Delhi High Court

Saran Automobiles (P) Ltd. vs Asstt. Cit on 27 June, 2003

Equivalent citations: (2004) 91 TTJ Del 1088

ORDER

Ram Bahadur, J.M.

This appeal by the assessed arises out of the order of the Commissioner (Appeals)-I, Meerut, dated 26-7-1999, for the assessment year 1990-91.

2. Below reproduced are the grounds of appeal :

"1. That the learned Commissioner (Appeals), Meerut order dated 26-7-1999, is not just and fair.

2. That the learned Commissioner (Appeals) should have deleted the total addition of Rs. 2,13,770 under section 69 made by the learned Assistant Commissioner, Circle-I, Meerut, as it was found that the DVO's valuation report was incorrect.

3. That the learned Commissioner (Appeals), Meerut, and the Assistant Commissioner, Circle-I, Meerut, the assessing officer, both erred in assuring (sic) the assessed its self-declared cost of construction and period of construction.

4. That the learned Commissioner (Appeals), Meerut, himself accepted the fact that the DVO had calculated the cost of construction by applying the plinth area rates of CPWD, which were meant for FCI godown, and rates adopted by the DVO were quite higher, but even then the learned Commissioner (Appeals), Meerut, did not delete the total addition of Rs. 2,13,770. It is very much clear from the map of factory that what type of construction there is."

3. Ground No. 1 is general, hence, it does not require adjudication.

4. Ground No. 2 relates to the alleged error of the Commissioner (Appeals) in confirming the addition of Rs. 1,07,000 which is 50 per cert of total addition of Rs. 2,13,770 under section 69 of the Act made by the Assistant Commissioner, Circle-I, Meerut, as it was found that the DVO's valuation report was incorrect. It has been observed by the assessing officer that the valuer whose report has been filed by the assessed does not show the basis on which the rates have been determined by the valuer. The DVO, on the other hand, valued the property, as mentioned, that he has adopted the standard plinth area rate of the CPWD and after applying the certain cost of index in respect of the year under consideration, he has valued the property. So far as supervision allowance is concerned, it may be mentioned that it is the case of a company and if some employees or somebody also is working for supervision, it adds to the cost of construction. When the contractor constructs the property, there is certain rate of profit but when the employees of the company get the property constructed there are chances of more wastage and the cost of construction is not reduced at an but rather it is on the higher cost of salary and wages of these employees. The assessed has not capitalised any of the salary, etc. however, giving benefit to the fact that the directors, etc. might have devoted time and the valuation officer was very reasonable in allowing the deduction of 7.5 per cent and the property has been completed in the subsequent year also but since more than 90 per cent work is done in this year unexplained investment as discussed above amounting to Rs. 2,13,770 will be added towards the income of the assessed. Against this order of the assessing officer, the assessed went in appeal before the Commissioner (Appeals) who has confirmed the order of the assessing officer and upheld the addition for difference in the cost of construction at about 50 per cent of Rs. 2,13,770. Against this order of the Commissioner (Appeals), the assessed, feeling aggrieved is in appeal before the Tribunal.

5. It has been held by the Commissioner (Appeals) that the basic difference in the cost of construction is on account of the fact that the DVO has applied the CPWD rates meant for construction of FCI godowns whereas the registered valuer has calculated it on the basis of actual consumption of raw material and labour. Both the assessments of the DVO as well as registered valuer cannot be called correct. The construction of workshop shed is simpler and cheaper than that of a godown. The workshop shed is open from one side and supported on pillars only whereas the godown is closed from all sides. The flooring of workshop and godown is also different. Hence, to adopt plinth area rates of godown for a workshop is not fully justified. On the other hand, the report of the registered valuer is also not reliable for the reasons that firstly, no details were kept by the assessed for actual use of raw material and labour and hence, only a gues work has been made by the registered valuer. The registered valuer has taken the period of construction as financial years 1988-89 to 1991-92. The registered valuer has valued the cost of construction at Rs. 9,51,000 only whereas the assessed himself has shown the cost of construction at Rs. 11,79,730. Hence, the valuation of registered valuer is definitely very low. Considering the totality of circumstances, the learned Commissioner (Appeals) has held it reasonable to uphold the addition for difference of cost of construction at about 50 per cent of Rs. 2,13,770. Hence, an addition of Rs. 1,07,000 is sustained undet section 69 and the balance of Rs. 1,06,770 is deleted.

6. We have heard both the parties, Shri R.C. Jain, learned Authorised Representative for the assessed, and Shri R.R. Prasad, learned Departmental Representative for the revenue. The learned Authorised Representative for the assessed has contended that the learned Commissioner (Appeals) has himself accepted and mentioned the fact in his order at para 3(a) of p. 3 of the order that the DVO had calculated the cost of construction by applying the plinth area rate of CPWD which were meant for FCI godowns and the registered valuer had estimated the cost of construction by estimating the actual material used therein. Despite these facts, the learned Commissioner (Appeals) has deleted the addition of Rs. 1,06,770 and the balance addition has been sustained by him which is absolutely unfair and unwarranted in view of the above-mentioned facts and circumstances. He, has further contended that how the addition could be made under section 69 of the Act while the proper opportunity has not been given to the assessed to explain the investment made in the construction of the garage. He has relied on the order of the Tribunal in the case of ITO v. Pravinchandra Girdhari Lal (1999) 63 TTJ (Ahd) 357. He further argued that the assessed has constructed a garage and not a godown. Hence, the addition should be deleted. On the other hand, the learned Departmental Representative has argued that the Commissioner (Appeals) has already given relief to the assessed and since no opportunity was given to the DVO, no interference should be called for. He has further contended that no actual cost has been given by the assessed/appellant also.

7. After having heard both the partie's and perusing the record, we are of the view that the case referred to by the learned Authorised Representative for the assessed is not applicable to the facts and circumstances of the case. Since no actual cost and vouchers have been given by the assessed and the assessed has already been given relief by the Commissioner (Appeals) with reasoned order, no interference is called for. This ground is dismissed.

8. Ground Nos. 3 and 4 are supporting grounds. Hence, they are also rejected as we hold that the Commissioner (Appeals) has not, erred in passing the reasoned order. No interference with the order of the Commissioner (Appeals) is called for.

9. In the result, the appeal is dismissed.