15% deduction for CPWD and State PWD rate variation allowable when AO estimated the cost of building construction based on the report of the valuation cell. This was stated by ITAT Visakhapatnam in a recent judgment as under:
Case Law Details:
I.T.A.No.430/Vizag/2014 Assessment Year: 2007-08
B. Madhusudhana Reddy vs. ACIT
Date of Judgment/Order: 06/05/2016
Brief Facts of the Case:
During the course of the assessment proceedings u/s 143(3), the Assessing Officer noted that the assessee had constructed a two storied building and the cost of construction shown by the assessee was Rs. 42,13,860/- which was supported by the valuation report of an approved valuer, according to which cost of construction of the building was of Rs. 42.09 lakhs after claiming self supervision charges at 7.5%. The A.O. was of the opinion that the cost of construction shown by the assessee was low, therefore, he referred the case to valuation cell which estimated the cost of construction at Rs. 51.54 lakhs. The assessee submitted that the building was constructed far away from Vijayawada city for which P.W.D. rates were to be applied and if at all, CPWD rates were applied, 15% deduction should have been given to the assessee. However, the A.O. not accepted the submissions made by the assessee and based on the report of the Valuation Cell, made an addition of Rs. 9,45,000/-.
On appeal, the CIT(A) confirmed the order of the A.O. On being aggrieved, assessee carried the matter in appeal before the Tribunal.
Important Excerpts from ITAT Judgment:
The case of the assessee is that the assessee has constructed a building in a rural area though comes under the purview of the Vijayawada city, CPWD rates cannot be applied but only PWD rates are to be applied. In case where CPWD rates are applied, 15% deduction towards the rate variation between CPWD & PWD should be given to the assessee. This aspect was not disputed by the department. Admittedly, the fact remains that the cost of construction was estimated by the A.O. based on the report of the valuation cell, which has in turn estimated the cost of construction based on the CPWD rates. Therefore, in our opinion, the assessee is entitled for 15% deduction towards the rate variation between CPWD & State PWD and further deduction of 7.5% towards self supervision charges from the value arrived by the DVO applying the CPWD rates. Ordered accordingly.
CPC order u/s 143(1) is appealable and hence the doctrine of merger with order u/s 143(3) do not arise -…
Under GST Act, there is no specific provision which bounds selling dealer to disclose route to be taken during transportation…
Restrictions on use of words Nidhi Limited unless declared as such under section 406(1). Nidhi (Amendment) Rules 2024 MINISTRY OF…
MCA prescribes period and fee for updating of Directors personal mobile number or email address by e-form DIR-3 KYC MINISTRY…
Integrated Services from NIC-IRP e-invoice-1 and e-invoice-2 Portals GSTN has informed that NIC is releasing the integrated services from e-invoice-1…
The Companies (Significant Beneficial Owners) Amendment Rules, 2024. MCA amends Form No. BEN-2 Return to the Registrar under section 90…