TaxTMI 
TaxTMI 
2023 (9) TMI 1308
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....tices U/s. 143(2) dated 30/09/2014 was issued and served on the assessee. Due to change in the jurisdiction of the Assessing Officer, further notice U/s. 142(1) and 143(2) were issued and served on the assessee. In response, the assessee's Authorized Representative appeared from time to time and furnished the information called for. Considering the submissions made by the Ld. AR, the Ld. AO referred the matter to the Ld. Departmental Valuation Officer [DVO] U/s. 142A of the Act for the building construction completed during the year which was leased. The Ld. DVO furnished the Valuation Report by valuing the property at Rs. 5,52,54,000/-. The Ld. AO submitted the copy of the report to the assessee inviting his objections. The assessee raised three objections which were forwarded to the Valuation Officer for his comments. In the mean time the assessee also filed the independent Registered Valuer's Report estimating the cost of construction at Rs. 298.36 lakhs as against Rs. 322.23 lakhs as claimed by the assessee. Since the assessee did not maintain the books of accounts, the Ld. AO did not accept the valuation of the independent Registered Valuer and therefore adopted the value of t....
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....see towards flowing was mentioned at Rs. 19,36,118/-, the same amount was not included in the cost of construction estimated at Rs. 682.60 lakhs by valuation officer but only an amount of Rs. 8,58,893/- was included. (ii) The amount of Rs. 19,36,118/- incurred by lessee towards flooring has not been included in the cost of construction estimated by Valuation Officer and therefore there is no need for reducing the amount. (iii) It is clear from para 6 of the valuation report that the cost of construction estimates includes an amount of Rs. 1,30,06,000/- towards cost of interiors & Special electrical works only incurred by lessee. (iv) There was no totaling mistake or omission by the Valuation Officer in arriving at cost incurred by the assessee and only an amount of Rs. 1,30,06,626/- was included in the cost of construction estimated for which deduction was allowed by the AO. (iv) There was no totaling mistake or omission by the Valuation Officer in arriving at cost incurred by the lessee and only an amount of Rs. 1,30,06,626/- was included in the cost of construction estimated for which deduction was allowed by the AO. 3. The Ld. CIT (A) is not justified in holding that t....
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....of construction to the assessee. The Ld. DR therefore pleaded that the relief granted by the Ld. CIT(A) be restricted to Rs. 8,58,893/-only. Per contra, the Ld. AR relied on the order of the Ld. CIT (A). 7. We have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities. We find from Annexure-I to the Valuation Report of the Ld. DVO vide Report No. 1: 02: 1470 in Item No.3 being the addition for cost of superior items provided in the building in place of items provided as per specifications of Plinth Area Rates (PAR) has included Rs. 8,58,893/- towards cost of flooring. However, in Annexure-II, while valuing the flooring charges incurred by the lessee M/s. Kalyan Jewellers the Ld. DVO valued at Rs. 19,36,116/-. As per clause 11 and 12 of the lease agreement entered on 12th March 2011, the lessee has to do the interiors and exterior installations including the decorations which shall not be claimed with the lessor. We therefore find that the Ld. CIT(A) has erred in adopting the valuation of Rs. 19,36,116/- incurred by the lessee and reducing it from the cost of construction of the assessee instead of Rs. 8,58,893/- incu....
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....om the lessor. Further, from Clause-11 and 12 of the Lease Agreement we find that the lessor shall bear only the cost of Civil Structure side walls whereas the interiors and exterior installations are to be done by lessee at their own cost. Further, the Ld. Revenue Authorities have also not disputed the cost incurred by the lessee towards electrical installations. Considering these facts as stated above, we find that the Ld. CIT(A) has rightly directed the Ld. AO to deduct Rs. 42,12,602/- [Rs. 66,13,127 - Rs. 24,00,525] from the cost of construction of the assessee. We therefore find no infirmity in the order of the Ld. CIT(A) on this ground and hence this ground raised by the Revenue is dismissed. 10. With respect to Grounds No. 4, 5, & 6 regarding the deduction of 15% towards variation in the CPWD rates and the local rates, the Ld. DR relied on the order of the Ld. AO. Per contra, the Ld. AR relied on the decision of the Coordinate Bench in ITA No. 573/Viz/2019 (AY 2014-15), dated 15/06/2022 in the case of M/s. Hillocks Hotels Pvt Ltd and pleaded that the same may be applied in the case of the assessee. 11. We have heard both the sides and perused the material available on reco....
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....tra, the Ld. AR relied on the decision of the jurisdictional Bench in ITA No. 573/Viz/2019 (AY 2014-15), dated 15/06/2022 in the case of M/s. Hillocks Hotels Pvt Ltd (supra). 14. We have heard both the sides and perused the material available on record and the orders of the Ld. Revenue Authorities. The jurisdictional Bench of the ITAT, Visakhapatnam has allowed self supervision charges at 10% in many cases including the case cited by the Ld. AR ie., in the case of M/s. Hillocks Hotels Pvt (supra). Consistently following the decisions of the jurisdictional Bench of ITAT, the Ld. CIT(A) has rightly directed the Ld. AO to adopt 10% as stated in para 46, page 45 after discussing the issue at length and held as under: "46. It was also pointed out by the L/R of the assessee that the building was constructed by the assessee using own labour and no contract was given to anyone for construction. It was accordingly contended that the observation of the DVO that rebate for self-supervision cannot be allowed is erroneous and self-supervision rebate of 10% is required to be allowed to arrive at the correct cost of construction of the building. In support of this contention, the L/R of the as....