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Issues involved: Determination of cost of construction based on reports of registered valuer and Departmental Valuation Officer, application of State PWD rates vs. Central PWD rates.
For the issue of determination of cost of construction, the assessee constructed a kalyana mandapam and the Assessing Officer referred the cost of construction to the Valuation Officer. The Valuation Officer determined the cost at Rs. 52,93,400. The Assessing Officer added a sum of Rs. 20,00,390 after allowing a 15% rebate towards self-supervision. The Commissioner of Income-tax (Appeals) reduced the addition to Rs. 3,51,000, stating that the Assessing Officer had no power to refer the cost to the Valuation Officer. The Income-tax Appellate Tribunal remanded the matter to the Assessing Officer to compare the reports of the Departmental Valuation Officer and the registered valuer, directing the application of State PWD rates instead of Central PWD rates. The High Court held that the determination of cost of construction and the choice between State and Central PWD rates are questions of fact, not legal issues. The Court cited a Rajasthan High Court decision supporting this view and dismissed the appeal, stating no substantial question of law arises. Regarding the application of State PWD rates vs. Central PWD rates, the High Court emphasized that the comparison of reports from the registered valuer and Departmental Valuation Officer is crucial to ensure consistency in the details of construction. The Court noted that variations are expected between State and Central PWD rates, making it a factual determination rather than a legal issue. The Court cited a previous decision to support the view that the cost of construction is a question of fact, not a legal matter. Consequently, the High Court dismissed the appeal, finding no substantial question of law for consideration.
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