Madras High CourtCommissioner Of Income Tax vs M/S.S.N.Sons on 19 October, 2004Bench:P.D.Dinakaran,S.Ashok KumarN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED: 19/10/2004

CORAM

THE HONOURABLE MR.JUSTICE P.D.DINAKARAN
AND
THE HONOURABLE MR.JUSTICE S.ASHOK KUMAR

T.C.No.853 OF 2004
AND T.C.Nos. 854 and 855 OF 2004

Commissioner of Income Tax                     .. Appellant
Tiruchirapalli.

-Vs-

M/s.S.N.Sons
Thiruthuraipoondi.                              .. 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.Subramanian
                        Senior Standing Counsel
                        for 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 15.10.2003
of the Income Tax Appellate Tribunal Madras 'A' Bench made in I.T.A.Nos.641 to
643/Mds/2003, with reference to the  assessment  years  1996-97,  1997-98  and
1998-99 respectively.2.1.   Brief  facts  leading  to  the  filing  of these appeals are as
follows: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  report
from  a  Registered  Valuer, in which the valuation has been fixed at Rs.38.33
Lakhs.  However, the Assessing Officer, referred the matter for valuation.  As
per the report of the Departmental Valuation Officer, the cost of construction
works out to Rs.77.06 Lakhs.2.2.  Aggrieved by the orders of assessment,  the  respondent/assessee
approached  the  Commissioner  of  Income  Tax  (Appeals),  who by order dated
10.1.2003 granted certain modifications and  finally  estimated  the  cost  of
construction of the cinema theatre at Rs.63.81 Lakhs.2.3.   The  respondent/assessee  preferred  further appeals before the
Tribunal.  The Tribunal, by a common order dated 15.10.2003 fixed the cost  of
construction  at  Rs.47 Lakhs and directed the assessing officer to modify the
assessment orders accordingly.2.4.  Against the order dated 15.10.2003 of the Tribunal, the  revenue
had preferred these appeals on the following substantial question of law:"Whether  on  the  facts  and in the circumstances of the case, the Income Tax
Appellate Tribunal was right in estimating the cost  of  construction  of  the
Theatre building constructed by the assessee during the period 1995 to 1998 at
a  round  sum  of Rs.47,00,000/- ignoring the relevant material pointed out in
the orders of the  Assessing  Officer  and  the  Commissioner  of  Income  Tax
(Appeals)  like absence of proper accounts, vouchers, etc., and the prevailing
rates of cost  and  the  defects  in  the  estimate  made  by  the  assessee's
registered  valuer  and  considering  irrelevant material like the abstract of
cost worked out at Rs.4 6.94 Lakhs by the assessee without any basis?"3.  The Calcutta High Court inNataraj Cinema  Vs.    Commissioner  of
Income-tax, [2002] 257 ITR 415, held that the issue of cost of construction of
the cinema theatre is basically a question of fact and no substantial question
of law arises.4.  In the instant case, the Tribunal modified the addition on account
of  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 260Aof the Income Tax Act.5.   Finding,  therefore,  no  substantial  question  of  law  for our
consideration, these appeals are dismissed.  No  costs.    Consequently,  T.C.
M.P.Nos.596 and 597 of 2004 are also dismissed.Index   :       Yes
Internet        :       Yes

sasi


