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Issues involved:
Assessment of house property valuation u/s Income-tax Act, 1961 for the assessment year 1978-79. Summary: The High Court of Madras delivered a judgment regarding the assessment of a two-storeyed bungalow's valuation for the assessment year 1978-79 under the Income-tax Act, 1961. The Tribunal had to decide whether to accept the valuation submitted by the assessee at Rs. 2,16,586 or adopt a different valuation of Rs. 2,48,000 for the property. The assessee, engaged in handloom sarees business in Madurai, constructed the bungalow at a cost of Rs. 2,16,586 excluding the land cost. The assessee's valuer estimated the construction cost at Rs. 1,88,095, while the contractor reported it as Rs. 1,84,000, the amount payable as per the agreement. The District Valuation Officer valued the structure at Rs. 2,63,000. The Appellate Assistant Commissioner reduced this valuation by Rs. 15,000 due to overestimation in some items. The Tribunal upheld this decision despite accepting the rates in the agreement between the assessee and the contractor. The Tribunal's decision was challenged, and the High Court held that the Tribunal erred in not accepting the assessee's recorded cost of Rs. 2,16,586. Consequently, the judgment favored the assessee, who was awarded costs of Rs. 1,000. In conclusion, the High Court ruled in favor of the assessee, emphasizing the importance of accepting the actual cost recorded in the books unless there are substantial reasons to deviate from it.
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