2003 (5) TMI 28 - HC - Income Tax

The only question involved in this appeal is regarding the valuation of the hotel building constructed by the assessee over a period of eight years from 1983 to 1991. - Tribunal has considered each and every piece of material furnished by the assessee including the objections to the valuation made by the departmental valuer and the cost of construction assessed by the Assessing Officer. Tribunal reduced the cost of construction substantially which came down to Rs. 55, 21, 733 resulting in sustaining an addition of Rs. 15, 42, 968. - The valuation of the hotel building constructed by the assessee over a period of eight years from 1983 to 1991 was correctly made by Tribunal

Summary

Issues: Valuation of hotel building for income tax assessment

Issue 1: Valuation of hotel building
The judgment concerns the valuation of a hotel building for income tax assessment for the assessment year 1988-89. The assessee initially reported the cost of construction as Rs. 39,78,765 in their accounts, supported by a valuation of Rs. 41,55,500 by a registered valuer. However, the departmental valuer estimated the cost at Rs. 90,53,600 using the plinth area method. This led to a discrepancy, with the Assessing Officer adding Rs. 45,85,000 as income under "Other sources." Subsequent appeals and revisions resulted in varying valuations, with the Tribunal finally fixing the cost at Rs. 55,21,733, leading to an addition of Rs. 15,42,968. The assessee contested this valuation, arguing that the authorities should have accepted the original cost supported by the registered valuer's report and objected to the plinth area method used. The senior counsel for taxes defended the valuation process, highlighting the reductions made by the appellate authorities and the relief granted by the Tribunal.

Issue 2: Judicial review of valuation
The High Court reviewed the arguments presented by both parties and examined the orders of the lower authorities. The Court acknowledged that the Tribunal had considered all materials provided by the assessee, including objections to the valuation and the cost assessments by the Assessing Officer. After thorough consideration, the Court concluded that the relief granted by the Tribunal was reasonable and found no grounds to provide further relief to the assessee. The Court also addressed the contention that the Tribunal had overlooked an annexure F statement submitted by the assessee, indicating that if this statement had been considered, additional relief might have been granted. The Court clarified that if the statement was indeed submitted and not considered by the Tribunal, the assessee could bring it to the Tribunal's attention for proper review and decision, without this judgment hindering such action.

Conclusion
The High Court dismissed the appeal with the observation that the Tribunal had appropriately considered the materials presented and granted reasonable relief to the assessee. The Court highlighted the importance of ensuring that all relevant evidence is properly considered in the assessment process, indicating a willingness to allow further review if additional material is brought to light.