Madras H.C : the Tribunal was right to ignore the valuation of the house property submitted by the assessee at Rs. 2,16,586 and instead adopt a sum of Rs. 2,48,000 as the valuation of the property

High Court Of Madras

K.K. Seshaiyer vs. CIT

Section 69B

Asst. year 1978-79

R. Jayasimha Babu & Mrs. A. Subbulakshmy, JJ.

Tax Case No. 164 of 1987

20th July, 1998

Counsel Appeared

R. Janakiraman, for the Assessee : Mrs. Chitra Venkataraman, for the Revenue

JUDGMENT

R. JAYASIMHA BABU, J. :

The statement of the case together with the question referred to us has been submitted by the Tribunal pursuant to the order of this Court dt. 6th March, 1985, in T.C.P. No. 427 of 1984. The matter arises out of the assessment of the applicant under the IT Act, 1961, for the asst. yr. 197879. The question referred to us is as to whether, on the facts and in the circumstances of the case, the Tribunal was right to ignore the valuation of the house property submitted by the assessee at Rs. 2,16,586 and instead adopt a sum of Rs. 2,48,000 as the valuation of the property ? The assessee carries on business in handloom sarees in the city of Madurai. The assessee constructed a two storeyed bungalow at No. 8, G.G. Road, Balarangapuram, Madurai. The cost of that construction as per the books amounted to Rs. 2,16,586 excluding the cost of land being a sum of Rs. 19,000. The land had been purchased earlier. The value of the construction was estimated at Rs. 1,88,095 by the assessee’s valuer one A. Jawahar. The contractor one M.R. Santhanam had given a report and according to him the cost was Rs. 1,84,000 which was the amount payable for the construction as per the agreement. The AO proceeded to call for a report of the District Valuation Officer, who valued the structure at Rs. 2,63,000. In the appeal filed by the assessee, the AAC held that the valuation made by the District Valuation Officer chosen by the Department should be reduced by Rs. 15,000 as the amount estimated by him in respect of several items were above the cost actually incurred. On furtherappeal to the Tribunal, the Tribunal affirmed the order of the AAC. Even while holding that the rates as set out in the agreement between the applicant and the contractor were acceptable and without recording any finding that the entries in the books of account maintained by the assessee were not genuine, the Tribunal has found that the Departmental valuer had claimed that he had visited the building and had looked into the vouchers. When the actual cost of construction was duly recorded by the assessee and that cost also was set out in the agreement with the contractor, specifying the rates, and which rates had been accepted by the Tribunal, and there was no finding that the building is larger than what the assessee has claimed it to be or had better quality of construction or fixtures than that which the assessee has recorded in his books, the opinion of the valuer cannot be straightaway substituted for the actual cost that was recorded in the assessee’s books. The Tribunal has not found that the books maintained by the assessee are not credible. In fact the Tribunal has not expressed opinion on the correctness of the entries in the assessee’s books. Though in the order initially made, the Tribunal found fault with the assessee for not having produced the agreement with the contractor, after the assessee pointed out that the agreement that had been entered into with the contractor had been produced before the AO, the Tribunal made a further order refusing to reconsider its earlier order but at the same time asserting that the rates as set out in the agreement had been adopted by the Tribunal in determining the value of the building. In the circumstances, we must hold that the Tribunal was not right in not accepting the value of Rs. 2,16,586. The question is, therefore, answered in favour of the assessee and against the Revenue. The assessee will be entitled to Rs. 1,000 as costs.

[Citation : 246 ITR 351]

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