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TMI Blog1983 (1) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... referred the cost of construction to the Departmental Valuation Officer, who after giving the assessee a hearing, fixed the cost at Rs. 1,56,000. In this valuation, by the Valuation Officer, the basis adopted was at the Kerala P.W.D. rates per sq. metre. The ITO adopted this and added the sum of Rs. 29,487 as unexplained investment in the building construction. It may be mentioned that the Valuation Officer, while determining the cost of construction at Rs. 1,56,000, allowed a deduction of 71/2% for the supervision of the construction by the assessee himself, who is an engineer. 2. In appeal before the AAC, it was urged that due allowance was not given for the supervision of the construction by the assessee and for the old material that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee's valuer is detailed and elaborate giving various quantities, while the valuation by the Valuation Officer is only at the Kerala P.W.D. rates per sq. metre area. It is submitted that there is no justification for preferring the report of the Valuation Officer to the report of the other engineer. 3. The first point raised in the department's appeal in grounds 2 and 3 is also regarding the reduction given by the AAC to the extent of Rs. 15,000 in the addition towards the cost of construction. It is the contention of the revenue that the Valuation Officer has actually inspected the building, has given due credit for all the old material used and for the supervision charges and, therefore, there was no justification for giving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Valuation Officer, in the instant case, is not a valuation contemplated statutorily, as for instance, under the WT Act or under IT Act relating to capital gains. It is only under these provisions that statutorily the AAC is required to give an opportunity of being heard to the Valuation Officer. In a case of the category before us, the AAC has before him the material that was before the ITO and is concerned with the question as to the correctness of the estimate of the cost of construction made by the ITO on the basis of the material before him. There can be no question that he is entitled to go into this estimate. It is his discretion whether to examine the Valuation Officer in respect of the report that has been submitted by him to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings in the cost as compared to the cost estimated by the Valuation Officer. We, therefore, restore the appeal to the AAC on this point. 6. The other point that is raised in the departmental appeal is regarding the computation of the income under the head 'property'. The building that has been considered earlier was used for his own residence by the assessee. The ITO estimated the annual value at 5% of the cost of construction as estimated by him. The assessee himself had estimated the annual letting value at Rs. 1800. The ITO's estimate at 5% of the cost of construction was Rs. 7800. After allowing Rs. 1800 as deduction u/s 23 (2) (i) and allowance for repairs at 1/6th of the annual value, he determined the net income for a whole year a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances like the location of the property, the rent that it could fetch normally should be taken into account. In the case before us, the ITO has not taken into account these other circumstances for fixing the annual value at Rs.7000. He has merely taken the annual value at 5% of the cost of construction estimated by him. We agree with the assessee that this manner of determining the annual value is artificial and arbitrary. In the absence of any other material that has been brought on record by the revenue, we are unable to say that the municipal valuation would not indicate the annual value of the property for our purposes. We, therefore, uphold the order of the AAC in this regard. 8. In the result, the appeal by the assessee wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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