TMI Blog2023 (7) TMI 729X X X X Extracts X X X X X X X X Extracts X X X X ..... g, the cost of construction has been declared by the assessee Rs. 10.79 crores, whereas the Departmental Valuation Officer has estimated the same at Rs. 11.03 crores. Therefore, on comparison of the two, the overall cost shown/claimed by the assessee is lesser than the valuation done by the DVO appointed by the Department. We are of the considered view that Ld. CIT(Appeals) has correctly held that since as per the report prepared by the DVO, the value of cost property is more as compared to the cost estimate given by the assessee, the addition made by the AO is not sustainable.Decided in favour of assessee. - ITA No. 1740/Ahd/2016 - - - Dated:- 8-5-2023 - SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER For the Assessee by: Shri S.N. Divatia, A.R. For the Revenue by: Shri Vijay Kumar Jaiswal, CIT-D.R. ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the Revenue against the order of the ld. CIT(A)-10, Ahmedabad, in proceeding u/s. 250 vide order dated 29-04-2016 passed for the assessment year 2011-12. 2. The Department has taken the following grounds of appeal:- 1. The Ld.CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the additions made by the AO with the following observations: The AO in the assessment order has observed that during the financial year 2009-10 that is A.Y. 2010-11, in order to minimize the profit/ income the assessee claimed to have incurred big expenses in the name of purchase/ labour and administrative expenses despite the fact that the scheme was constructed completely and granted BU permission earlier. During the year under consideration the assessee has shown opening WIP of Rs. 94408703/- as on 01/04/2010 and opening WIP as on 01/04/2009 was at Rs. 24186592/-. The AO has further observed that during the assessment year 2010-11 the assessee has incurred purchase expenses of Rs. 63871140/- and other expenses of Rs. 9039872/- and thereafter the AO went on to examine these expenses in detail. Thereafter, the AO has discussed various discrepancies found in the books of accounts of the appellant which have been discussed from page no 25 of the assessment order till page no. 27 and accordingly rejected the books of accounts of the appellant. However, it is noticed that all these findings of the AO are with reference to the expenses incurred by the appellant during the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 009-10 the AO referred the project to DVO for valuation of the cost of construction of this project. The reference was made by the Additional CIT Range - 9, Ahmadabad on 24/11/2011 u/s. 142A of the Act. The DVO after making site visits of the project on 13/02/2011 submitted the report to the department on 07/02/2012. The relevant portion of the DVO's valuation report is reproduced as under: Financial Year Cost of investment (Rs.) (Land i/c old structure) Declared by assessee Estimated by this office 2005-2006 30949200 30949200 2006-2007 1550800 1550800 Total 32500000 32500000 Financial Year Cost of investment (Rs.) (Building) Declared by assessee Estimated by this office 2005-06 1043097.50 1338453.02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order. Further, the DR pointed out that Ld. CIT(Appeals) erred in holding that the AO could not verify the expenses claimed by the assessee during the year under consideration. The argument put forth by the DR was that since the assessee has claimed expenses during the year under consideration, the AO is empowered to verify the same even though the expenses have been incurred in the prior years. In response, the counsel for the assessee submitted that the Ld. CIT(Appeals) has correctly observed that the AO referred the project to DVO for valuation of cost of construction of the project. As per the project report submitted by the DVO appointed by the Department, the cost of investment in land has been shown by the assessee at Rs. 3.25 crores and the same has been valued by the DVO at Rs. 3.25 crores as well. In case of cost of investment in building, the cost incurred by the assessee for completion of the project has been declared by the assessee at Rs. 10.79 crores whereas, the estimation of the DVO is Rs. 11.03 crores. Therefore, since the cost estimated with regard to the reports submitted by the DVO appointed by the Department, both with respect to cost of investment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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