K JAYAKUMAR,COIMBATORE vs. ITO, NCC-1(4), COIMBATORE

Both the appeals of the assessee are directed against the respective orders of the Commissioner of Income Tax (Appeals) -2, Coimbatore, dated 24.10.2018 and pertain to assessment years 1997-98 and 1998-99. Therefore, we heard both the appeals together and disposing the same by this common order.

Shri S. Sridhar, the Ld.counsel for the assessee, submitted that the only issue arises for consideration in both the appeals is the cost of construction. According to the Ld. counsel, for the assessment year 1997-98, the matter travelled upto Madras High Court and the Madras High Court found that the cost of construction has to be reworked and to be distributed for the assessment years 1997-98 and 1998-99 by taking the State PWD rate for consideration. On the basis of the order of the Madras High Court, the Assessing Officer reworked the cost of construction as per State PWD rate and determined the same at ₹1,24,78,138/-. According to the Ld. counsel, the difference in the cost of construction disclosed by the assessee and determined by the Assessing Officer as per the State PWD rate was apportioned between the assessment years 1997-98 and 1998-99. According to the Ld. counsel, for the assessment year 1997-98, the Assessing Officer apportioned the cost of construction at ₹10,88,030/- and for the assessment year 1998-99 it was ₹4,02,426/-.

Shri S. Sridhar, the Ld.counsel for the assessee further submitted that when the appeal of the Revenue for the assessment year 1998-99 came before the High Court, the High Court found that the difference in the cost of construction shall be determined at ₹8 lakhs and it shall be apportioned for the assessment years 1997-98 and 1998-99. In fact, the Tribunal for the assessment year 1998-99 fixed the cost of construction at ₹8 lakhs and it was confirmed by the High Court. Once it is confirmed by the High Court, according to the Ld. counsel, the CIT(Appeals) is not correct in accepting the cost of construction determined by the Assessing Officer.

We heard Ms. R. Anitha, the Ld. Departmental Representative also. According to the Ld. D.R., the High Court for the assessment year 1997-98 directed the Assessing Officer to re- estimate the cost of construction and decide the distribution of the same for assessment years 1997-98 and 1998-99. Accordingly, the Assessing Officer estimated the difference in the cost of construction and apportioned the same. Subsequently, according to the Ld. D.R., the High Court found that the Tribunal accepted the offer of the assessee that the difference in the cost of construction is only ₹8 lakhs and the same has to be distributed equally for assessment years 1997-98 and 1998-99. The order of this Tribunal for assessment year 1998-99 accepting the offer of the assessee to determine the difference in the cost of construction at ₹8 lakhs was also confirmed by the High Court. Therefore, according to the Ld. D.R., the Assessing Officer by following the earlier order of the High Court, determined the cost of construction and the difference in the cost of construction was apportioned for the assessment years 1997-98 and 1998-99.

We have considered the rival submissions on either side and perused the relevant material available on record. The only issue arises for consideration in both the appeals is determination of difference in the cost of construction and apportionment of the same for the assessment years 1997-98 and 1998-99. As rightly submitted by the Ld.counsel for the assessee and Ld. D.R., for the assessment year 1997-98, the High Court remitted back the matter to the file of the Assessing Officer to decide the difference in the cost of construction and also to distribute the difference for the assessment years 1997-98 and 1998-99. Accordingly, the Assessing Officer determined the difference in the cost of construction at ₹14,90,456/-. The Assessing Officer distributed the cost of construction for the assessment year 1997-98 at ₹10,88,030/- and for the assessment year 1998-99 at ₹4,02,426/-. Subsequently, for the assessment year 1998-99, the High Court confirmed the order of this Tribunal wherein the difference in the cost of construction was determined at ₹8 lakhs and it is to be distributed for the assessment years 1997-98 and 1998-99. Therefore, there was a confusion whether the difference in the cost of construction is to be taken at ₹14,90,456/- as determined by the Assessing Officer for assessment year 1997-98 and 1998-99 or at ₹8 lakhs as confirmed by the High Court for assessment year 1998- 99.

Under normal circumstances, this Tribunal would have remitted back the matter for reconsideration. However, we are not doing so since the assessment years under consideration are 1997- 98 and 1998-99. After a lapse of twenty years, remanding back the matter may not serve any purpose. Moreover, taking into consideration of the monetary limit fixed by the CBDT for filing appeal for filing appeal before the Tribunal and other forums, this Tribunal is of the considered opinion that the litigation has to be brought to an end at this stage instead of dragging the matter further in one way or other. Therefore, by keeping the interest of justice in mind, this Tribunal is of the considered opinion that the difference in the cost of construction as confirmed by the High Court for assessment year 1998-99 has to be adopted and it has to be distributed equally for assessment years 1997-98 and 1998-99. Accordingly, the orders of both the authorities below are modified and the Assessing Officer is directed to take the difference in the cost of construction at ₹8 lakhs and distribute the same equally for assessment years 1997-98 and 1998-99.

In the result, both the appeals filed by the assessee are partly allowed.