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TMI Blog2015 (4) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... to furnish evidence for claim of production of chhilka and driage, fall in production of rice and under valuation of closing stock of bardana - CIT(A) deleted the addition - Held that:- No good reason to interfere to the order of the CIT(A) where evidently books of accounts had not been rejected and no defect in the books of accounts maintained has been pointed out either by the AO or the Sr. DR in the present proceedings. In the afore-mentioned peculiar facts and circumstances, in the absence of any specific argument in the facts as they stand we dismiss the departmental ground. - Decided in favour of assessee. Non deduction of TDS as required u/s 194C - CIT(A) deleted part disallowance u/s 40(a)(ia) - Held that:- CIT(A) correctly upheld the disallowance of the payment of ₹ 45,000/- as it was a payment against a single builty. However qua the payment of ₹ 36,000/- claimed by the assessee he found that it consisted of payment against three freight vouchers of ₹ 12,000/- each and hence consisted of three independent contracts consequently he concluded that TDS was not required to be deducted. - Decided in favour of assessee in part. - I.T.A. No. 3870/Del/200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also in respect of plant and machinery. On the receipt of the DVO s Report vide letter No.-VO/CHD/IT/2008-09/I-619/518 dated 15.12.2008 and subsequent year wise break-up report dated 17.12.2008 which determined the total value of investment for the year under consideration at ₹ 42,69,877/- as against ₹ 21,61,172/- shown by the assessee the AO confronted the same to the assessee. The assessee as per record is found to have replied vide letter dated 22.12.2008 objecting to the reference being made to the DVO in view of the fact that the day to day record of construction supported by vouchers of each expense had been maintained and no discrepancy or mistake in regard thereto had been pointed out. For ready-reference, we extract the submissions from pages 2 3 of the AO:- Even on merits proposal of your good self to make an addition of the difference of the cost of construction incurred by the assessee, by keeping day to day account and maintaining full vouchers to the tune of ₹ 28,81,149/- and arrived at by the D.V.O., Chandigarh ₹ 42,69,877/- by taking the same as gospel truth is not tenable. Yearwise investment by the assessee is i.e. during 2004-2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilding was not complete as yet but for the purpose of knowing the investment in the factory building, AO made reference to the DVO. The DVO valued the investment in the building at ₹ 77,02,000/- in total out of which he apportioned ₹ 42,69,877/- for the year under consideration and therefore, AO held that assessee had shown less investment in the factory building during the year upto ₹ 21,08,705/-. Whereas, the assessee claimed that reference u/s 142A is not valid and further claimed that the valuation by the DVO is merely an estimate, whereas, assessee has kept all the records and day to day detail of construction expenses which supporting evidence in which no discrepancy or mistake has been pointed out by the AO or the DVO and therefore, objected to the value estimated by the DVO. Whereas, the AO did not agree with the objections of the assessee and finally held that ₹ 13,88,728/- is the net difference in the expenditure shown by the assessee and the valuation estimated by the DVO and therefore, made addition of ₹ 13,88,7281- to the income of the assessee. 3.1. The record shows that the CIT(A) after going through a marathon exercise of bringing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has also filed the valuation report by a chartered engineer but the DVO has not given any satisfactory reply to the submissions of the assessee and the valuation report but he merely insisted on supply of structural drawings and architectural drawings. The assessee started construction on 01.08.2004 and claimed to have completed the construction of the factory building (sheller) on 31.03.2008 which is spread over four assessment years, i.e. AY 2005-06 to AY 2008-09, whereas, AO neither made any reference to valuer nor made any other addition to the income of the assessee in any other year except the AY 2006-07 for ₹ 13,88,728/-and the DVO has also spread the cost of construction on two years, i.e on AY 2005-06 and 2006-07 only. The DVO inspected the factory building on 05.11.2008 when the building was completely constructed. The assessee claimed to have spent ₹ 4,37,249/- during F.Y. 2006-07 and ₹ 5,98,548/- during F.Y. 2007-08 upto 10.08.2008 and therefore, assessee incurred expenditure of ₹ 10,35,797/- during the period relevant to A.Y. 2007-08 and 2008-09. The detail of such expenditure is claimed to have been filed before the AO and the DVO bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke less number of side walls etc. are the points on which DVO has not given any satisfactory explanation or comment, whereas, such defects are specifically pointed out by the assessee and therefore, it is clearly a wrong application of godowns rates of construction to the case of the assessee because assessee has merely constructed the building for the sheller and godown and sheller building are quite different from each other in quality and other technical aspects. Therefore in view of the above discussion after reducing the estimated cost on account of various defects pointed out and discussed as above, if any difference remains then such a difference is bound to be there because DVO has merely estimated the cost of construction, whereas, the assessee has shown the actual expenditure incurred. Hence in view of the above discussion, no addition can be made on the basis of the estimate of construction furnished by the DVO. In view of the above discussion, it is clear that the addition of ₹ 13,88,728/- on account of unexplained investment in factory building was made without rejecting the books of accounts and only on the basis of the DVO's report, whereas, the DVO' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments and the comments of the AO which too have been extracted at page 6. This has been followed by the comments of the DVO extracted at page 7 of the impugned order including the assessee s re-joinder to these comments which is found extracted at pages 8 to 10 in the impugned order alongwith the extract of valuation report, relied upon by the assessee from the Chartered Engineer determining the total investment of ₹ 46,67,400/-. It is seen that the CIT(A) has forwarded the same to the DVO whose comments are extracted in the impugned order at page 10 and has also considered the assessee s rejoinder dated 08.05.2009 at pages 11 to 12 which was again confronted to the DVO vide letter dated 09.06.2009 whose comments are found to have been sent by letter dated 17.06.2009 are also found extracted at page 13 and the assessee s final re-joinder dated 24.06.2009 extracted at page 14 it is seen that only after this mammoth exercise, the CIT(A) concluded the issue in assessee s favour. Being satisfied with the reasoning and finding contained therein which we have already addressed Ground No.-1 of the Revenue is dismissed. 7. The facts relatable to Ground no-2 are found discussed at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reason for not deducting TDS on payments exceeding ₹ 20,000/- on account of freight. In response to this query, the assessee has furnished the Xerox of the freight vouchers of ₹ 12,000/- each totaling ₹ 36,000/- paid on 31.03.2006 but no reasons for non-deduction of TDS either from the payment of ₹ 45,000/- or from the lumpsum payment of ₹ 36,000/- have been given which has been made on the same date at one occasion to one Sh. Ram Pal. Accordingly, since the payments have been made exceeding ₹ 20,000/- each and no TDS has been deducted as required u/s 194C of the IT Act, the addition for the total amount of ₹ 81,000/- is made as per provisions of Section 40(a)(ia) of the I.T.Act, 1961. 12. Considering the facts when the issue was agitated before CIT(A) he upheld the disallowance of the payment of ₹ 45,000/- as it was a payment against a single builty. However qua the payment of ₹ 36,000/- claimed by the assessee he found that it consisted of payment against three freight vouchers of ₹ 12,000/- each and hence consisted of three independent contracts consequently he concluded that TDS was not required to be deducted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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