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TMI Blog2015 (10) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... adopted is also on higher side. Thus CIT(A) has correctly arrived at the valuation of the building more or less to the extent of valuation as declared by the assessee over a period of three years. Therefore, the addition made by the A.O. as unexplained investment cannot be sustained. To that extent, the orders of Ld. CIT(A) in A.Y. 2009-2010 and 2010-2011 are to be sustained. - Decided against revenue. Allowing salary on the estimated income to the partners of the firm - Held that:- This is as per the provisions of partnership deed provisions under section 40(b) are correctly invoked and accepted by the Ld. CIT(A). In fact, A.O. himself was accepted deduction of salary in A.Y. 2009-2010 and that there is no issue in that year, but why he did not allow the same in A.Y. 2010-2011 is not understandable. Assessee has claimed one salary in A.Y. 2009- 2010 for one partner. Whereas, by virtue of the revised agreement, it claimed salaries for two persons in the later year. Since the partnership deed permits the remuneration to the partners, this has to be allowed as per the provisions of the Act. Therefore, Revenue contention on this issue cannot be accepted. In view of this, grounds r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has not completed the project by that time, therefore, assessee did not file returns for A.Y. 2009-2010. A.O. however, issued notice under section 148 calling for return for A.Y. 2009-2010. In response, assessee estimated income at 8% on the advances of ₹ 33,90,000 received during the year and arrived at gross income of ₹ 2,71,200. It claimed salary of ₹ 1,20,000 under section 40(b) and offered net income of ₹ 1,51,200. For A.Y. 2010-2011 assessee received advances of ₹ 48,45,000 on which also assessee estimated income of ₹ 3,87,600 after claiming deduction of ₹ 2,65,160 under section 40(b) offered net income of ₹ 1,22,440. A.Y. 2011-2012, when the project was complete is not before us. 3. A.O. noticing that assessee has not maintained any books of accounts, referred the cost of construction of the apartment constructed to valuation cell who arrived at the valuation at ₹ 1,90,30,736. Since the construction took place in a period of 3 years, A.O. took the cost of construction equally at 1/3rd and held that the entire amount of ₹ 63,43,667 in each year was unaccounted investment in the construction of apartments and b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flats. 17103.0 15084.0 3. Penthouse 275.77 274.37 Servant room and lift 4. 269.1 208 machine room 5. Balconies 1119.456 2473.36 The difference also can be ascertained from the registered valuer's report who mentioned the total area to be 1769 Sq. Mtrs. or 19047 Sft. including the stilt of 3193 Sft whereas the Valuation Cell adopted the area at 2092.62 Sq.Mtrs, which is equivalent to 22525 Sft. Therefore, the correct area was not adopted by the Valuation Cell as alleged by the appellant. The difference in the area is 324 Sq.Mtrs. 7.2 The Hon'ble IT A T consistently holding that a rate of 15% towards rate difference as the CPWD adopted the basic Delhi rate for the construction of the building and 10% towards self supervision is being allowed. I find that the Valuation Cell allowed only 7.5%. Considering the fact that the appellant is a builder who derived income on sale of flats and considering the fact that most of the flats have been sold by the appellant and even in view of the discrepancies in the report of the Valuation Cell, I find that the cost of construction should have been arrived at as under : Total cost ₹ 1,90,30,736 14,93,867 ₹ 2,05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has accepted the estimation of 8% income on the advances received. Having accepted that assessee has received advance towards apartments, apartfrom partner's capital, the amounts received towards that should have been given credit. Even though reference to valuation was made, as pointed out by the Ld. CIT(A), the valuation report itself has certain basic errors in taking the areas and the valuation adopted is also on higher side. Considering the detailed order of the Ld. CIT(A) which, in turn, was given following the Coordinate Bench orders in this issue of allowing certain deductions in valuation, we are of the opinion that Ld. CIT(A) has correctly arrived at the valuation of the building more or less to the extent of valuation as declared by the assessee over a period of three years. Therefore, the addition made by the A.O. as unexplained investment cannot be sustained. To that extent, the orders of Ld. CIT(A) in A.Y. 2009-2010 and 2010-2011 are to be sustained. Accordingly, the orders of CIT(A) in both the years are upheld and Revenue contentions on addition of unexplained investment are rejected. 8. Coming to the other issue of allowing salary on the estimated income, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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