Gunisetty Satyadev, Vijayawada v. ACIT, Khammam

ITA 623/HYD/2007 | 2003-2004
Pronouncement Date: 05-03-2010 | Result: Partly Allowed

Appeal Details

RSA Number 62322514 RSA 2007
Assessee PAN AFPPG7092E
Bench Hyderabad
Appeal Number ITA 623/HYD/2007
Duration Of Justice 2 year(s) 9 month(s) 21 day(s)
Appellant Gunisetty Satyadev, Vijayawada
Respondent ACIT, Khammam
Appeal Type Income Tax Appeal
Pronouncement Date 05-03-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 05-03-2010
Date Of Final Hearing 10-02-2010
Next Hearing Date 10-02-2010
Assessment Year 2003-2004
Appeal Filed On 15-05-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B' HYDERABAD BEFORE SHRI G.C.GUPTA VICE PRESIDENT AND SHRI AKBER BASHA ACCOUNTANT MEMEBR ITA NO. ASSESSMENT YEAR APPELLANT RESPONDENT 624/HYD/07 2003-04 SMT.GUNISETTI SAMANTHAKAMANI KOTHAGUDEM (PAN AFPPG 7092 E) ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE-1 KHAMMAM 621/HYD/07 2003-04 SHRIGUNISETTI PRATAP KOTHAGUDEM (PAN AFPPG 7065 K ) ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE-1 KHAMMAM 622/HYD/07 2003-04 SHRI GUNISETTI SATYADEV (HUF) KOTHAGUDEM (PAN AAEHS 2717 J) ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE-1 KHAMMAM 623/HYD/07 2003-04 SHRI GUNISETTI SATYADEV KOTHAGUDEM (PAN AFPPG 7079 D) ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE-1 KHAMMAM APPELLANTS BY : SMT. K.NEERAJA RESPONDENT BY : SMT. NIVEDITA BISWAS O R D E R PER G.C.GUPTA VICE PRESIDENT: THESE FOUR APPEALS BY THE ASSESSEES FOR THE ASSESSMENT YEAR 2003-04 ARE DIRECTED AGAINST SIMILAR BUT SEPARATE ORDERS OF THE COMMISSIONER OF INCOME-TAX(APPEALS). SINCE IDENTICAL ISS UE IS INVOLVE ITA NO.621 TO 624/HYD/07 SMT.G.SAMANTHAKAMANI & THREE OTHERS KOTHAGUDEM 2 IN ALL THESE APPEALS THESE ARE BEING DISPOSED OFF BY A CONSOLIDATED ORDER. ITA NO.624/HYD/07 : ASSESSMENT YEAR 2003-04 2. LET US FIRST TAKE UP FOR CONSIDERATION THE APPEAL ITA NO.624/HYD/07 OF SMT.G.SAMANTHAKAMANI KOTHAGUDEM I N WHICH THE CIT(A) HAS PASSED THE DETAILED ORDER. GROUNDS OF ASSESSEE IN THIS APPEAL READ AS UNDER- '1. THE ORDER OF COMMISSIONER OF INCOME-TAX APPEALS IS AGAINST LAW ARBITRARY AND AGAINST THE FACTS OF THE CASE. 2. THERE ARE NO PROPER GROUNDS TO REJECT THE CONSTR UCTION COSTS OF THE BUILDING ADMITTED BY THE APPELLANT AT RS.15 LAC S (AS DECLARED BY APPELLANT AND ACCEPTED BY ASSESSING OFF ICER IN SURVEY CONDUCTED ON 21.1.03 3. THE COMMISSIONER OF INCOME-TAX APPEALS OMITTED T O CONSIDER/DID NOT PROPERLY CONSIDER THE APPELLANT'S CONTENTIONS (A) THAT THE ASSESSING OFFICER ERRED IN REFERRING THE CASE TO VALUATION CELL WHEN HE DID NOT GIVE ANY FINDING ABOUT DEFECT IN THE COST OF CONSTRUCTION ADMITTED BY THE APPELLANT AND (B) THAT THE CONSTRUCTION COSTS ADM ITTED BY THE APPELLANT WERE REASONABLE AND FAIR AS THEY WERE IN AGREEMENT WITH LOCAL PWD PLINTH RATES. 