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2016 (3) TMI 86
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....or ity is oh init io void Hence, the appellant prays for relief. 3. The learned Commissioner of Income Tax (Appeals), Visakhapatnam, is also not justified in coming to his conclusion that the valuation made by the District Valuation Officer, was quite reasonable, without properly apprec iat ing the objec t ions rai sed by the appel lant and al so the s ubmi s s ions made agains t the ex c es s area t aken by the Di s t r i c t Valuation Officer than the area constructed by the appellant and also the other defects pointed out by the appellant in the report of the District Valuation Officer. As the estimated cost of construction made by the District Valuation Officer was abnormally high, the objections raised by the appellant in this regard may kindly be considered favourably and relief may kindly be granted accordingly. 4. The Ld. Commissioner of Income Tax (Appeals), Visakhapatnam, is also not just i f ied in allowing discounts only up to 10% even though the appel lant had speci f ical ly sought discount of 15% for higher rate adopted by the District Valuation Officer and for self supervision to the extent of 10% totalling to 25% and also the discount for the cost....
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....the balance amount was borrowed from friends and relatives. As regards the construction of house property, she claimed that the residential site was gifted by her mother and the source for the construction was out of the agricultural income of the earlier years, however, failed to produce any bills & vouchers for the amount incurred for construction of house property. The A.O., during the course of assessment proceedings, referred the valuation of building to the Departmental Valuation Officer (DVO) to ascertain the correct amount invested in construction of residential house property. The DVO has submitted his valuation report, wherein quantified the investments in residential house at Rs. 68,30,949/- which was spread from April, 2005 to March, 2008. The D.V.O., based on the amount of investment made by the assessee for various years, estimated the cost of construction for the assessment year under consideration at Rs. 51,17,042/-. The Assessing Officer, considering the DVO's report, an opportunity has been accorded to the assessee vide his office letter dated 15.10.2010 along with copy of the valuation report, in order to adopt the value of investment made by the assessee as esti....
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....on'ble ITAT Hyderabad Bench in the case of Vinod Kumar Agarwal Vs. ACIT reported in 107 ITR 477. 5. During the course of appellate proceedings, the assessee contended that the DVO has adopted more constructed area, than what was actually constructed and therefore, the DVO's measurements were incorrect. Therefore, the CIT(A) directed the A.O. to obtain the comments of the DVO on the issues pointed out by the assessee. The Executive Engineer, Valuation Cell, I.T. Department in his letter furnished his comments, wherein he has denied all the claims made by the assessee. In view of the above comments of the DVO, the A.R. was called upon to furnish the comments of the assessee regarding the contention of the DVO. In reply, the assessee submitted that she has utilized the materials from dismantled house property for construction of new house property and also she has self-supervised the construction, therefore, the cost of construction is quite less, when compared to the value adopted by the DVO. Therefore, requested to consider the registered valuer report for ascertaining the cost of construction. However, the CIT(A) after considering the assessee explanations, remand report of the ....
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....etailed estimate method is having many pitfalls, therefore, the plinth area rates and cost index method is more appropriate method rather than detailed estimate method. As regards the CPWD rates and local rates adopted by the DVO, the A.R. submitted that the DVO has taken the CPWD rates fixed by the Central Government for the purpose of valuation of building, whereas the registered valuer has adopted the prevailing market rates at the time of construction of building. Therefore, the DVO should have allowed the required margin towards difference between CPWD rate and also towards self-supervision charges. However, the DVO has not allowed the required margin towards self-supervision charges and towards rate difference between CPWD and local rates. In support of his contention, the A.R. of the assessee relied upon the decision of coordinate bench of ITAT, Hyderabad bench in the case of Salma A. Mehdi and Vinod Kumar Agarwal. On the other hand, the Ld. D.R. strongly supported the order of the CIT(A). 8. We have heard both the parties and perused the materials available on record. The A.O. made additions towards difference between the cost of construction estimated by the DVO and cos....
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....tailed one and valued by applying the detailed estimate method. Therefore, we fail to understand as to why the DVO is unable to estimate the cost of construction on the basis of detailed estimate method, when the registered valuer approved by CBDT with same information could estimate the cost of construction by applying detailed estimate method. Therefore, we are of the opinion that the AO was not correct in fully relied upon the DVO report, when there are two reports available before him. 10. The AO summarily rejected the registered valuer's report without giving any reasons and without making further investigation. We do not appreciate the action of A.O. for not considering the registered valuer report, when the registered valuer report is being made with itemwise estimate of building. However, we are of the opinion that there is a big difference between plinth area arrived at by both the valuers. Though both the valuation reports are from competent authority and both methods chosen by both the valuers are accepted method of valuation, either side has failed to substantiate the respective reports with any valid reasons. Therefore, we are of the opinion that to meet the ends of....
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....ng the facts and circumstances of the case, we are of the opinion that the assessee is eligible for 15% deduction towards rate difference and a further 10% deduction towards self supervision charges. 12. Now, it is pertinent to mention the case law relied upon by the assessee. The assessee relied upon ITAT, Hyderabad bench decision in the case of Salma A. Mehdi (supra). The coordinate bench of this Tribunal, under similar circumstances held the issue as under: " T he DVO e s t ima t ed the c o s t o f c ons t ru c t i o n fol lowing the pl inth area method of valuation. He applied the basic plinth area rates approved by the CEDT. . He appl ied the pl inth area of New Delhi as f ixed 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 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 CPWD rates of New Delhi are far higher than local rates. Keeping that factor in view the first appellate authority would appear to have allow....
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....in such situations the more beneficial option, should b& made available to the assessee. in this regard we refer to the judgment of the Supreme Court in the case of CIT v. Mahendra Mills (20001 243 ITR 56. At page 62, the Supreme Court has observed as under: When there are two provisions under which an assessee could claim some benefit, it is for the assessee to choose one. A reference was made to a claim for medical reimbursement for the current year which is different from a claim for depreciation. This is so because depreciation is a claim on the written down value and if depreciation is not claimed in the current year, the written down value would remain the same for the following year. Prior to the amendment of section 32 business loss could be carried forward for eight years? There was no time limit for the claiming of depreciation. This is not so now. Earlier, therefore, it was always for the assessee to claim business loss first and current depreciation thereafter if he so desired." 16. By the same principles, we hold that the method of valuation to be adopted for evaluating the cost of construction should be the method that is most beneficial to the asses....