PRINCIPAL COMMISSIONER OF INCOME TAX FARIDABAD vs. AVTAR KUKREJA

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ITA/92/2015HC Punjab & HaryanaPHHC01110196201521 May 2015Bench: MR. JUSTICE A.B. CHAUDHARI,MR. JUSTICE M.M. AGGARWAL3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no question of law arose from the ITAT's order, as the matter involved appreciation of facts alone. Regarding the first property, the Tribunal rightly deleted the addition because no comparable sale instances were provided, and there was no incriminating material to justify it. For the second property, the Tribunal correctly observed that the DVO's valuation ignored the acquisition date and the existence of a constructed house. For the third property, the Tribunal's reduction of the addition by adopting PWD rates and allowing rebates for self-supervision was within its discretion and not subject to interference. For the fourth and fifth properties, the Tribunal rightly deleted the additions as the capitalization of rent was based on erroneous assumptions and did not consider the relevant assessment year and prevailing rental values at that time. Consequently, the appeals were dismissed.

What were the facts?

These appeals by the Principal Commissioner of Income Tax, Faridabad, challenge a common order of the Income Tax Appellate Tribunal (ITAT) dated 30.11.2010. The ITAT had substantially allowed the respondent assessee, Avtar Kukreja's, appeal against the order of the CIT (Appeals), which had confirmed additions made by the Assessing Officer. The assessment years involved are 2004-2005 and 2006-2007. The proceedings originated from a search under Section 132 of the Income Tax Act, 1961. The Assessing Officer had obtained property valuations from the Departmental Valuation Officer (DVO). The ITAT upheld the reference to the DVO but set aside the additions on merits concerning several properties.

What were the issues?

1. Whether the Tribunal erred in deleting the addition of ` 46,916/- in respect of the first property, where the difference in valuation between the assessee and the DVO was ` 1,18,887/-, despite the Assessing Officer having made a lower addition? (Question of fact) 2. Whether the Tribunal erred in setting aside the addition for the second property, considering the DVO valued it in 2008 while it was acquired in 2003 and registered in 2004 with a constructed house? 3. Whether the Tribunal erred in reducing the addition for the third property from ` 5,76,926/- to ` 1,61,542/-, by adopting PWD rates instead of CPWD rates and allowing rebates for self-supervision? 4. Whether the Tribunal erred in deleting the addition for the fourth property, where rent was capitalized based on 2007-2008 rates instead of considering the estimated cost of acquisition in the relevant assessment year 2003-2004? 5. Whether the Tribunal erred in deleting the addition for the fifth property, where rent was capitalized on an erroneous basis? Assessee's Contention: The assessee argued that no comparable sale instances were provided for the first property, and there was no incriminating material to justify the addition. For the second property, the DVO's valuation ignored the acquisition date and existing construction. For the third property, PWD rates and rebates for self-supervision should have been considered. For the fourth and fifth properties, capitalization of rent was based on incorrect assumptions and relevant assessment years. Revenue's Contention: The revenue's arguments are not explicitly recorded in the judgment, but their appeals suggest disagreement with the Tribunal's findings on the above issues.

Which sections of the Income-tax Act were involved?

Section 132

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

ITA-92-2015 (O&M) Date of decision:- 21.05.2015

The Principal Commissioner of Income Tax, Faridabad ...Appellant Versus

Avtar Kukreja ...Respondent

ITA-94-2015 (O&M)

The Principal Commissioner of Income Tax, Faridabad ...Appellant Versus

Avtar Kukreja ...Respondent CORAM: HON'BLE MR. JUSTICE S.J. VAZIFDAR, ACTING CHIEF JUSTICE

HON’BLE MR. JUSTICE G.S. SANDHAWALIA

Present: Mr. Tajender K. Joshi, Advocate,

for the appellant. * * * * S.J. VAZIFDAR, A.C.J. (ORAL)

These appeals are against the common order of the Tribunal dated 30.11.2010 allowing substantially the respondent’s appeal against the order of the CIT (Appeals) confirming the additions made by the Assessing Officer. 2. Both the appeals pertain to the assessment years 2004-2005 and 2006-2007 respectively. A search was carried out under Section 132 of the Income Tax Act, 1961. The Assessing Officer had the properties valued by the Departmental Valuation Officer (in short DVO). The Tribunal upheld the matter having been referred to the DVO. However, on merits, the Tribunal has set aside the additions made by the Assessing Officer. 3. No question of law arises in the matter. The matter involved an appreciation of facts alone. In respect of the first property, the difference in AMODH SHARMA 2015.05.25 12:06 I attest to the accuracy and authenticity of this document chandigarh

ITA-92-2015 (O&M) ITA-94-2015 (O&M)

valuation of the plot by the assessee and DVO came to ` 1,18,887/-. The Tribunal noted that no comparable sale instance had been given and that there was no incriminating material which could justify the addition made. The Assessing Officer had added an amount of only ` 46,916/-. The Tribunal rightly deleted the addition. 4. With respect to the second property, the Tribunal noted that the stamp duty had been paid on the current circle rate. The Tribunal rightly observed that the DVO had valued the property on 18.11.2008 ignoring the vital fact that the property was acquired in the year 2003 and registered on 03.03.2004 with the constructed house thereon. There was no evidence to support the addition. The same was, therefore, rightly set aside. 5. With respect to the third property, the cost of construction was assessed at ` 5,76,926/- against the respondent’s claim that the cost of construction was ` 3,00,000/-. The Tribunal found merit in the argument that the PWD rates should have been adopted instead of the CPWD rates and that no rebate had been given for self-supervision. The Tribunal adopted a rebate of 15% on account of difference between the CPWD rates and the PWD rates and 5% on account of self-supervision. The Tribunal, therefore, after balancing the factors reduced the addition to ` 1,61,542/-. There is no warrant for interfering with the discretion. 6. The last property was valued at ` 48,60,000/- by capitalizing the rent. However, the rent was taken as prevalent in the year 2007-2008. It was noted that by then the locality had become more prominent and had started fetching commercial value. The rent was fixed in respect of a lease granted in favour of a Multi National Company (MNC). The Tribunal rightly noted that the estimated cost of the acquisition ought to have been considered with AMODH SHARMA 2015.05.25 12:06 I attest to the accuracy and authenticity of this document chandigarh

ITA-92-2015 (O&M) ITA-94-2015 (O&M)

respect to the relevant assessment year, namely, 2003-2004. At that time, the rent was about 1/10th of the rent in the year 2007-2008. The addition was, therefore, rightly deleted. 7. As regards the next property, the issue was similar. The rent was capitalized on an erroneous basis. 8. The above findings are in any event purely questions of fact. No question of law arises. 9. The appeals are, therefore, dismissed.

(S.J. VAZIFDAR) ACTING CHIEF JUSTICE

(G.S. SANDHAWALIA)

JUDGE 21.05.2015 Amodh AMODH SHARMA 2015.05.25 12:06 I attest to the accuracy and authenticity of this document chandigarh

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