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2015 (12) TMI 831 - DELHI HIGH COURT

2015 (12) TMI 831 - DELHI HIGH COURT - TMI - Addition on account of alleged excess cost of construction - as per AO cost should be taken at ₹ 511 per sq. ft. as against ₹ 750 per sq. ft. shown by the Assessee - ITAT confirmed AO order - Held that:- An authentic determination of the cost of construction for the flats which were sold during the AY 2010-11 is not available in the record. Dr. Rakesh Gupta, learned counsel for the Assessee, states that the Assessee has in its possession a .....

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st 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.

In view of the statement made by the counsel for the Assessee befo .....

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J. For the Appellant : Dr. Rakesh Gupta, Adv. with Ms. Poonam Ahuja, Mr.Rohit Kumar Gupta, Advs For the Respondent : Mr. Rahul Chaudhary, Senior Standing counsel with Mr. Ruchir Bhatia, Adv ORDER 1. Admit. 2. The following question is framed for consideration: "Whether the ITAT was justified in restoring the order of the Assessing Officer ( AO ) arriving at the cost of construction at ₹ 511 sq. ft., for the flats sold by the Assessee during the year in question." 3. The backgroun .....

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₹ 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 ded .....

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struction at ₹ 511 per sq.ft. The difference between the said figure and ₹ 750 per sq.ft., being the cost of construction adopted by the Assessee, was determined as the excess amount of cost of construction and added back to the income. 6. Aggrieved by the above order, the Assessee went before the Commissioner of Income Tax (Appeals [CIT (A)] who by order dated 21st August 2013 allowed the appeal in part. The CIT(A) adopted an estimate figure of ₹ 700 per sq.ft. as the cost of .....

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r sq.ft and no valid reason was assigned by the CIT (A) either, while granting relief to the Assessee. Accordingly, the ITAT restored the order 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 per .....

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34 per sq.ft determined by the DVO and ₹ 511 per sq. ft, which was the figure for the 2008 construction as determined by the report of the Chartered Engineer produced by the Assessee himself. The ITAT has, in the absence of there being any proper determination of the cost of construction for the AY in question by the Assessee, gone by the figure of ₹ 511 per sq. ft. 10. The net result is that an authentic determination of the cost of construction for the flats which were sold during .....

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