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Income Tax Appellate Tribunal, ‘SMC’ ‘B’ BENCH, CHENNAI
Before: Shri A. Mohan Alankamony
आदेश / O R D E R
This appeal by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals)-2, Tiruchirappalli dated 27.10.2016 in 2)/TRY for the assessment year 2007-08 passed U/s.250(6) r.w.s.143(3) of the Act.
The assessee has raised several grounds in his appeal, however the crux of the issue is that the assessee is aggrieved by the order of the Ld.CIT(A), who has confirmed the addition of Rs.8,43,400/- made by the Ld.AO U/s.69 of the Act by adopting the valuation of the Ld.DVO with respect to the hospital building constructed by the assessee which was in excess to the extent of Rs.8,43,400/- than what was declared by the assessee.
At the outset the Ld.AR submitted before us that the total cost of construction of the hospital building declared by the assessee was Rs.85,79,600/-. However the Ld.DVO has estimated the value at Rs.94,23,000/- by adopting the CPWD rates. The Ld.AR further submitted that the building was constructed in pudukottai which is not a metropolitan city. Moreover the PWD rates are also comparatively lower than the CPWD rates. The Ld.AR pleaded that the variation between the construction cost declared by the assessee and the valuation estimated by the Ld.DVO is less than 10%, therefore the addition made by the Ld.AO which was further confirmed by the Ld.CIT(A) is not warranted. The Ld.DR on the other hand argued in support of the orders of the Revenue authorities.
4. I have heard the rival submission and carefully perused the materials on record and we find merit in the contentions of the Ld.AR. The CPWD rates are higher than the PWD rates and further the construction of the hospital building by the assessee is not in a metropolitan city where the construction cost will be higher. In this circumstances, I’m of the considered view that the addition made by the Ld.Revenue Authorities for Rs.8,43,400/- by estimating the construction cost of the building at Rs.94,23,000/- is not warranted as pleaded by the Ld.AR because the variation is meager when weightage is given to the location and PWD rates factor. Therefore, I hereby direct the Ld.AO to delete the addition of Rs.8,43,400/- made by invoking the provisions of Section 69 of the Act.
In the result, the appeal of the assessee is allowed. Order pronounced in the court on the 25th July, 2017.