TMI Blog2015 (12) TMI 831X X X X Extracts X X X X X X X X Extracts X X X X ..... figure is not adopted. In the considered view of the Court, the approach adopted by the ITAT in the matter was possibly not the best way of going about determining whether the CIT (A) was in error in adopting the figure of ₹ 700 per sq.ft. as the cost of construction of the flats in question. One method was to insist on a proper report of valuation taking into account the books of accounts maintained by the Assessee himself. The alternative method of taking the figure for 2008 and applying to it a 'mark up' by the cost inflation index should normally be resorted to when the Assessee is unable to produce its books of accounts or documents. Where it is prepared to do so, as in the present case, the former method should be adopted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,586 on account of alleged excess cost of construction on the ground that cost should be taken at ₹ 511 per sq. ft. as against ₹ 750 per sq. ft. shown by the Assessee. During the course of assessment, the AO appointed District Valuation Officer ( DVO ) who undertook an evaluation under Section 142A of the Act and determined the cost of construction at ₹ 1,174 per sq. ft. However, the Assessee contended that cost of construction could not be taken at more than ₹ 750 per sq. ft. The Assessee explained that from the sale proceeds of each property the cost of land is deducted and the balance is claimed to represent the sale price. By allowing for a profit margin of 10% from the sale price the cost of construction per sq. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the AO. 8. The Court has heard the submissions of Dr. Rakesh Gupta, learned counsel for the Assessee and Mr. Rahul Chaudhary, learned counsel for the Revenue. 9. It is seen that the report of the DVO which was commissioned by the AO was not acceptable to the Assessee. That report estimated the cost of construction at ₹ 1174 per sq.ft. Having persuaded the AO not to go by the report of the DVO, the Assessee fell back on a report of a Chartered Engineer which gave the cost of construction for the year 2008 at ₹ 5,550 per sq.m. It is contended before this Court that the cost of construction of the flats that were sold during AY 2010-11 was definitely higher than ₹ 511 per sq.ft. which figure was valid only for 2008. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmally be resorted to when the Assessee is unable to produce its books of accounts or documents. Where it is prepared to do so, as in the present case, the former method should be adopted. 12. In view of the statement made by the counsel for the Assessee before this Court, the Court is of the view that the ITAT should re-examine the above issue on merits by calling for a report of valuation by any approved registered valuer as may be considered appropriate by the ITAT. The ITAT will issue appropriate directions regarding the production by the Assessee of its records relevant to the issue of determination of the cost of construction of the flats sold during the AY in question. 13. Accordingly, the impugned order dated 6th May 2015 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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