4. THE COMMISSIONER OF INCOME-TAX (A) IS NOT CORRECT I N RESTRICTING THE DEDUCTION TO 5% TOWARDS SELF SUPERV ISION CHARGES AS AGAINST THE CLAIM OF THE APPELLANT AT 10 % 5. THE COMMISSIONER OF INCOME-TAX APPEALS OUGHT TO HAV E HELD THAT THE REPORT OF VALUATION CELL BASED ON CENTRAL PWD PLINTH RATES SHOULD NOT BE RELIED UPON TO JUDGE THE CONSTR UCTION COST AND MAKE AN ADDITION ON THE BASIS OF SUCH REPORT. 6. THE ADDITION OF RS.5 64 780 AS SUSTAINED BY COMMISS IONER OF INCOME-TAX(APPEALS) IS ARBITRARY AND EXCESSIVE.' ITA NO.621 TO 624/HYD/07 SMT.G.SAMANTHAKAMANI & THREE OTHERS KOTHAGUDEM 3 3. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE IS AN INDIVIDUAL AND HAS CONSTRUCTED RESIDENTIAL BUILD ING IN SRINAGAR COLONY OF KHAMMAM TOWN AND THE ONLY DISPUTE IN THIS A PPEAL IS REGARDING THE ESTIMATION OF THE COST OF CONSTRUCTION OF T HE HOUSE. SHE SUBMITTED THAT THE ASSESSEE HAS FILED REPORT FROM THE APP ROVED VALUER BEFORE THE ASSESSING OFFICER IN WHICH THE COST OF CONSTRUCTI ON WAS ARRIVED AT RS.14.84 LAKHS DURING THE CONSTRUCTION PERI OD FROM 5.7.2001 TO 25.3.2003. SHE SUBMITTED THAT A SURVEY WA S CONDUCTED ON THE PREMISES OF THE ASSESSEE ON 21.1.2003. STATEMENT OF ONE OF THE FAMILY MEMBERS AND ONE OF THE ASSESSEES CONCERNED IN THESE APPEALS GUNISETTY SATYADEV WAS RECORDED AT THE TIME OF SURVEY ON 21.1.2003 WHEREIN HE ADMITTED THE COST OF CONSTRUCTION AT RS.15 LAK HS. SHE SUBMITTED THAT ONCE THE COST OF CONSTRUCTION WAS ADMITTED AT RS.15 LAKHS AT THE TIME OF SURVEY THERE IS NO VALID REASON F OR THE ASSESSING OFFICER TO REFER THE ISSUE OF ESTIMATION OF COST OF CONSTRU CTION OF THE PROPERTY TO THE DEPARTMENTAL VALUATION OFFICER (D.V. O.). SHE SUBMITTED THAT THE D.V.O. HAS ESTIMATED THE COST OF CONST RUCTION OF THE PROPERTY AT A VERY HIGH FIGURE OF RS.25.57 LAKHS BY NOT ALLOWING ANY DEDUCTION ON ACCOUNT OF SELF-SUPERVISION AND BY ADOPTING THE RATES OF CPWD INSTEAD OF LOCAL PWD. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HAS RELIED ON THE ORDERS OF THE ASSESSING OFFICER A ND THE CIT(A). SHE SUBMITTED THAT THE CIT(A) HAS ALREADY ALLOWED SUIT ABLE RELIEF TO THE ASSESSEE BY ALLOWING 5% DEDUCTION ON ACCOUNT OF SELF-SUP ERVISION AND 5% ADDITIONAL DEDUCTION TOWARDS DIFFERENCE IN R ATES IN ACCORDANCE WITH THE ORDERS OF THE TRIBUNAL CITED IN HIS ORDER. SHE SUBMITTED THAT THE ASSESSEE WAS BUSY IN BETEL LEAVES BUSIN ESS AND SO WAS NOT IN A POSITION TO SAVE MONEY ON ACCOUNT OF SELF-SU PERVISION. SHE REFERRED TO THE RELEVANT PORTIONS OF THE REPORT OF THE D.V.O. IN ITA NO.621 TO 624/HYD/07 SMT.G.SAMANTHAKAMANI & THREE OTHERS KOTHAGUDEM 4 SUPPORT OF HER SUBMISSION THAT THE