9911796707
TMI Blog2011 (1) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... t there was violation of provisions contained in Rule 46A of the Income Tax Rules, 1962, despite the fact that opportunity was given by the AO under section 142A(3) of the Income Tax Act, 1961 to the assessee during the course of assessment proceedings and any evidence if any or objections to the DVO's report was to be submitted before the AO which was not done and that the assessee was not eligible to produce new evidence for the first time before the CIT(A) and also not appreciating the fact that there is no provision for a revised report under section 142A of the Income Tax Act, 1961? ii) Whether on the facts and circumstances of the case and in law, the learned ITAT was right in law in observing that there was no violation of Rule 46A of the Income Tax Rules, 1962, despite the fact that none of the conditions prescribed under rule 46A were satisfied by the assessee for admission of additional evidence in as much as there was no occasion where (a) the AO refused to admit the evidence, (b) or the assessee was prevented by sufficient cause from producing the evidence which was called upon to be produced by the AO, (c) or the assessee was prevented by sufficient cause for p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of accounts. Accordingly, the Assessing Officer made additions based on the report of the DVO. On appeal, the CIT(A) sought a revised report in view of objections of the assessee to the first report. This was done in exercise of power under Rule 46A of the Income Tax Rules, 1962 (for short, 'the rules'). In the revised report, the DVO reduced the estimated cost of construction given earlier taking into account the factor of self supervision and self procurement of material by the assessee. The DVO, however, did not accept the objections of the assessee under the heads 'Humidification Plant' and 'Trenches'. The CIT(A) accepted the revised report of the DVO against which cross appeals were filed by the revenue as well as the assessee. According to the revenue, the CIT(A) was not justified in seeking revised report and should have upheld the additions made by the Assessing Officer while according to the assessee, its objections to higher cost under the heads 'Humidification Plant' and 'Trenches' should have been accepted and cost reduced further and to that extent, the modified report should not have been accepted. The Tribunal dismissed the appeals filed by the revenue and upheld t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 24. Having upheld the order of learned CIT(A) in sustaining the AO's action in making reference to DVO under section 142A as proper and justified, we now proceed to decide the issue as to whether the DVO's report is relevant to determine the cost of construction of factory building. In the present case, the DVO determined the cost of construction at Rs.10,46,80,683/- spreading over the period beginning from assessment years 2000-01 to 2006-07. This report was originally submitted by the DVO to the AO vide letter dated 9.12.2006 just before the completion of the assessment made on 27.12.2006 for the assessment year 2004-05. The AO has completed the assessment on the basis of DVO's report and by stating that the assessee has failed to file any objection against the value determined by the DVO. However, during the course of the appellate proceedings, the assessee submitted a detailed objection to the valuation report submitted by the DVO. The assessee also submitted the report from registered valuer before the learned CIT(A). The assessee's objection with the copy of valuation report submitted by the assessee were duly forwarded by the learned CIT(A) to the AO as well as to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y him at Rs.9,70,23,300/- includes all such expenses incurred by the assessee on 'Humidification Plant' and 'Trenches', which was separately books under the different head. Therefore, the DVO was of the opinion that the expenses incurred towards' Humidification Plant' and 'Trenches' by the assessee is to be included into the total cost of construction declared by the assessee. In the manner, the DVO found that the assessee had declared the cost of construction of the factory building in respect of which a valuation report has been submitted by the valuation officer at Rs.9,69,51,534/-. While determining the cost of construction shown by the assessee in the books of account, the DVO has also taken into account the expenditure already declared by the assessee in the books of account upto 2.11.2006 i.e., the date of physical inspection made by the DVO. The DVO, Mr. AK Sharma has considered the expenditure amounting to Rs.80,45,110/- incurred by the assessee from 1.4.2006 to November 2006 while determining the total investment declared by the assessee vis a vis assessed value as per Annexure IV of his comment dated 22.12.2008; which was confirmed by Shri SN Vemra, DVO, Chandiga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter, we therefore hold that as against Rs.52,66,.691/- adopted by the learned CIT(A) on account of investment on trenches and humidification the amount of Rs.2,06,78,902/- and Rs.l4,53,171/- should be taken into account as so accepted by both the DVO's in their respective report dated 22.12.2008 and 9.1.2009 respectively. In this view of the matter, the total investment declared by the assessee is to be taken at Rs.9,69,51,534/- as accepted and determined by the DVO in their final report. 29. In the light of the discussion made above, we, therefore, hold as under:- i) Cost of construction declared by the assessee in the books is to be taken at Rs.9,69,51,534/-; ii) Cost of construction as estimated by the DVO is to be taken at Rs.9,70,23,300/-. The difference between the cost declared by the assessee and the cost estimated by the DVO is very nominal being Rs.71,766/- (Rs.9,70,23,300/- - Rs.9,69,51,534/-) only. 30. This difference can be due to the difference of the opinion and even this difference can be ignored in the light of the fact that the deduction on account of self supervision allowed by the DVO and by the learned CIT(A) at 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
