Commissioner Of Income Tax v. M/S.s.n.sons Thiruthuraipoondi

N THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 19/10/2004 CORAM THE HONOURABLE MR.JUSTICE P.D.DINAKARANANDTHE HONOURABLE MR.JUSTICE S.ASHOK KUMAR T.C.No.853 OF 2004AND T.C.Nos. 854 and 855 OF 2004 Commissioner of Income Tax .. AppellantTiruchirapalli. -Vs- M/s.S.N.SonsThiruthuraipoondi. .. Respondent PRAYER: Against the order of the Income Tax Appellate Tribunal Madras'A' Bench, dated 15.10.2003 in I.T.A.Nos.641 to 643/Mds/2003 respectively. !For Appellant : Mr.K.SubramanianSenior Standing Counselfor Income Tax Cases ^For Respondent : --- :JUDGMENT(Judgment of this Court was delivered by P.D.DINAKARAN,J.) These appeals are directed against the common order dated 15.10.2003of the Income Tax Appellate Tribunal Madras 'A' Bench made in I.T.A.Nos.641 to643/Mds/2003, with reference to the assessment years 1996-97, 1997-98 and1998-99 respectively. 2.1. Brief facts leading to the filing of these appeals are asfollows: As per the books of accounts maintained by the respondent/assessee,the cost of construction of the cinema theatre was shown as Rs.36.61 Lakhs,and in support of the same the respondent/assessee had also obtained a reportfrom a Registered Valuer, in which the valuation has been fixed at Rs.38.33Lakhs. However, the Assessing Officer, referred the matter for valuation. Asper the report of the Departmental Valuation Officer, the cost of constructionworks out to Rs.77.06 Lakhs. 2.2. Aggrieved by the orders of assessment, the respondent/assesseeapproached the Commissioner of Income Tax (Appeals), who by order dated10.1.2003 granted certain modifications and finally estimated the cost ofconstruction of the cinema theatre at Rs.63.81 Lakhs. 2.3. The respondent/assessee preferred further appeals before theTribunal. The Tribunal, by a common order dated 15.10.2003 fixed the cost ofconstruction at Rs.47 Lakhs and directed the assessing officer to modify theassessment orders accordingly. 2.4. Against the order dated 15.10.2003 of the Tribunal, the revenuehad preferred these appeals on the following substantial question of law:"Whether on the facts and in the circumstances of the case, the Income TaxAppellate Tribunal was right in estimating the cost of construction of theTheatre building constructed by the assessee during the period 1995 to 1998 ata round sum of Rs.47,00,000/- ignoring the relevant material pointed out inthe orders of the Assessing Officer and the Commissioner of Income Tax(Appeals) like absence of proper accounts, vouchers, etc., and the prevailingrates of cost and the defects in the estimate made by the assessee'sregistered valuer and considering irrelevant material like the abstract ofcost worked out at Rs.4 6.94 Lakhs by the assessee without any basis?" 3. The Calcutta High Court in Nataraj Cinema Vs. Commissioner ofIncome-tax, [2002] 257 ITR 415, held that the issue of cost of construction ofthe cinema theatre is basically a question of fact and no substantial questionof law arises. 4. In the instant case, the Tribunal modified the addition on accountof unexplained cost of construction on the basis of appreciation of evidence,which being purely a question of fact cannot be gone into in an appeal underSection 260A of the Income Tax Act. 5. Finding, therefore, no substantial question of law for ourconsideration, these appeals are dismissed. No costs. Consequently, T.C.M.P.Nos.596 and 597 of 2004 are also dismissed. Index : YesInternet : Yes sasi