2015 (12) TMI 832 - HC - Income Tax

Valuation of property - Adoption of State P.W.D. rates or the Central P.W.D. - Held that - As decided in T.M.P.N.Murugesan -vs- Commissioner of Income-tax 2014 (8) TMI 57 - MADRAS HIGH COURT no justifiable ground to adopt the rate prevailing in cities like Delhi for the purpose of working out the cost of construction of house at Virudhunagar. When the details regarding the cost of construction at PWD rates for Virudhunagar District is applicable there is no reason for the Valuation Officer to adopt the rate which is prevalent at distant places and metropolitan cities like Delhi. As in the present case the Tribunal was right in directing the Assessing Officer to adopt the State P.W.D. rates on the ground that the building is located in interior Tamil Nadu. - Decided against revenue

Summary

Issues:
1. Adoption of State P.W.D. rates vs. CPWD rates for building valuation in interior Tamil Nadu.
2. Applicability of self-supervision and bulk purchase discount in building valuation.
3. Authority to determine valuation rates for construction in Tamil Nadu.

Analysis:

Issue 1: Adoption of State P.W.D. rates vs. CPWD rates
The case involves a dispute over the valuation of a building in interior Tamil Nadu for the assessment year 2008-2009. The Tribunal directed the Assessing Officer to adopt State P.W.D. rates instead of CPWD rates, considering the location of the building. The Tribunal emphasized that the rates specified by the PWD would be more appropriate for valuation in interior Tamil Nadu. The decision was supported by the absence of reasons to deny benefits like self-supervision and bulk purchase discounts. The High Court cited a previous judgment that emphasized giving credence to State P.W.D. valuation in the absence of specific directives favoring CPWD rates. The Court noted that the Commissioner of Income Tax's view against State P.W.D. rates lacked support from departmental notifications or circulars, highlighting the need for consistency in valuation methods within the state.

Issue 2: Applicability of self-supervision and bulk purchase discount
The Tribunal's decision to allow a reduction of 7.5% on account of self-supervision and bulk purchase in the building valuation was based on the arguments presented by the assessee's counsel. The Tribunal found no material provided by the Revenue to dispute the applicability of these benefits. This decision was in line with previous recommendations by judicial authorities for discounting factors in building valuation due to self-supervision and bulk material purchase. The High Court upheld the Tribunal's decision, emphasizing the importance of considering such factors in valuation exercises.

Issue 3: Authority to determine valuation rates for construction in Tamil Nadu
The High Court referenced a previous case where the Valuation Officer's adoption of CPWD rates for a construction in a non-metropolitan area was deemed inappropriate. The Court stressed the need for using PWD rates specific to the location of the construction for accurate valuation. The judgment highlighted the error in adopting rates from distant places like Delhi for valuing constructions in Tamil Nadu, emphasizing the importance of using locally relevant valuation rates. The Court dismissed the appeal, citing previous decisions and the need for consistency in applying valuation rates within the state.

In conclusion, the High Court's judgment upheld the Tribunal's decision to adopt State P.W.D. rates for building valuation in interior Tamil Nadu, considering factors like self-supervision and bulk purchase discounts. The judgment emphasized the importance of using locally relevant valuation rates and consistency in valuation methods within the state.