Law: Income Tax Act, 1961

Section: 256(2)

Income-tax---Reference---Valuation of a capital asset---Cost of construction of a hotel ---Assessee maintaining regular books of account and vouchers for construction of hotel---Assessing Officer referring valuation to District Valuation Officer ---Assessee filing report of registered valuer ---Asset to be valued on basis of regular books of account maintained by assessee for construction---Tribunal justified in holding that reference to District Valuation Officer was not justified on facts of this case---Tribunal justified in holding that valuation made by registered valuer to be adopted---No question of law arose---Indian Income Tax Act, 1961, S. 256(2). The assessee constructed a hotel and showed the cost of construction of the hotel in the books of account regularly maintained. The Assessing Officer referred the valuation of the hotel building to the District Valuation Officer who estimated the cost of the building on the basis of the C.P.W.D. rates with certain additions and alterations. The Assessing Officer made an addition of Rs.6,30,807 as unexplained investment in the hotel on the basis of the valuation made by the District Valuation Officer. On appeal the Tribunal held that if the books of account kept by the assessee did not show any infirmity they had to be accepted. However, in the instant case, since the assessee had procured the report of. the registered valuer, the Tribunal directed that the same may be adopted. The Tribunal also observed that the registered valuer had rightly adopted the rates of the Rajasthan P.W.D.: Held, that in a case where the value of the asset was claimed by the assessee on the basis of regular books of account maintained for the purpose of construction of the asset and not on the basis of the valuation of the registered valuer, it was not open to the Assessing Officer to make a reference to the District Valuation Officer unless the Assessing Officer formed an opinion that having regard to the nature of the asset and other relevant circumstances it was necessary to do so. If an account of the expenses of the construction of the asset are maintained regularly and supported by vouchers there should be no reason not to…

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