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TMI Blog2018 (4) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... R AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER For The Appellant : Shri G.V.N. Hari, AR For The Respondent : Shri V. Srinivasa Rao, DR ORDER PER D.S. SUNDER SINGH, Accountant Member: This appeal filed by the assessee is directed against order of the Commissioner of Income Tax (Appeals)-2 {CIT(A)}, Visakhapatnam vide ITA No.92/2015-16/CIT(A)-2/VSP/W-2/KKD/2016-17 dated 1.9.2016 for the assessment year 2012-13. 2. The assessee filed return of income declaring total income of ₹ 2,520/- on 31.12.2012. A survey u/s 133A of the Act was conducted in the case of Sri M.Venkanna Babu on 6.12.2012, who is the managing Partner of the assessee firm. During the course of survey A.O. found that the assessee firm had constructed the residential complex consisting of apartments in the name of Venkatadri Residency and the assessee did not produce the books of accounts on a request made by the Assessing Officer at the time of survey. Hence, the assessment is reopened u/s 147 of the Act by issue of notice u/s 148 of the Act. The A.O. has asked the assessee to produce the books of accounts, bills, vouchers relating to construction of residential apartment bui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d investment towards cost of construction for the A.Y.s 2010-11 and 2011-12 which was not the subject matter of - appeal before him. c. The learned Commissioner of Income Tax (Appeals) ought to have granted rebate 15% towards difference in CPWD rates and local rates and @ 10% rebate towards self-supervision. 4. Any other ground that may be urged at the time of appeal hearing. 5. Ground Nos.1 4 are general in nature, which does not require specific adjudication. 6. Ground Nos. 2, 3(a) 3(b) are not pressed by the ld. A.R. during the appeal hearing, hence, ground Nos.2, 3(a) 3(b) are dismissed as not pressed. 7. The only ground remained to be adjudicated is ground No.3(c), which relates to the rebate of 15% towards difference in cost of construction with CPWD rate and 10% for self supervision. During the appeal hearing, the Ld. A.R. argued that the assessee is in the business of constructing the residential apartments and he is having thorough knowledge and vast experience in this line of activity. The ld. A.R argued that with his experience and knowledge they bought the materials at lowest cost and reduced the wastages to the maximum level ,thus reduced the cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coordinate bench of this Tribunal in the case of Salma A. Mehdi in ITA No.697 698/Hyd/1995. We have examined the case laws relied upon by the assesse, in the light of the facts of the present case. The coordinate bench of this Tribunal, in the above mentioned case, while dealing with similar issue held as under: The DVO estimated the cost of construction following the plinth area method of valuation. He applied the basic plinth area rates approved by the CBDT. . He appl ied the pl inth area of New Delhi as f ixed in 1976 and approved by the Government of India by duly enhancing the basic rate of similar structures with appropriate cost index as applicable to the locality during the period of construction. The Valuation did not appear to have taken into consideration the local rates that actually existed during the period for construction. It is common knowledge CPWD rates of New Delhi are far higher than local rates. Keeping that factor in view the first appellate authority would appear to have allowed some ad hoc deduction in the cost of basic construction. Taking into consideration the fact that the CPWD rates of New Delhi are always higher than the local rates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or construction of a particular property, very specific parameters are sent in the contract for the purpose of each individual project and, hence, it is not correct to say that the State PWD rates are the proper basis to arrive at the cost of construction. The applicability of CPWD rate with local indexing came up before the Tribunal in the case of Smt. Salma A. Mehdi, in ITA Nos. 697 698/Hyd/93 for asst. years 1985-86 and 1986-87 wherein the Tribunal vide paras 10 of this order held that in arriving at proper cost of construction, it would be justified if a discount of 15% is given for higher CPWD rate and further rate of 100/0 for personal supervision is allowed. The said paragraph-10 reads as under:- The DVO estimated the cost of construction fol lowing the pl inth area method of valuation. He applied the basic plinth area rates approved by the CBDT. . He appl ied the pl inth area of New Delhi as f ixed in 1976 and approved by the Government of India by duly enhancing the basic rate of similar structures with appropriate cost index as applicable to the locality during the period of construction. The Valuation did not appear to have taken into consideration the local ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a larger area is being constructed, there will be cost economy in many ways for bulk purchases and a better bargaining power and the discount which is given in case of smaller area may not be sufficient. Looking to the facts and circumstances of the case and a very huge area constructed in this appeal, we are of the opinion that a further discount at 5% would be reasonable in estimating the cost of construction. We direct accordingly. 11. Considering facts and circumstances of the case and also respectfully following the coordinate bench decision, we are of the opinion, that the assessee is entitled for 15% deduction towards rate variation between CPWD and State PWD and a further 10% deduction towards self-supervision charges from the value arrived by the DVO applying the CPWD rates. The CIT(A), after considering the facts that the assesse has maintained books of accounts and bills for construction, scaled down the addition to ₹ 7,25,000/-. We do not find any error or infirmity in the order of the CIT(A). Therefore, we inclined to upheld the order of the CIT(A) and reject the ground raised by the revenue. 7. Since the facts are similar, respectfully following the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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