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TMI Blog2002 (2) TMI 341X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue raised by the assessee in this appeal and its legal implications at length. The admitted facts that are necessary for adjudicating the issue raised by the assessee are as follows: 4. The assessee is a firm carrying on real estate business at Trichy. On 2nd Sept., 1998, a search was conducted under s. 132 of the IT Act, 1961, in the premises of the assessee as well as its partners. During the course of search, apart from recording the statements, the Department has seized some diaries maintained by one of the partners, Mr. D. Virudachalam. After receipt of notice the assessee filed Form No. 2B admitting an undisclosed income of Rs. 59,07,163. After hearing the assessee, the AO was not satisfied with the income returned as undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yments amounting to Rs. 5,07,888 as disclosed in the seized material. 5. On these two grounds the assessee filed appeal before the CIT(A) and after hearing the assessee, the learned CIT(A) as per the impugned order has deleted the addition of interest payments amounting to Rs. 5,07,888 as not according to law and allowed the same as allowable business expenditure from the assessable income. 6. Regarding the second ground of difference in value of construction as arrived at by the AO by deducting the investments admitted by the assessee from that of the valuation report received from the valuation cell, the CIT(A) confirmed it. Hence, the assessee has come up before the Tribunal in appeal regarding the confirmation portion of the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence for valuation report to the valuation cell with regard to the cost of construction is not at all permissible under law. It is further submitted that the assessee is a builder and the cost of construction shall go to reduce the profit. Any understatement of cost will only enhance its profits artificially since the cost is to be deducted from the sale proceeds to arrive at the taxable income earned by the assessee. So the observation of the AO as well as the CIT(A) that the assessee has not accounted for the full investments made by it in the construction is incorrect and thereby the reference made to the valuation cell is not sustainable under law, as well as the principles of "prudence". Consequently, the difference from the valuatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll and thereby arriving at the correct cost of construction incurred by the assessee as per the provisions applicable thereto. Hence the addition made by the AO on this account and as confirmed by the CIT(A) requires no interference and it is to be upheld. In support of his contentions, the learned Departmental Representative has relied on the decision of the jurisdictional Madras High Court in the case of C.T. Laxmandas vs. Asstt. CIT Anr. (1994) 208 ITR 859 (Mad) and the decision of the Gauhati High Court in the case of CIT vs. Smt. Amiya Bala Paul (2000) 160 CTR (Gau) 133 : (1999) 240 ITR 378 (Gau). 9. On consideration of the record made available with the Tribunal and analysing the same in the light of the arguments advanced on beha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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