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2015 (12) TMI 895 - AT - Income TaxComputation of cost of construction - Held that:- CIT(A) has determined the cost of construction of the flats at ₹ 700/- per sq.ft. as against ₹ 511/- estimated by the Assessing Officer, without giving any valid reason for the relief allowed to the assessee. The CIT(A) has allowed the relief on the ground that selling price of the flats for succeeding year has been taken at ₹ 735/- per sq.ft. We are unable to appreciate that how the selling price in the succeeding year could determine the cost of construction of the property for the preceding year. In these facts of the case, we hold that the assessee could not adduce any evidence in support of its estimate of cost of construction and no valid reason could be assigned by the CIT(A) while giving substantial relief to the assessee and there was some basis for arriving at the cost of construction at ₹ 511/- per sq.ft. by the Assessing Officer on the basis of the assessee’s own valuer report - Decided in favour of revenue Estimating the net profit rate of 15% of gross contract receipts - Held that:- he addition was made by estimating the net profit rate of 15% of gross contract receipts minus 8% of contract receipts by the Assessing Officer. We find that there was no basis for estimating the profit by applying the net profit rate of 15% and, accordingly, we hold that there is no mistake in the order of learned CIT(A) in holding that the Assessing Officer has adopted 15% rate without any concrete reason. Accordingly, the order of learned CIT(A) on this issue is confirmed - Decided against revenue
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