TaxTMI 
TaxTMI 
2023 (3) TMI 1235
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....iny and statutory notices u/s 143(2) and 142(1) were issued from time to time to which the A.R. of the assessee appeared and filed certain details. Since the assessee was constructing a building both for hospital and residential purposes, the Assessing Officer referred the matter to the valuation cell for determination of the valuation of the cost of hospital and residential building. 4. During the course of the assessment proceedings, the Assessing Officer noted that the Valuer in his valuation report has valued the cost of the hospital building at Rs.1,76,55,000/-. Since the assessee has not filed any valuation report, the Assessing Officer asked the assessee to file its objection, if any, for making addition of the entire cost of Rs.1,76,55,000. The assessee in response to the query raised by the Assessing Officer filed the valuation report of a valuer (not a govt. valuer) showing the cost of construction of the hospital building at Rs.1,10,45,797/-. It was submitted that the difference is only Rs.66,09,203/- and not Rs.1,76,55,000/- as proposed. Since the assessee did not file any other objection except stating that due to COVID 19, they were unable to get the valuation done....
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....s. 143(3) of the Act were completed by making an addition of unexplained investment u/s. 69 of the Act of Rs.66,09,203/-, being the difference between cost of construction of hospital building valued by the Valuation Officer of the Department and the cost of construction valued by the builder, thereby assessing total income of the appellant at Rs.84,79,743/-. Going into the facts of the case, a survey operation u/s 133A of the IT Act was conducted in the case of the appellant firm on 27.09.2016. The appellant had filed its return of income on 28.10.2017 admitting income of Rs.10,70,540/-. During the assessment proceedings, the appellant filed a revised computation of income for a total income of Rs. 18,70,570/- including the additional income of Rs.8,00,000/- admitted during the Survey operation. The appellant firm constructed a building for hospital as well as residential purposes. The issue disputed in the current appeal proceedings 15 the addition made pertaining to the cost of construction of the hospital building. During the assessment proceedings, the Assessing Officer had referred to the Valuation Officer of the Income Tax Department for valuation of the ho....
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.... the appellant's valuer in respect of residential building are similar and the appellant did not raise any objection against the valuation of the residential building by the DVO. Therefore, there is basis to indicate any bias of the DVO or the incorrectness of the method adopted by the DVO. It is important to note that the usage and the requirement of the hospital and residential building are vastly dissimilar and the commercial and specialized complexes require a different sort of construction and it is always expensive than the residential construction. The DVO has taken into consideration, the specialization required for the hospital building and arrived at the value of hospital building. The appellant did not file any specific objection to the t valuation report by the DVO and only has merely submitted case laws without highlighting any material defect in the valuation, therefore appellant's contention is rejected. Further, the DVO in its report, observed that the inferior quality of material was used and specification of material used was not at par with the Govt. Standard and accordingly gave a deduction of 10% of the total value of construction. The....
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....C or section 69D, if such income is not covered under clause (a), the income-tax payable shall be the aggregate of (i the amount of income-tax calculated on the income referred to in clause (a) and clause (b), at the rate of sixty per cent; and ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i). The amended provisions of the Sec. 115BBE of the IT Act are applicable w.e.f. O1.04.2017 and therefore are applicable to AY 2017-18. In the instant case, the addition was determined u/s. 69 of the Act and the provisions of the section 115BBE are squarely applicable and therefore the income added u/s. 69 of the Act is rightly taxed at 60% in accordance with the Sec. 115BBE. The appellant in this ground, did not object to the addition made u/s. 69 or applicability of Sec. 115BBE of the Act. The contention of the appellant is regarding applicability of amended provisions of Sec. 115BBE for AY 2017-18 and has submitted various case laws contending that the applicability in such a scenario would be from the date of Hon'ble Presidential assent which was 1....
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....se laws submitted are not relevant to the case of the appellant and therefore, the contention of the appellant is rejected and the ground no. 5, o and 7 are dismissed accordingly." 6. Aggrieved with such order of the learned CIT (A), the assessee is in appeal before the Tribunal by raising the following grounds: "1. On the facts and in the circumstances of the case, the order of ld. Commissioner of Income Tax (Appeals)-11, Hyderabad, is erroneous and unsustainable on facts and in law. 2. The ld. Commissioner (Appeals) erred in upholding the alleged addition in the previous year relevant to assessment year 2017-18 while the fact is that the construction of hospital building commenced during financial year 2010-11 and ended in financial year 2014-15. The finding of the ld. Commissioner (Appeals) that the construction concluded in August 2016 is baseless and unsustainable on facts. 3. Without prejudice to the above ground no.2, the ld. Commissioner (Appeals) erred in sustaining the addition of Rs.66,09,203 in its entirety in the assessment year under consideration. The finding of the ld. Commissioner (Appeals) that in the absence of books of accounts, the....
