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2023 (3) TMI 1235 - AT - Income TaxAddition u/s 69 - unexplained investment - Addition being the difference between the cost of construction arrived at by the DVO and the cost of construction declared by the assessee - assessee failed to substantiate the source of such income for investment in the hospital building - Applicability of the amended provision of section 115BBE - HELD THAT:- We find merit in the argument of assessee that the construction of the building started in financial year 2009-10 (May-2009) and completed in financial year 2016-17(August,2016) and therefore, the difference between the cost of construction as per the DVO and the Valuer’s report should be spread over between financial year 2009-10 to financial year 2016-17 i.e. A.Y 2010-11 to A.Y 2017-18 proportionately. We, therefore, direct the AO to spread over the difference between the cost of construction arrived at by the DVO and the cost of construction arrived at after considering our observations in the subsequent paragraphs over the period from August, 2010-11 to A.Y 2017-18. A perusal of the report of the DVO shows that he has allowed only 10% towards reduction in cost of material purchased by the assessee. Since the assessee is a reputed doctor, it is quite possible that he has purchased the material from sources known to him and is expected to get some further discount. Considering the totality of the facts of the case, we direct the AO to consider the discount for the material purchased by the assessee at 20% as against 10% allowed by the DVO. Similarly, the cost of self-supervision charges has been allowed by the DVO at 5% only whereas the Coordinate Benches of the Tribunal are allowing such self-supervision charges varying from 12.5% to 15%. We direct the AO to allow self-supervision charges at 12.5% as against 5% allowed by the DVO. AO is directed to recompute the cost of construction after reducing the discount for purchase of material at 20%, allowing self-supervision charges at 12.5% and whatever value is arrived by the AO, the same shall be deducted from the value arrived at by the DVO and the difference so arrived at shall be spread over A.Y 2009-10 to A.Y 2017-18 and the AO shall calculate the income of the assessee on the basis of such spread over. Applicability of provisions of section 115BBE - Since the addition has been made u/s 69 of the I.T. Act, therefore, the learned CIT (A) is fully justified in upholding the order of the Assessing Officer on this issue. Therefore, the additions so made after the calculations shall be taxed u/s 115BBE for A.Y 2017-18. Grounds raised by the assessee are accordingly partly allowed in the terms indicated above.
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