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TMI Blog2014 (11) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... account of estimated cost of construction based on department Valuer's Report wherein CPWD rates had been considered instead of PWD rates in spite of specific contention of the appellant that the CPWD rates were not applicable to the property in question as the same is located on the outskirts of the city. (b) That the learned CIT(Appeals) erred in sustaining addition of Rs. 94,566/-on account of architect fees in spite of the reiteration of assessee that no architect had been employed." ITA No. 2390/Del/2010 Asstt. Year 2003-04 2(a) "That the learned Commissioner of Income-tax (Appeals) has erred in law and on the facts in making addition of Rs. 12,02,319/- on account of undisclosed investment under section 69 of the Income Tax Act, 1961 on account of alleged difference between cost estimated by Department Valuation Officer and one shown by the assessee. (b) That the Ld. Commissioner of Income-Tax (Appeals) has erred in law and on the facts in sustaining the action of Ld. AO of commission/ referring the matter of determination of investment to Valuation Officer at the eleventh hour and he has further erred in relying upon Valuation Officer's report and making addition based th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven to the assesee. 4. The assessee made a number of contentions before the first appellate authority. The first appellate authority at para 6.5 for the asstt. Year 2003- 04 held as follows :- "6.5 Having regard to the above finding the valuation arrived at by the DVO is revised as under :- Value determined on the basis of PA rate for ground floor (floor height 3.50 m), first floor (floor height 3.30 m), 2nd floor (floor height 3.30 m) : Rs. 36,67,836/- Less : 15% on account PWD rates : Rs. 5,50,175/- Rs. 31,17,661/- Add : Cost of services & extra items Rs. 3,88,125/- Rs. 35,05,786/- Deduct 10% for self supervision through the father of the Appellant Rs. 3,50,578/- Rs. 31,55,208/- Add: 3% for architects fees Rs. 94,656/- Total Rs. 32,49,864/- 6.6. The above total cost of investment in the property is being allocated year-wise as under on the basis of ratio of investment actually declared by the appellant. S.No. F.Y. Investment declared by the appellant (in Rs.) Estimated year-wise Investment based on the above valuation (in Rs.) 1. 1999-2000 1,74,200/- 2,93,048/- 2. 2000-2001 5,20,115/- 8,74,964/- 3. 2001-2002 60,083/- 1,01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther is Executive Engineer in PWD and is in a better position to reap benefits of economies of scale. Therefore, and aggregate reduction of 30% may be allowed. The Ld. VO estimated year wise cost of construction just by doubling then shown by the assessee. B. That the valuation officer applied rate of CPWD whereas the building is situated in Uttaranchal earlier UP where UPPWD rates are applicable. The plinth area rate of CPWD as determined 63% higher than the PWD rates in the case of assesee and 27.50% higher than PWD by VO in the case of Sachin Hotel, Haridwar, PWD rates as per letter dated 26.2.1997 (which are applicable for 5 years - copy of schedule rates enclosed) are as under :- CPWD Rates PWD rates Determined by VO as per schedule 1. Plinth area rate 6159.00 3760.00 Of Ground Floor 2. Plinth area rate 6341.00 3600.00 of First Floor 3. Plinth Area rate 6341.00 3760.00 Of First Floor All govt. buildings are constructed on the basis of UPPWD schedule rates and also private works by the contractors keeping in view UPPWD schedule rates. Ld. VO should have made local enquiries in this regard before estimating the cost of building. Hence he is not justified to apply CPWD rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been carried out by the father of the assesee and no one has been employed. Ld. VO should have allowed 10% towards supervision charges keeping in view the judgment of Smt. Promila Grover Vs. CIT-25-TTJ-186 which has also the referred in the case of Shri Ram Prakash Halwai before the Hon'ble ITAT New Delhi who also allowed 10% supervision charges. Hence the assessee may also be allowed 10% rebate towards self supervision charges instead of 2.5% (copy enclosed for ready reference) - (Annexure-3) D. That ld. VO added 3% for architects fee. In this connection it is submitted that the assessee has not engaged any architect (an affidavit is enclosed) - (Annexure -4). Besides the above facts it is also submitted that the Ld. VO has himself stated in the report that submitted that the Ld. VO has himself stated in the report that supervision has been carried out by the father of the assesee who is XEN PWD and on the other hand is adding 3% or architect fee whereas building is plain and no architectural work has been carried out in the building nor Ld. VO has stated in the report. Hence the addition of 3% is not justified. E. VO has taken 12.5% for internal electrification whereas as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, aluminum door, glazed tiles, RCC projection with mosaic floor. In this connection it is submitted that the Ld. VO should either have deducted the cost of these items from plinth area cost or otherwise the cost of these items is already included in the plinth area or should have reduced the rate of plinth area accordingly of these openings. J The Ld. VO has stated in the report that the approved valuer has taken plinth area rates on lower side which is wrong and unjust. The approved valuer has taken the plinth area rates on the basis of 1997 UPPWD schedule (copy enclosed) which are duly approved by the competent authority whereas Ld. VO has taken 92 rates with index cost. Hence the report of approved valuer is more authenticated. That Ld. VO has taken Rs. 3,88,125/- as investment on extra items the reply is as under :- 1. PORCH AT G.F.WITH R.C.C. PILLAR :- He has taken Rs. 55440.00 as investment considering 18 sq.m. @ 3080.00 per sq. m. in this connection it is submitted that the same is calculated in cu.m and not in sq.m. 2. M.S.GATE :- He has taken cost at Rs. 4955.00 @ 1101.00 of 4.5 sq.m. in this connection it is submitted that the same is calculated in weight and not i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken cost at Rs. 18213.00 @ 1401.00 of 13 cu.m. in this connection it is submitted that the building is based on pile foundation and hence no brick work in foundation is carried out. I. That the building is situated on the main road itself, therefore, a cartage of material is cheaper as all the construction material and labour is frequently available in Roorkee market. This will further reduce the cost of building. In the case of M/s. Sachin Hotel, Haridwar Hon'ble CIT Dehradun after considering all these facts allowed the appeal of the assessee. II. It is also submitted that the Ld. VO has taken the cost of 1st and 2nd floor more than 10% of the ground floor whereas the cost of 1st floor is always less than the ground floor and of second floor is equal to ground floor as per PWD rate. It is, therefore, submitted that the report of the Ld. VO is above 63% than the PWD rates, sanitation and electrification rates are also not at par with the PWD rates, deduction of self supervision @ 10% be allowed and charges of architect fees be reduced as no architect was appointed." 7. On a careful consideration of these contentions we direct as follows :- a) Keeping in view the facts and cir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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