SAMPAT DEVI SUTALIYA,HYDERABAD vs. INCOME TAX OFFICER, WARD - 4(5), HYDERABAD.

Aggrieved assessee preferred appeal before the Ld. CIT(A) and pleaded that in the year 1986-87 she incurred an expenditure of Rs. 19,37,400/- for construc�on of the total plinth area of 5744 square feet, and the cost of construc�on a�ributable to the 50% share out of this, 5744 square feet comes to Rs. 9,68,700/- and the indexed cost thereof comes to Rs. 74,79,748/-. Learned AR submi�ed that when there is evidence sufficient to conclude that by demolishing the old structure, the assessee constructed a new building, denying the cost of construc�on in total is untenable and illogical. He further submi�ed that as rightly observed by the Ld. CIT(A) the business en��es are supposed to keep the accounts of documents up to the period of 6 years, and therefore, to expect an individual to preserve the bills and vouchers for a period of more than 30 years will cause a lot of hardship. He, therefore, prayed that in the absence of any proof being produced by the assessee, it is always open for the authori�es to take resorted to some es�mate having regard to the cost of construc�on at any point of �me in proximity to the period of construc�on. He produced a copy of the order dated 29/12/2006 passed in ITA No. 465

Page 2 of 4Page 2 of 4 /Hyd/ 2003 in the case of ACIT vs. K Pratap Reddy for the assessment year 1997-98 where the Tribunal approved the cost of construc�on at Rs. 150/- per square feet and basing on that he submits that a reasonable es�mate at Rs. 322/- could be made in this case because the construc�on in this case is about 5 years later.

Per contra, Ld. DR relied upon the orders of the authori�es and submi�ed that since there is no evidence whatsoever that is produced by the assessee, it is not possible to allow the indexed cost of construc�on and, therefore, the authori�es rightly disallowed the cost of construc�on.

We have gone through the record in the light of the submissions made on either side. Sale deed dated 13/2/1986 clearly show that the house was exis�ng in the property purchased by the assessee and the assessee constructed a new building by obtaining permission from the municipal Corpora�on of Hyderabad wide permit No. 143/10, file No. 689/6/3/86, dated 8/10/1986. It is too much to expect that the assessee constructs a three-storey building of a plinth area of 5744 square feet without incurring any expenditure. Denial of the total cost of construc�on are indexed cost of construc�on amounts the same. We are unable to accept the same. In all fairness, the authori�es should have es�mated the cost of construc�on by taking clue from the cost of construc�on prevailing in that year or in some other year in proximity of such period. We therefore, deem it just and proper to es�mate the cost of construc�on and allow it to the assessee.

A perusal of the order in the case of K Pratap Reddy (supra)clearly shows that for the construc�on in the year 1981, Ld. CIT(A) adopted the cost of construc�on at Rs. 150/- per square feet and it was approved by the Coordinate Bench of this Tribunal. By taking such es�mate into considera�on, we can reasonably reach the figure of Rs. 300/-per square feet for the year 1986-87. We adopt of the same. We accordingly direct the learned Assessing Officer to take the cost of construc�on at Rs. 300 per