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2014 (8) TMI 118 - HC - Income TaxValuation made by assessee not accepted - Whether the rates fixed by the State P.W.D. or the Central P.W.D. should be adopted Held that - Construction is in the temple city of Kumbakonam, which is not a Metropolitan town - the State P.W.D was authorised to give valuation for all constructions in the State of Tamil Nadu - the assessee s property is in the State of Tamil Nadu - There cannot be a different yardstick adopted for valuation within the State Relying upon T.M.P.N.Murugesan -vs- Commissioner of Income-tax 2014 (8) TMI 57 - MADRAS HIGH COURT - Revenue should give credence to the valuation of the State P.W.D. in relation to the value of construction either on the side of the assessee or on the side of the Department - there is no specific notification or circular indicating that CPWD rate alone should be adopted in arriving at the cost of construction, the Tribunal is justified in adopting the valuation of the State P.W.D. rates for the purpose of determining the cost of construction Decided against Revenue.
Issues:
Valuation dispute between State P.W.D. and Central P.W.D. rates for determining cost of construction. Analysis: Issue 1: Valuation Dispute The case involved a dispute regarding the valuation of a hotel construction for the assessment year 2007-2008. The assessee initially admitted a cost of construction of Rs. 1,05,80,000, but the Department's valuer valued it at Rs. 2,13,60,000. The Assessing Officer determined the cost of construction based on Central P.W.D. rates, resulting in a difference of Rs. 59,51,090, treated as unaccounted investment under Section 69 of the Income Tax Act. The Commissioner of Income Tax (Appeals) accepted the assessee's contentions, citing discrepancies in the valuation process, and ruled in favor of the assessee. Issue 2: Appeal to Income Tax Appellate Tribunal The Revenue appealed to the Income Tax Appellate Tribunal, which partially allowed the appeal, considering the valuation based on State P.W.D. rates. The Tribunal determined the undisclosed investment at Rs. 6,43,603. The Revenue further challenged this decision in the present Tax Case (Appeal) before the High Court. Issue 3: High Court Decision The High Court analyzed the dispute, focusing on whether the rates fixed by the State P.W.D. or the Central P.W.D. should be adopted for valuation. The Court noted that the Assessing Officer's preference for Central P.W.D. rates lacked support from any official notification. Citing a previous judgment, the Court emphasized the importance of using State P.W.D. rates for valuation within the state to avoid incongruous results. The Court held that in the absence of a specific directive to adopt only CPWD rates, the Tribunal's decision to use State P.W.D. rates for valuation was justified. Conclusion The High Court upheld the Tribunal's decision, confirming the partial allowance of the appeal by the Revenue. The Court ruled against the Revenue on the question of law raised, dismissing the appeal and confirming the Tribunal's order. No costs were awarded in the matter. This detailed analysis highlights the valuation dispute, the progression of the case through different judicial bodies, and the final decision of the High Court regarding the adoption of State P.W.D. rates for determining the cost of construction in the assessment year 2007-2008.
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