TaxTMI 
TaxTMI 
2019 (10) TMI 846
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....TA No.1903/Del/2013 (by the Revenue. 3. Facts of the case, in brief, are that the assessee is a company. A search and seizure operation u/s 132 of the IT Act, 1961 was carried out in the case of the assessee on 12th September, 2007. During the course of assessment proceedings, the Assessing Officer noted that the assessee has completed part of the project in Jaipur pertaining to the mall and apportioned the cost of the mall and hotel the details of which are given at para 4 of the assessment order. While going through the apportionment of expenses between the mall and the hotel project, the Assessing Officer noted the following anomalies:- "(i) The cost of land at village Tigra-Maidawas and Shikhopur amounting to Rs. 477.84 lac and Rs. 28.85 lac respectively has not been reduced from the cost of the project. (ii) In terms of built up area the ratio of Mall and Hotel is approximately 65.35 whereas 83% of construction cost has been allocated to the Mall only. In case of indirect cost 90% of the entire cost has been allocated to the Mall. Such allocation has no basis except one certificate dated 16.11.2008 issued by one M L Mutneja & Co., which is a chartered accountant firm (t....
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....appeal (ITA No.1087/Del/2013) "Ground No. 1: The Ld. Commissioner of Income Tax (Appeals) - 1, New Delhi (hereinafter referred to as 'CIT(A)') has erred in law and in the fact & circumstances of the case by passing the order dated 16.01.2013 under section 250 of the Income Tax Act, 1961 (hereinafter referred to as 'The Act'). The order passed by the CIT(A) is illegal being against the principles of natural justice and against the provisions of the Act. Ground No. 2: a) The CIT(A) has erred on facts and circumstances of the case in confirming the addition amounting to Rs. 90,50,894 on the basis of the valuation report of the District Valuation Officer, Jaipur ("DVO"). b) The CIT(A) has erred on facts and circumstances of the case in relying on the valuation report of DVO. c) The CIT(A) has erred on facts and circumstances in not appreciating the fact that DVO has determined the cost of Mall and Hotel on the basis of Plinth Area Rates and Cost Index Method for the basic structural work of the building and accounts method for finishing items in the building, however the determination of cost by the appellant is based on actual cost which has actually been i....
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....xed In the F.Y. 2007-08, relevant to A.Y. 2008-09 and the balance amount of Rs. 1,63,93,392/- is pertain to total project which has culminated/completed during the current financial year and liable to be taxed during the year, excess claim of cost and to be disallowed. Therefore, the amount of Rs. 1,63,93,392/- is added to the income of the assessee on account of "Excess claim of Cost of Integrated Project." 8. He submitted that the report of the DVO was not available at the time of assessment although the Assessing Officer had referred the matter to the DVO. The report of the DVO was obtained before the appeal was heard by the CIT(A) and the copy of the same was forwarded to the Assessing Officer for his comments. After considering the report of the DVO, the ld.CIT(A) gave relief to the assessee to the extent of Rs. 9,67,27,979/-, but, sustained the addition of Rs. 90,50,894/-. He submitted that since the Assessing Officer in the order for assessment year 2010-11 has already accepted the DVO's report, therefore, when the CIT(A) had granted relief on the basis of the DVO, the Revenue should not have any grievance. 9. So far as the addition sustained by the CIT(A) is concerned, he....
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....deleted an addition of Rs. 9,67,27,979/-. The reasons for such part relief granted by the CIT(A) have already been reproduced in the preceding paragraphs. It is the submission of the ld. counsel that when the books of account of the assessee are not rejected and the difference between the value determined by the DVO and the value declared by the assessee is insignificant, no addition on account of such difference in cost of construction can be made. 12. We find some force in the above argument of the ld. counsel. As mentioned in the earlier paragraph, the Assessing Officer while passing the order for assessment year 2010-11 has himself accepted the value determined by the DVO and has made proportionate addition for assessment year 2010-11. Therefore, when the Ld.CIT(A), following the report of the DVO has reduced the disallowance, the Revenue should not have any grievance. Accordingly, the grounds raised by the Revenue are dismissed. 12.1 Now, coming to the grievance of the assessee, it is an admitted fact that the books of account of the assessee have not been rejected before referring the matter to the DVO for determination of the cost of construction. The Hon'ble Supreme C....
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...., the variation is 3.86 %. This is a very minor variation, having regard to the large amounts involved. Besides, the fact that the AO did not examine the variations, with specific reference to any items of expenditure that were unreasonable, or showed wide variation, these differences can also be put down to differing perceptions, and the practice adopted by the concerned business activity. 17. In view of the above discussion, and having regard to the fact that the variation in valuation, in this case between what was disclosed by the assessee and what was indicated by the DVO is not significant, this court is of opinion that there is no infirmity in the findings contained in the impugned order of the Tribunal. No substantial question of law arises for consideration. The appeals are, therefore, dismissed." 15. Since, in the instant case, the assessee has maintained the books of account supported by bills and vouchers for the construction of the mall and hotel, which was not rejected by the Assessing Officer before sending the matter to the DVO for determination of the cost of construction and since the difference in the value declared by the assessee and the value determined b....