TMI Blog1988 (9) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction as per books 1979-80 Rs. 2,18,7738 1980-81 Rs. 4,51,268 1981-82 Rs. 7,94,612 1982-83 Rs. 2,80,342 4. In the assessment proceedings for asst. yr. 1984-85, the assessee submitted a valuation report from a registered valuer Shri S.B. Gupta, who reported the cost of construction of the entire building at Rs. 17,21,754 calculated as below: Items Plinth Area Rates in Amount . sq. m. Rs. /sqm. Rs. Renovation of shops 135.7 450 61,065 G.F. Main Hall 588.3 600 3,52,980 Reception 85.9 450 38,655 F.F. Main block 465.7 625 2,94,062 Passage 122.6 450 55,170 Reception 85.9 450 38,655 S.F. Main block 588.3 650 3,82,395 Reception 85.9 475 40,802 Th. F. Main block 376.4 675 2,54,070 Passage 211.9 500 1,05,900 Reception 85.9 500 42,950 Terrace floor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dly were already there but were renovated by the construction of new pillars etc. so as to bear the load of the upper stories that were to be constructed thereon. He also allowed the assessee a reduction of 7.5% on account of savings that the assessee could have made by personal supervision. He thus determined the cost of construction of the building at Rs. 35,10,751 and after adjusting the investment as declared by the assessee made an addition of Rs. 17,65,719. The assessee appealed to the CIT(A)and relied upon his books of accounts as well as the reports of two registered valuers filed by it. The learned CIT(A) upheld the determination of the cost of construction by the IAC(A)but finding that the building has been constructed in a period of 4 years, he held that the unexplained investment cannot be subjected to tax in a single assessment year. He therefore, distributed the unexplained investment as follows: 1981-82 2,20,000 1982-83 4,00,000 1983-84 8,00,000 1984-85 3,45,000 Thus the learned CIT(A) reduced the addition for the year under consideration to Rs. 3,45,000 and directed the ITO to take appropriate acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion is a four-storeyed RCC Column structure. The registered valuer Shri S.B. Gupta applied a rate of Rs. 450 per sq. mt. In respect of the shops which admittedly were in existence from before and were in some way renovated. He applied a rate of Rs. 600 per sq. mt. for the ground floor, Rs. 625 per sq. mt. for the first floor, Rs. 650 per sq. mt. for the second floor, Rs. 675 per sq. mt. for the third floor and Rs. 600 per sq. mt. for the barsati in respect of the roomed accommodation. In respect of reception for the hotel and the nursing home being run in the building it was stated that they were situate in verandahs and therefore, for them a rate of Rs. 450 per sq. mt. was applied for the ground floor and the first floor, of Rs. 475 for the second floor and of Rs. 500 per sq. mt. for the third floor. He determined the value of the cost of construction at Rs. 7,21,754. He mentioned the following facts while considering the valuation: (i)The building work has been carried out directly whereby saving at least 10% by way of contractor s profits and supervision expenses. (ii)The height of floors is only 10 feet while the ground floor consists only of a single hall. (iii)Substa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed above, the valuation officer claims to have applied the plinth area rates notified by the CPWD as on1st Oct., 1976by multiplying the same with the cost index of 229. Neither the CPWD rates as on 1st Oct., 1976 have been appended to the report nor has the cost index from year to year been indicated anywhere so that it is not possible to verify how far the plinth area rate applied by the Disst. Valuation Officer is correct. 8. Mrs. Sharma Mehra in her report dt.,26th March, 1987determined the cost of construction of this building at Rs. 16,36,000. In her report she has mentioned that in the ground floor and the first floor, second class brick work in mud mortar was done. She has based her calculations on the rate Schedule as on16th Oct., 1980of the PWD,Meerutand has upgraded the rates as under on account of cost increase: 1980-81 100 1981-82 115 1982-83 131 1983-84 143 and has added 18% separately for the cost of electrification, water supply and sanitation. She has also relied on the building cost index for Western Zone index which includesMeerut, for 1983-84 prepared by the Yojana Monitoring and Cost Manageme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... At page 46 we have the cost index of Type 'A' double storeyed quarters which is based on the Central Building Research Institute Building Digest No. 96. According to it the cost of construction of such quarters with a plinth area of 701.20 sq. mts., comes to Rs. 2,81,600 for the year 1980-81, giving an average rate of Rs. 420 per sq. mts. If we add 18% thereto for the electrical and sanitary fittings as done by Mrs. Shama Mehra, the rate will come to Rs. 496 per sq., mt., as against Rs. 511 per sq. mts., shown by the assessee. We all know that construction work done by private individuals, particularly one in trade in the same town, is much cheaper than the cost to the Government of similar works. Therefore, keeping in view the rates as specified in the aforesaid documents of the local authorities, the cost of construction shown by the assessee appears to be quite reasonable. 9. The learned counsel for the assessee had also pointed out that the building has been subjected to house-tax for which the municipal authorities themselves estimated the cost of construction and according to them, it was Rs. 13,32,800. This was stated in the written submissions before the CIT(A) and has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pliedly? Regarding the argument that the matter may be sent back to the IAC for re-examination on those lines, we are of the view that it is not too late to order such an investigation when no material is placed before us to show that such an investigation is really necessary. As already stated the assessee's books of accounts have been accepted and its income from business as declared has been accepted as correct with only routine modifications. The assessee has been declaring this investment for the last four years and the investment reported by it seems acceptable being supported by the reports of two registered valuers. The report of the Departmental Valuation Officer was a mere mathematical exercise lacking necessary supporting material as well as reasons for rejecting the report of a registered valuer. It is important to bear in mind that registered valuers are appointed by the Department and are equally qualified. Therefore, when there is a registered valuer's report the valuation officer s job is not merely to report the value as assessed by him but also to clarify where the registered valuer has erred. We have already stated that in this case the registered valuer's report ..... X X X X Extracts X X X X X X X X Extracts X X X X
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