By TIOL News Service

KOCHI, DEC 17, 2013: THE issue before the Bench is - Whether Revenue is right in relying on the rate of Central PWD for the purpose of valuation of the renovation and cost of construction when rates declared by the State PWD were available. And its answer is NO.

Facts of the case

The Assessee had constructed a house in the year 1995-96. He claimed expenditure of Rs. 20 lakhs and odd for the A.Y 2006-07 towards extension and renovation. However, the Department estimated the cost of renovation and construction at Rs. 42,10,000 .The entire issue revolves round the valuation made by the Department after personal inspection of the building in question. Neither the AO nor the CIT(A) agreed with the claim of the appellant assessee. The Tribunal accepted the report of the DVO, and opined that assessee did not point out any flaw in the valuation report.

On Appeal before the HC the Assessee Counsel submitted that when the rates declared by State PWD are available, that alone would govern the issue and not the CPWD rates. The Revenue Counsel submitted that the assessee never raised the contention that DVO placing reliance on CPWD rates, at any stage of proceedings, therefore, it is not open for him to raise such controversy before this Court.

Having heard the parties, the HC held that,

++ the cost of construction may very from State to State, therefore it is just and proper to place reliance on the local PWD rates rather than Central PWD rates in order to arrive at the valuation of the property. Ultimately the AO will have the other materials supplied by the assessee to know what exactly was the material used and what was the prevailing rate of such material apart from ascertaining the rates from PWD department which rate varies from time to time;

++ the orders of the three authorities based on the Central PWD rates are set aside by remanding back the matter to the AO who shall rely upon the report of the DVO at Thiruvananthapuram so far as value of the renovation and cost of construction for the A.Y 2006-07 and then proceed in accordance with the procedure contemplated.

(See 2013-TIOL-1032-HC-KERALA-IT)