ESTIMATION OF COST OF CONSTRUCTION BY THE D.V.O. WAS JUSTIFIED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE HAVE PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AS WELL AS REPORT OF THE REGISTERED VALUER AND ALSO THE REPORT O F THE D.V.O. REGARDING THE LEGAL ISSUE RAISED BY THE LEARNED COUNSE L FOR THE ASSESSEE REGARDING VALIDITY OF THE REFERENCE MADE TO TH E D.V.O. WE FIND THAT THE REFERENCE MADE TO THE D.V.O. FOR ESTIMA TING THE COST OF CONSTRUCTION WAS VALID AND MERELY BECAUSE THE ASSESSEE HAS AG REED DURING THE COURSE OF SURVEY TO ESTIMATE THE COST OF CONSTR UCTION OF THE PROPERTY AT RS.15 LAKHS ONE CANNOT SAY THAT REFERENCE T O THE D.V.O. FOR VALUATION OF THE PROPERTY COULD NOT BE MADE. 6. WITH REGARD TO THE MERITS OF THE ESTIMATE OF COST OF CONSTRUCTION MADE BY THE D.V.O. WE FIND THAT THE DIFF ERENCE IN THE ESTIMATE MADE BY THE D.V.O. AND THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE IS DUE TO NON-DEDUCTION OF SAVINGS ON ACCOUNT OF SELF SUPERVISION AT 10% CLAIMED BY THE ASSESSEE AND THE DIFFERE NCE IN THE CONSTRUCTION RATES OF THE LOCAL PWD AND CPWD. WE FIND T HAT THE CIT(A) HAS ALLOWED A DEDUCTION OF 5% ON ACCOUNT OF SELF- SUPERVISION. THOUGH THE ASSESSEE IS A BUSINESS PERSON ADMITTEDLY BUI LDING WAS CONSTRUCTED UNDER SELF-SUPERVISION AND THIS FACT HAS NOT B EEN CONTROVERTED BY THE DEPARTMENT. IN THESE FACTS WE FI ND THAT DEDUCTION ON ACCOUNT OF SELF-SUPERVISION AT THE RATE OF 10% IS QUITE REASONABLE AND IS ALLOWED ACCORDINGLY. 7. NEXT ISSUE IS REGARDING ESTIMATE OF COST OF CONSTRUCTIO N RATE. WE FIND THAT THE PROPERTY CONSTRUCTED WAS IN SRI NIAGAR COLONY KHAMMAM DURING THE PERIOD 5.7.2001 TO 25.3.2003. K HAMMAM IS A ITA NO.621 TO 624/HYD/07 SMT.G.SAMANTHAKAMANI & THREE OTHERS KOTHAGUDEM 5 DISTRICT HEADQUARTERS IN THE STATE OF ANDHRA PRADESH. THEREFORE THE RATES OF ANDHRA PRADESH PWD ARE APPLICABLE AND THERE I S NO JUSTIFICATION FOR APPLYING THE CONSTRUCTION RATES OF CPWD . THERE IS NO MATERIAL BROUGHT ON RECORD TO SUGGEST THAT THE ASSESSEE HA S DONE CONSTRUCTION WITH ANY EXTRA-ORDINARY FITTINGS OR MATER IAL. IN THESE FACTS WE HOLD THAT THE LOCAL PWD RATE OF ANDHRA PRADE SH STATE ARE APPLICABLE FOR ESTIMATING THE COST OF CONSTRUCTION OF THE PROPERTIES IN QUESTION. THE ASSESSEE HAS FILED A CHART SHOWING THE CALCULA TION AS PER THE LOCAL PWD RATE AND DEDUCTING 10% THEREOF TOWARD S SELF- SUPERVISION AND THUS ARRIVED AT COST OF CONSTRUCTION AT A FIGURE OF RS.15 27 090. THIS CALCULATION CHART WAS FILED AS ANNEXUR E TO WRITTEN SUBMISSIONS FILED BEFORE THE CIT(A). NO CALCULATION MIST AKE COULD BE POINTED OUT ON BEHALF OF THE REVENUE REGARDING THE CALCULATION MADE IN THIS ANNEXURE TO THE WRITTEN SUBMISSIONS FILED BEFORE T HE CIT(A). ACCORDINGLY