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TMI Blog2017 (9) TMI 819X X X X Extracts X X X X X X X X Extracts X X X X ..... ving that this rebate is allowed towards probable savings in engaging labour and procuring material directly rather to a contractor. A.O. is directed to allow 7.5% towards self-supervision for an amount of ₹ 15,88,392/-. As find that the Ld. CIT(A) has reasonably allowed self-supervision at 7.5% to the assessee and also find that no further allowance is required on account of self-supervision. By taking into consideration all find no infirmity in the order passed by the Ld. CIT(A). Thus, this appeal filed by the assessee is dismissed. - I.T.A. No. 496/Vizag/2016 - - - Dated:- 13-9-2017 - SHRI V. DURGA RAO, JUDICIAL MEMBER For The Appellant : Shri P. Prabhakara Murthy, AR For The Respondent : Shri K.C. Das, DR ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by CBDT as adopted by DVO, when compared to local rates in mofussil area like Kakinada, as held by various binding judicial forums from all quarters of the country, which were accepted by department itself. 4.1 In the facts and circumstances of appellant's case, the Learned Commissioner of Income Tax (Appeals)-2, Visakhapatnam should have allowed rebate towards self super vision charges @ 10% to 12.5% as against 7.5% allowed by DVO. 4.2 In the light of the above, the Learned Commissioner of Income- Tax(Appeals)-2, ought to have properly appreciated, the appellant's working of % of Difference between cost adopted by DVO and cost as per books of account, which are in the range of 1.24% to 8.63%, adopting different paramet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard to 7 Star Super Speciality Hospital, the Managing Partner in his statement recorded on 19.8.2014 subsequent to the survey admitted an additional amount of ₹ 48 lakhs for the assessment year 2012-13 towards cost of construction of the said hospital as the assessee was not able to produce certain vouchers relating to labour and material such as sand, bricks, etc. Subsequently, the A.O. referred the property for valuation. The DVO determined the cost of construction at ₹ 2,56,24,000/- after giving allowance towards self-supervision of ₹ 15,88,392/-. Against the said value, it was seen that the assessee admitted cost of construction of ₹ 2,19,60,712/- in the books of accounts. The A.O. called the assessee s objecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the maintenance of vouchers, therefore, there is no valid basis for the assessee to retract from the disclosure made. Besides the A.O. has noted that the valuation officer had adopted the rates, which are approved by the CBDT, hence same are reasonable and are to be adopted to determine the cost of construction. A.O. also noted that the assessee being in medical profession would not have personally supervised construction activity and therefore would not be eligible for claim of rebate towards self-supervision. Therefore, the A.O. determined the cost of construction at ₹ 2,74,12,403/- against the amount admitted by the assessee at ₹ 2,19,60,712/-. Thus, the difference of ₹ 54,51,619/- was added to the total income of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, I find that the AO is not justified in denying this rebate. Accordingly, the AO is directed to allow 7.5% towards self-supervision of an amount of ₹ 15,88,392/-. 7. With the above observations, Ld. CIT(A) has partly allowed the appeal filed by the assessee. 8. On being aggrieved, assessee carried matter in appeal before the Tribunal. Ld. Counsel for the assessee has submitted that the valuation is made by the DVO by following the CPWD method and therefore, 15% allowance should be given to the assessee. He further argued that the Ld. CIT(A) has only allowed deduction for self-supervision at 7.5% and it can be allowed up to 12%. 9. On the other hand, the Ld. D.R. strongly supported the order passed by the authorities b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without giving allowance towards self-supervision of ₹ 15,88,392/-. On appeal, the Ld. CIT(A) has confirmed the order of the A.O. in respect of rate adopted by the A.O. by observing that the DVO has adopted the rates approved by CPDT taking into account cost of index of particular time and place. I have gone through the DVO report and also the assessment order and I found that the DVO by considering the time and place of construction and also rates approved by the CBDT, cost of construction is estimated. I find no infirmity in the order passed by the Ld. CIT(A). 11. So far as self-supervision is concerned, the DVO has granted 7.5%. However, A.O. has not accepted the allowance given by the DVO. On appeal, Ld. CIT(A) allowed the reb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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