Case Law Details
We have considered the facts of the case and submissions made before us. According to us, the best evidence regarding cost of construction is from Devika, who constructed the building. In response to summons u/s 131, Devika filed a copy of the agreement, an unsigned valuation report prepared by Shri Charanjit S. Shah and a copy of balance-sheet as on 31.03.2002. The balance-sheet shows capital work-in-progress as on 31.03.2002 at Rs.2,50,30,642/-, half of which amounts to Rs. 1,25,15,372/-.
By way of another letter dated 29.10.2009, it also furnished the cost of construction as on 31.03.2002, 31.03.2003, 31.03.2004, 31.03.2005 and 31.03.2006. Since the half portion of the assessee was handed over to the assessee in the financial year 2001-02, i.e., this year, we are of the view that subsequent figures are not of relevance because Devika would not spend any further amount in normal circumstances on half portion of the building handed over to the assessee on or before31.03.2002. Therefore, the relevant figure according to us would be Rs. 1,39,30,068/-. Devika had also furnished unsigned valuation report prepared by Shri Charanjit S. Shah, architect. We find that a signed report of Shri Charanjit S. Shah addressed to the assessee vide letter dated 05.02.2001 is also available on record, which shows the cost of construction of the half portion at Rs. 1,14,58,200/-. As against the aforesaid, the valuation officer has valued the cost of construction at Rs. 2,13,56,800/- based upon BSR 2002. Having considered all these matters, we are of the view that the cost of construction shown in the books of Devika is most appropriate for computation of capital gain as it is based upon the actual expenditure incurred by it. It is also a third party evidence. It is not the case of the AO that there is manipulation in the balance-sheet made by Devika in collusion with the assessee to show lower cost of construction as on 31.03.2002. The report of the valuation officer is based upon estimates. In such circumstances, we are of the view that the value shown by Devika for 50% of the cost of construction at Rs. 1,39,30,068/-, say Rs. 1,39,31,000/- represents the best figure of the cost of construction. Accordingly, the transfer consideration works out to Rs. 1,69,31,000/-. The AO is directed to work out capital gains accordingly.
INCOME TAX APPELLATE TRIBUNAL. DELHI
ITA No. 5494(Del)/2010 – Assessment year: 2002-03
Assistant Commissioner of Income-tax
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