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2017 (5) TMI 200 - ITAT HYDERABADReopening of assessment - Held that:- We find that the Departmental Valuation Officer’s report is an opinion which has come to the knowledge of the AO during the assessment proceedings for the A.Y 2008-09 and the same was examined and an addition was made during the A.Y 2008-09. It is pursuant thereto, that the assessments for the relevant A.Ys have been reopened. We find that the AO for the A.Y 2008-09 has observed that the construction of the hospital building has taken place in two phases and has brought the proportionate cost to the tax in the A.Y 2008-09 and formed a belief that the cost of construction in the first phase has also been under reported by the assessee. Thus the re-assessment proceedings have been validly initiated. Valuation of cost of construction of the property - Held that:- DVO has valued the property as on 31.3.2008. The DVO has adopted the CPWD rate and not the State PWD rate, and he has adopted plinth area indexation method for valuation of the property. We also find that he has not given any rebate for self supervision, whereas it is the case of the assessee that her husband is an Architect and he himself has supervised the construction of the hospital. We find that for the A.Y 2008-09, the CIT (A) has considered the issue at length and has observed that the State PWD rates are to be considered and also the self supervision rebate is to be given. Since the construction of the building has started in financial year 2003-04 and has been partially completed in the financial year 2007-08, the rates adopted for financial year 2007-08 may be higher than the rates for the A.Ys 2004-05 and 2005-06. We find that the order of the CIT (A) for the A.Y 2008-09 has attained finality as no appeal has been filed by the Revenue. Therefore, we are of the opinion that the AO for the A.Ys 2004-05 and 2005-06 also has to adopt the valuation as per the State PWD rates for the relevant period and also has to grant discount for the self supervision. Therefore, the issue of valuing the cost of construction of the hospital building for the A.Ys 2004- 05 and 2005-06 is remitted to the file of the AO for consideration in accordance with law and our observations above. Addition on gift received - Held that:- While the assessee has filed confirmations of the gifts from her father and brother, no evidence whatsoever for the agricultural income and internal accruals have been filed. Since the confirmations have been filed, we are inclined to accept the gift from assessee’s father and brother, who out of love and affection might have given the gift of cash for construction of the hospital building and we are also inclined to accept a sum of ₹ 22,200 to be out of internal accruals as the assessee is a medical professional. However, as regards the agricultural income of ₹ 55,000, we confirm the addition as no evidence whatsoever of holding of agricultural land and carrying on of agricultural activities has been filed by the assessee. Therefore, the addition of ₹ 55,000 is confirmed. Similarly, addition of ₹ 1,60,800 is also confirmed as the assessee herself agreed for the addition during the assessment proceedings.
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