SINCE THE ASSESSEE HAS ADMITTED THE COST OF CONSTRU CTION OF THE BUILDING IN THE RETURN OF INCOME AT RS.15 LAK HS THE DIFFERENCE BETWEEN THE COST OF CONSTRUCTION AS PER THE ANNEXURE TO THE WRITTEN SUBMISSIONS AND AS PER THE RETURN VIZ. RS.27 090 ONLY IS LIABLE TO BE ADDED IN THE HANDS OF THE ASSESSEE AS INCOME AND THE BALA NCE ADDITION MADE ON ACCOUNT OF ESTIMATION OF COST OF CONSTRUCT ION IS DELETED. GROUNDS OF APPEAL OF THE ASSESSEES ARE ACCORDINGLY PARTLY ALLOWED. ITA NOS.121 TO 123/HYD/07 : ASSESSMENT YEAR 2003-04 8. GROUNDS RAISED BY THE ASSESSEES IN THESE THREE APPEALS ARE IDENTICAL TO THE ONES RAISED BY THE ASSESSEE SMT.G.SAANTHAKAMANI IN ITA NO.124/HYD/07. THUS THE ISSUES INVOLVED INCLUDING THE AMOUNTS ARE IDENTICAL. FURT HER CONTENTIONS OF THE PARTIES ARE ALSO IDENTICAL. HENCE FOR THE REASONS DISCUSSED IN ITA NO.621 TO 624/HYD/07 SMT.G.SAMANTHAKAMANI & THREE OTHERS KOTHAGUDEM 6 PARA-5 TO 7 HEREINABOVE IN THE CONTEXT OF APPEAL OF SMT.G.SAANTHAKAMANI IN ITA NO.124/HYD/07 WHILE WE UPHOLD THE LEGALITY AND VALIDITY OF THE REFERENCE MADE BY THE A SSESSING OFFICER TO THE D.V.O. FOR ESTIMATING THE COST OF CONSTRUCTION WE HO LD THAT SINCE THE ASSESSEES HEREIN HAVE ADMITTED THE COST OF CONSTRUCTION O F THE BUILDING IN THE RETURN OF INCOME AT RS.15 LAKHS THE DIFFERENCE BETWEEN THE COST OF CONSTRUCTION AS PER THE ANNEXURE TO THE WRITTEN SUBMISSIONS AND AS PER THE RETURN VIZ. RS.27 090 ONLY IS LIABLE TO HE ADDED IN THE HANDS OF THE ASSESSEES AS INCOME AND THE BALA NCE ADDITIONS MADE ON ACCOUNT OF ESTIMATION OF COST OF CONSTRUCT ION ARE DELETED. GROUNDS OF APPEAL OF THESE THREE ASSESSEES ARE AL SO ACCORDINGLY PARTLY ALLOWED. 9. IN THE RESULT ALL THE FOUR APPEALS OF THE ASSESSEES A RE PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 5.3.2010 SD/- SD/- (AKBER BASHA) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 5.3.2010 COPY FORWARDED TO: 1. SMT.GUNISETTI SAMANTHAKAMANI (KOTHAGUDEM) C/O.SHRI C.N.RANGASWAMY CHARTERED ACCOUNTANT 28-11-3 HINDI STREET GANDHINAGAR VIJAYAWADA-3. 2. SHRI GUNISETTI PRATAP (KOTHAGUDEM) C/O.SHRI C.N.RANGASWAMY CHARTERED ACCOUNTANT 28-11-3 HINDI STREET GANDHINAGAR VIJAYAWADA-3. 3. SHRI GUNISETTI SATYADEV(HUF) (KOTHAGUDEM) ITA NO.621 TO 624/HYD/07 SMT.G.SAMANTHAKAMANI & THREE OTHERS KOTHAGUDEM 7 C/O.SHRI C.N.RANGASWAMY CHARTERED ACCOUNTANT 28-11-3 HINDI STREET GANDHINAGAR VIJAYAWADA-3. 4. SHRI GUNISETTI SATYADEV (KOTHAGUDEM) C/O.SHRI C.N.RANGASWAMY CHARTERED ACCOUNTANT 28-11-3 HINDI STREET GANDHINAGAR VIJAYAWADA-3. 5. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 1 KHAMMAM. 6. COMMISSIONER OF INCOME-TAX(APPEALS) VIJAYAWADA. 7. COMMISSIONER OF INCOME-TAX VIJAYAWADA.. 8.. DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD. B.V.S.