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TMI Blog1995 (1) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... y lease from one Major General Rao Manohar Singh in 1976 but ultimately purchased the same on 27th April, 1981, for Rs. 2,31,000. During the period between 1976 and 1982 the assessee incurred an expenditure of Rs. 1,07,725 on the alteration and modification of the said hotel building. In 1982 the assessee started new construction on the vacant land and completed the same in April, 1986. The investment made by the assessee in various years came to the following: Asst. yr. Amount . Rs. 1985-86 10,93,612 1986-87 8,56,772 1987-88 1,13,943 . 20,64,327 The previous year adopted by the assessee was April ending. 3. It appears that in the wealth-tax cases of the partners of the assessee-firm M/s R.K. Khurana and Desh Bandhu Khurana, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formity with the report of DVO dt. 23rd Feb., 1989, given for wealth-tax purposes, the Assessing Officer determined the cost of construction at Rs. 24,92,714 in the following manner: . Rs. Value of old building portion as on 1st Oct., 1976 2,87,094 Value of new building portion as on (sic) 22,05,620 . 24,92,714 The difference between the cost determined by the DVO at Rs. 24,92,714 and as declared by the assessee at Rs. 22,05,183 came to Rs. 2,87,531. The Assessing Officer considered this difference as unexplained investment made by the assessee during the period relevant to asst. yr. 1986-87 and added the same accordingly. 5. For asst. yr. 1987-88 the Assessing Officer adopted the total cost of construction of the new building at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report of the DVO was based on scientific data as clarified in the CBDT instructions cited supra, the Assessing Officer was justified in determining the cost of construction of the hotel building in the two years under consideration. The learned counsel for the assessee, however, supported the order under appeal and further submitted that since the Assessing Officer had found no fault with the account of investment made by the assessee in the two years under consideration, the learned CIT(A) was fully justified in deciding the issue in conformity with the settled view of the Tribunal as expressed in the case of Vidyadhar Gupta & Ors. (Jaipur Bench). He further submitted that since the Assessing Officer had nowhere pointed out that the buil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material. In proceedings under the Act the valuation of the property is not relevant if liability for earning income is to be fastened. It is well known that the concepts of "cost", "value" and "price" are not akin in their meanings and widely differ from one another in their areas of operation and application. The cost of construction of a building is not the same as may be its value on a relevant valuation date. The report of the DVO prepared for wealth-tax purposes could have hardly been beneficially used by the Assessing Officer in this case for finding out any unexplained investment by the assessee. We are thus satisfied that the learned CIT(A) has deleted the additions in question in both the years for quite valid and sound reasons. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee for asst. yrs. 1987-88 and 1988-89 for the purpose of allowing depreciation. But in appeal, the learned CIT(A), following Rajasthan High Court decision in the case of CIT vs. Ambica Electrolytic Capacitors Pvt. Ltd. (1991) 91 CTR (Raj) 49 : (1991) 191 ITR 494 (Raj) directed him not to so reduce the cost of the assets for the said purposes. 15. Heard the parties. 16. Since it is not disputed that the hotel of the assessee was constructed in a backward area of the Rajasthan State and that the subsidy granted to the assessee was not specifically referable to any particular asset, the issue has rightly been decided by the learned CIT(A) in favour of the assessee in view of the binding decision of the jurisdictional High Court. 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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