This appeal relates to the other assessee Shri Jagdish Dudi for the return of income as filed for the financial year 2003-2004. The very same aspects relating to the cost of construction of the same building and estimate on agriculture expenses are involved in this case too. The facts relating to this assessee Shri Jagdish Dudi, as being the co-owner of the building in question and being the engineering graduate and self-supervisor of the construction, have already been discussed hereinbefore. In relation to this assessee too, for the same reasons as considered in detail qua the other assessee Shri Suresh Dudi, the Tribunal allowed 35% reduction on the cost of construction of the ....
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....elation to the vehicles, the Tribunal found the AO having proceeded absolutely without any basis and the CIT(A) having rightly appreciated the facts. The Tribunal proceeded to reject the grounds urged by the Revenue with the following observations:- "30. After considering the rival submissions and perusing the relevant material on record, we find that the AO has given absolutely no basis for coming to the conclusion that the afore referred four vehicles were not used for the purpose of business and there was no need for the assessee to use these vehicles. We are unable to uphold the view taken by the AO on the simple ground that a businessman knows his interest best. If a particular expenditure is claimed to have been incurred for business interest, the AO cannot substitute his opinion that there was no necessity for incurring this expenditure. As expenditure has not been held by the AO to be ingenuine and incurred for nonbusiness purpose, in our considered opinion the ld.CIT(A) rightly appreciated the facts in coming to the conclusion that 20% of these expenses was rightly disallowable on account of personal use. This ground is not accepted." The Tribunal also foun....