TMI Blog2023 (9) TMI 1308X X X X Extracts X X X X X X X X Extracts X X X X ..... stallations including the decorations which shall not be claimed with the lessor. We therefore find that the Ld. CIT(A) has erred in adopting the valuation of Rs. 19,36,116/- incurred by the lessee and reducing it from the cost of construction of the assessee instead of Rs. 8,58,893/- incurred by the assessee as per Annexure-I of the Ld. DVO report. We therefore direct the Ld. AO to adopt Rs. 8,58,853/- as cost of flooring which needs to be reduced from the cost of construction of the assessee. Thus, this Ground raised by the Revenue is partly allowed. Expenditure towards electrical installations - CIT(A) directed to reduce the balance cost incurred by lessee from estimated cost of construction as lease agreement that the said clause does not mention anything about electric fittings - HELD THAT:- As on perusal of the lease agreement, we find that the lessee was not claiming cost of interiors and exteriors from the lessor. Further, from Clause-11 and 12 of the Lease Agreement we find that the lessor shall bear only the cost of Civil Structure side walls whereas the interiors and exterior installations are to be done by lessee at their own cost. Revenue Authorities have al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 31/3/2015. 2. Brief facts of the case are that the assessee being an individual filed his return of income for the AY 2012-13 admitting a loss of Rs. 10,45,529/- on 26/03/2014. The case was selected for scrutiny and notices U/s. 143(2) dated 30/09/2014 was issued and served on the assessee. Due to change in the jurisdiction of the Assessing Officer, further notice U/s. 142(1) and 143(2) were issued and served on the assessee. In response, the assessee s Authorized Representative appeared from time to time and furnished the information called for. Considering the submissions made by the Ld. AR, the Ld. AO referred the matter to the Ld. Departmental Valuation Officer [DVO] U/s. 142A of the Act for the building construction completed during the year which was leased. The Ld. DVO furnished the Valuation Report by valuing the property at Rs. 5,52,54,000/-. The Ld. AO submitted the copy of the report to the assessee inviting his objections. The assessee raised three objections which were forwarded to the Valuation Officer for his comments. In the mean time the assessee also filed the independent Registered Valuer s Report estimating the cost of construction at Rs. 298.36 lakhs as ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,118/- on the ground that there is totaling mistake that occurred in arriving at the cost incurred by the assessee at Rs. 1,30,03,206/- as (i) It is evident from Annexure-II of valuation report though the cost incurred by the lessee towards flowing was mentioned at Rs. 19,36,118/-, the same amount was not included in the cost of construction estimated at Rs. 682.60 lakhs by valuation officer but only an amount of Rs. 8,58,893/- was included. (ii) The amount of Rs. 19,36,118/- incurred by lessee towards flooring has not been included in the cost of construction estimated by Valuation Officer and therefore there is no need for reducing the amount. (iii) It is clear from para 6 of the valuation report that the cost of construction estimates includes an amount of Rs. 1,30,06,000/- towards cost of interiors Special electrical works only incurred by lessee. (iv) There was no totaling mistake or omission by the Valuation Officer in arriving at cost incurred by the assessee and only an amount of Rs. 1,30,06,626/- was included in the cost of construction estimated for which deduction was allowed by the AO. (iv) There was no totaling mistake or omission by the Val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as granted relief of Rs. 19,36,116/- citing there is a mistake in totaling in Annexure-II of the Valuation Report. The Ld. DR further submitted that in the Valuation Report of the Ld. DVO an amount of Rs. 8,58,893/- only was included by the Ld. DVO in arriving at the total cost of construction to the assessee. The Ld. DR therefore pleaded that the relief granted by the Ld. CIT(A) be restricted to Rs. 8,58,893/-only. Per contra, the Ld. AR relied on the order of the Ld. CIT (A). 7. We have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities. We find from Annexure-I to the Valuation Report of the Ld. DVO vide Report No. 1: 02: 1470 in Item No.3 being the addition for cost of superior items provided in the building in place of items provided as per specifications of Plinth Area Rates (PAR) has included Rs. 8,58,893/- towards cost of flooring. However, in Annexure-II, while valuing the flooring charges incurred by the lessee M/s. Kalyan Jewellers the Ld. DVO valued at Rs. 19,36,116/-. As per clause 11 and 12 of the lease agreement entered on 12th March 2011, the lessee has to do the interiors and exterior installatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tedly the lessee M/s. Kalyan Jewellers has furnished a letter dated 6/3/2015 to the Ld. DVO that it has incurred a cost of Rs. 66,13,127/- towards electrical fittings. Further, on perusal of the lease agreement, we find that the lessee was not claiming cost of interiors and exteriors from the lessor. Further, from Clause-11 and 12 of the Lease Agreement we find that the lessor shall bear only the cost of Civil Structure side walls whereas the interiors and exterior installations are to be done by lessee at their own cost. Further, the Ld. Revenue Authorities have also not disputed the cost incurred by the lessee towards electrical installations. Considering these facts as stated above, we find that the Ld. CIT(A) has rightly directed the Ld. AO to deduct Rs. 42,12,602/- [Rs. 66,13,127 Rs. 24,00,525] from the cost of construction of the assessee. We therefore find no infirmity in the order of the Ld. CIT(A) on this ground and hence this ground raised by the Revenue is dismissed. 10. With respect to Grounds No. 4, 5, 6 regarding the deduction of 15% towards variation in the CPWD rates and the local rates, the Ld. DR relied on the order of the Ld. AO. Per contra, the Ld. AR rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nciples of consistency we find no infirmity in the order of the Ld. CIT(A) on this ground and hence, these grounds raised by the Revenue are dismissed. 13. With respect to Ground No. 7 regarding the deduction of 10% towards self-supervision, the Ld. DR relied on the order of the Ld. AO. Per contra, the Ld. AR relied on the decision of the jurisdictional Bench in ITA No. 573/Viz/2019 (AY 2014-15), dated 15/06/2022 in the case of M/s. Hillocks Hotels Pvt Ltd (supra). 14. We have heard both the sides and perused the material available on record and the orders of the Ld. Revenue Authorities. The jurisdictional Bench of the ITAT, Visakhapatnam has allowed self supervision charges at 10% in many cases including the case cited by the Ld. AR ie., in the case of M/s. Hillocks Hotels Pvt (supra). Consistently following the decisions of the jurisdictional Bench of ITAT, the Ld. CIT(A) has rightly directed the Ld. AO to adopt 10% as stated in para 46, page 45 after discussing the issue at length and held as under: 46. It was also pointed out by the L/R of the assessee that the building was constructed by the assessee using own labour and no contract was given to anyone for construct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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