TaxTMI 
TaxTMI 
2018 (8) TMI 1143
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.... (AO) has conducted a survey and subsequently issued notice u/s 147 and in response to the notice, the assessee filed return of income electronically admitting total loss of Rs. 5,02,789/-, and agricultural income of Rs. 1,80,000/-. The AO completed the assessment on total income of Rs. 39,57,209/- and raised the demand of Rs. 16,97,513/-. 3. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) partly allowed the appeal of the assessee and also made an enhancement in respect of sources for construction. 4. Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before this Tribunal. 5. Ground No.1 and 6 are general in nature which does not require specific adjudication. 6. Ground No.2 is related to the cost of construction of the building. During the assessment proceedings, the AO found that the assessee had constructed a function hall by name M/s Venkanna Babu Function Hall. During the survey proceedings, the assessee was asked to produce the books of accounts for construction of the function hall, but the assessee failed to produce the books of accounts. However during the course of survey, the AO found certain l....
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..... We have heard both the parties and perused the material placed on record and gone through the orders of the authorities below. The assessee has constructed function hall for which the cost of construction was admitted by the assessee at Rs. 1,11,30,963/- against the valuation made by the registered approved valuer at Rs. 60,00,000/-. The same building was valued by the departmental valuation officer at Rs. 1,42,25,000/-. As observed from the approved valuer, the cost of construction admitted by the assessee and the valuation report estimated by the DVO shows substantial difference in cost of construction. The DVO has valued the property on the basis of CPWD rates and CPWD rates include the profit element of the contractor. Therefore, the CPWD rates cannot be applied mutatis mutandis to the constructions made in the local areas. There is a difference between the CPWD rates and state PWD rates. This Tribunal in the case of Padmini Priya Property Developers and Builders (supra) has considered similar facts and circumstances and allowed deduction of 15% towards the rate variation for CPWD rates and local rates and further reduction of 10% towards self-supervision from the value estim....
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....s. 5,16,750/- arrived at by us after giving 15% reduction for higher CPWD rates and 10% deduction for personal supervision, appears to be quite reasonable. It can be rounded to Rs. 5,16,000/-." 10. In yet another case, the ITAT Hyderabad bench in the case of G. Pulla Reddy Vs. JCIT, while considering the similar issue of applicability of State PWD rates and deduction for self supervision charges, has observed as under: "Plinth area rate as prescribed by CBDT of courrse contain provisions for cost indexing and adjustment of location variation to arrive at cost of construction of a particular location. 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 lTD 1995 by the Jaipur Bench that CPWD rates are general in their nature and purpose in view of the wide area of 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 for constructionmaterial, 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 ....
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.... of the higher rate adopted by the valuation officer, the estimate of cost of construction determined by the valuation officer comes down to Rs. 5,16,7501/-. Even if we take average of cost of construction of Rs. 68900 determined by the DVO on the basis of plinth 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 at by us after giving 15% reduction for higher CPWD rates and 10% deduction for personal supervision, appears to be quite reasonable. It can be rounded to Rs. 5,16,000/-. 24. We are in respectful agreement with the aforesaid order of the Tribunal and hold that CIT(A) was justified in upholding plinth area basis for determining cost of construction over the CPWD rates and further reduction of 10%0 on account of persona! supervision. We do not find force in department's submission that the object of determining that rate of 10% for personal 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 supervises the property personally, and the rate allowed by the Tribunal by 10°/o....
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....BH 65,71,321 3. Union Bank Account 32840650029309 2,50,000 4. Cash Paid 9,98,491 5. Creditors 3,67,470 6. Loan interest capitalized 9,43,681 Grand Total 1,11,30,963 The AO did not accept the sources of cash of Rs. 9,98,491/- and source of creditors of Rs. 3,67,470/- against the sources explained by the assessee amounting to Rs. 1,11,30,963/-. The AO disbelieved the source for investment of Rs. 13,65,961/- and accepted the source of Rs. 97,65,002/-. the remaining amount of Rs. 13,65,961/-was added to the income. 10. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) tabulated the availability of the cash and the source as under : 1. Cash Paid : Sources for the cash paid are as under : Source Agricultural Income 1,80,000 Property Income 67,986 Refer Pg.7 of the paper book-1 Net Proft as per profit and loss account on civil works 3,25,800 Add : Depreciation 31,683 Add : Sundry Creditors 1,01,591 &....
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....d ending the assessment year 2011-12. The DVO has inspected and prepared and submitted the report subsequent to the receipt of gifts and the amenities and completion of misc. works. There was no finding given either by the AO or the Ld.CIT(A) to establish that the said amount of Rs. 5,00 lakhs admitted by the assessee as income from other sources was applied for any other purpose. Therefore, there is no reason to suspect the submission of the assessee and application of the income for the purpose of construction of function hall. Accordingy, we direct the AO to accept Rs. 5 lakhs as a source for construction of the function hall and allow the credit to the assessee. 14. From the cash flow statement tabulated by the Ld.CIT(A) for the sources of Rs. 9,98,491/- the assessee has admitted agricultural income of Rs. 1,80,000/- and the business income of Rs. 4,59,074/- which was not disputed by the Ld.CIT(A) or the AO. The assessee has contended that he has used the agricultural income of Rs. 1,80,000/- and the business income Rs. 4,59,074/- for construction of function hall and argued that the same be treated as the source. 15. We have heard both the parties and observed that the a....