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Commissioner of Income Tax Versus M/s. Gracious Knits

2015 (12) TMI 832 - MADRAS HIGH COURT

Valuation of property - Adoption of State P.W.D. rates or the Central P.W.D. - Held that:- As decided in T.M.P.N.Murugesan -vs- Commissioner of Income-tax [2014 (8) TMI 57 - MADRAS HIGH COURT ] no justifiable ground to adopt the rate prevailing in cities like Delhi for the purpose of working out the cost of construction of house at Virudhunagar. When the details regarding the cost of construction at PWD rates for Virudhunagar District is applicable, there is no reason for the Valuation Officer t .....

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by R. Sudhakar,J. ) This Tax Case (Appeal) is filed at the instance of the Revenue as against the order of the Income Tax Appellate Tribunal for the assessment year 2008-2009 raising the following substantial questions of law: "1. Whether in the facts and circumstances of the case, the Tribunal was right in directing the Assessing Officer to adopt the State P.W.D. rates on the ground that the building is located in interior Tamil Nadu? 2. Whether in the facts and circumstances of the case, .....

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es?" 2. The respondent/assessee is carrying on business manufacturing hosiery garments. The assessment in this case relates to the assessment year is 2008-2009. The assessee filed its return of income for the said assessment year admitting total income of ₹ 7,14,250/-. The case was selected for scrutiny and the Assessing Officer had completed the assessment. Thereafter, survey under Section 133A was conducted in the business premises of the assessee on 26.6.2008 and the Managing Partn .....

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rder of assessment, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), who upheld the order of the Assessing Officer, thereby dismissed the appeal. 3. Aggrieved by the said order of the Commissioner of Income Tax (Appeals), the assessee pursued the matter once again before the Tribunal contending that the District Valuation Officer had adopted the CPWD rate, but the property is situated in Tamil Nadu. The Tribunal, after hearing both sides, allowed the appeal holding a .....

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udicial authorities have recommended 5% to 7.5% discounting factor in valuing the building on account of self-supervision and bulk purchase of materials. In the case of the assessee, there is no reason is stated by the Revenue as to why this benefit should be denied. The Revenue has also not brought out any materials on record to establish that the assessee had not supervised the construction of the building by its staff/partners. Considering the facts and circumstances of the case and the praye .....

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ficer to value the cost of the building as indicated herein above and complete the assessment accordingly. We further make it clear that our aforesaid decision is based on the arguments made by the Ld.A.R. and the Ld.D.R. at the time of hearing of the case before us and no further issues or grounds were raised by either party." 4. Aggrieved by the above-said order of the Tribunal, the Revenue is before this Court raising the above-mentioned substantial questions of law. 5. Heard the learned .....

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herefore, it is evident that in a case of this nature, the Department should give credence to the valuation of the State P.W.D. in relation to the value of construction either on the side of the assessee or on the side of the Department. Since we find that there is no specific notification or circular indicating that CPWD rate alone should be adopted in arriving at the cost of construction, the Tribunal is justified in adopting the valuation of the State P.W.D. rates for the purpose of determini .....

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ruction is in Tirupur, which is not a Metropolitan town. Nevertheless, the State P.W.D was authorised to give valuation for all constructions in the State of Tamil Nadu. Admittedly, the assessee's property, which is a subject matter of consideration, is in the State of Tamil Nadu. There cannot be a different yardstick adopted for valuation within the State. This will result in incongruous results, as one Officer is taking the rates fixed by the CPWD and another Officer is taking the rates fi .....

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