HOTEL WHITELINES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE matter arises under the Income Tax Act, 1961 (hereinafter referred to as the Act). The assessee under the Act has filed this appeal against the order of the Income Tax Appellate Tribunal in ITA. 524 (Coch)/1995. The assessment year concerned is 1988 -89. The only question involved in this appeal is regarding the valuation of the hotel building constructed by the assessee, over a period of eight years from 1983 to 1991. In the books of account maintained by the assessee the cost of construction of this building was shown at Rs. 39,78,765. The assessee had also obtained a valuation of this building by a registered valuer, who had estimated the cost of construction of this building with reference to PWD rate and, after taking into account the inflation, fixed the cost of construction of the building at Rs. 41,55,500. The assessing officer was not prepared to accept the cost of construction furnished by the assessee. He, accordingly, referred the matter to the departmental valuer, who had adopted the plinth area method and estimated the cost of construction with reference to CPWD rate at Rs. 90,53,600. Notwithstanding the objection filed by the assessee the assessing officer had accepted the valuation report and took the difference between the cost of construction estimated by the departmental valuer and the cost of construction recorded in the accounts, i.e., Rs. 45,85,000 as income under the head 'other sources'. In appeal, the Commissioner (Appeals) set aside the assessment and remanded the matter to the assessing officer for fresh consideration. Subsequently, the assessing officer had reduced the cost of construction to Rs. 77,14,141 as against Rs. 90,53,600 originally fixed. The assessing officer had accordingly taken the difference of Rs. 37,35,376 as income under the head other sources on account of unexplained investment. In further appeal, by the assessee, the Commissioner (Appeals) granted partial relief and reduced the addition to Rs. 34,18,886. Not being satisfied with the order of the Commissioner (Appeals), the assessee filed a second appeal before the Tribunal. The Tribunal elaborately considered the report of the departmental valuation officer, the objection filed by the assessee, the clarification given by the valuation officer, the contentions taken by the respective parties, and reduced the cost of construction substantially, which came down to Rs. 55,21,733, resulting in sustaining an addition of Rs. 15,42,968. The assessee is still aggrieved by the cost of construction fixed by the Tribunal.

(2.) SHRI P. Balachandran, learned counsel for the assessee, submits that the authorities were not justified in rejecting the cost of construction of the building recorded in the books of account supported by the valuation report of the registered valuer furnished along with the return. Counsel also submits that authorities were not justified in adopting the plinth area method for arriving at the cost of construction instead of the actual cost depicted in the books of account. Counsel further submits that the departmental valuer had valued other buildings of the size, situated within the vicinity of the building at a much lesser cost as can be seen from the statement at Annexure -F furnished by the assessee before the Tribunal. Counsel also submits that after having more or less accepted the contentions raised by the assessee with regard to the various benefits available to the assessee, the Tribunal was not justified in limiting the deduction as done in the appellate order. Counsel further submitted that though the assessee had placed Annexure -F statement with regard to the valuation of another building by name 'T.B.S. Building', made by the same departmental valuer and the rate adopted in the valuation, the Tribunal failed to consider the same. Counsel submitted that if the Tribunal has considered the said material, the assessee would have been entitled to further deduction in the cost of construction.

(3.) WE have considered the rival submissions and have perused the orders of the three authorities. We find that the Tribunal has considered each and every piece of material furnished by the assessee including the objections to the valuation made by the departmental valuer and the cost of construction assessed by the assessing officer. On a consideration of all those materials, we are of the view that the Tribunal has granted reasonable relief to the assessee. We do not find any ground to grant any further relief to the assessee.