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....he assessee, copy of which is placed at 21 to 26 of the paper book, he drew the attention of the Bench to the question No.2 according to which the assessee has stated to have constructed the hospital building during the period 2010-11 to 2014-15. Referring to the report of the DVO, copy of which is placed at pages 56 to 65 of the paper book, he drew the attention of the Bench to clause 6.5 according to which the assessee has stated the period of construction to be during the year 2009 to 2016. Referring to the Annexure-1 of report of the DVO he submitted that the DVO himself has mentioned that the period of construction started during May, 2009 and the period of completion is August, 2016. Referring to Annexure-II of report of the DVO he submitted that the DVO have also referred to the period of construction as May 2009 and completion as August, 2016. He accordingly submitted that when the construction of the building started in May, 2009 i.e. financial year 2009-10 and completed in the month of August, 2016 i.e. financial year 2016- 17, therefore, taking the entire difference in one A.Y instead of spreading it over the period of construction i.e. from financial year 2009-10 to 201....
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..../- being the difference between the cost of construction arrived at by the DVO at Rs.1,76,55,000/- and the cost of construction declared by the assessee at Rs. 1,10,45,797/- on the ground that the assessee failed to substantiate the source of such income for investment in the hospital building. We find the CIT (A) sustained the addition made by the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraph. It is the submission of the learned Counsel for the assessee that the construction work of the hospital building started in the month of May, 2009 and completed in August, 2016 which is evidenced by the various documents filed in the paper book and as per the report of the DVO and therefore, the difference between the value adopted by the DVO and as per the Valuer cannot be added in the year under consideration and should have been spread over the period between financial year 2009-10 to financial year 2016-17. It is also his submission that the cost of construction rate adopted by the valuer for the hospital building at Rs.13,905/- per square meter is higher than the cost of construction rate adopted by the same DVO for the residential build....
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....,2016) and therefore, the difference between the cost of construction as per the DVO and the Valuer's report should be spread over between financial year 2009-10 to financial year 2016-17 i.e. A.Y 2010-11 to A.Y 2017-18 proportionately. We, therefore, direct the Assessing Officer to spread over the difference between the cost of construction arrived at by the DVO and the cost of construction arrived at after considering our observations in the subsequent paragraphs over the period from August, 2010-11 to A.Y 2017-18. 15. A perusal of the report of the DVO shows that he has allowed only 10% towards reduction in cost of material purchased by the assessee. Since the assessee is a reputed doctor, it is quite possible that he has purchased the material from sources known to him and is expected to get some further discount. Considering the totality of the facts of the case, we direct the Assessing Officer to consider the discount for the material purchased by the assessee at 20% as against 10% allowed by the DVO. 15.1 Similarly, the cost of self-supervision charges has been allowed by the DVO at 5% only whereas the Coordinate Benches of the Tribunal are allowing such self-supervisi....
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....8 13995.90 Sqm 5674988 TOTAL 1216.43 17024964 2.0 Services Internal water supply and 2.1 17024964 8.00% % 1361997 Sanitary Installations 2.2 Internal electrical installations 17024964 10.00% % 1702496 2.3 External service connections 17024964 4.00% % 680999 TOTAL A 20770456 1. Deduct 10% for inferior quality of material used and specification of materials used are not at par with Govt. 15.00% % Standard. 17654888 2. 5% for self supervision Valuation Officer-i, Valuation cell, Income Tax Department, Hyderabad Document 2 DETERMINATION OF REASONABLE COST OF CONSTRUCTION. Annexure-I Assessee:-Dr. Methuku Anand, M/s Sabitha Anand Hospitals H.No. 4-2-879/6/1, Pratapgiri bagh, Vikarabad-501101 Property:- Residential Building, Pratapgiri bagh, Vikarabad-501101 Period of construction:- 1) Date of start- May 2009 2) Date of complition-Aug 2016 S.No Description of Item Quantity Rate Unit Amount Remarks 1.0 Building Portion:RCC Framed Structure 1.1.0 Ground floor 1.1.1 Ground floor with floor height 3.30 m 144.778 12441.00 ....