Shymal Kumar Sen, J. - (1.) In this reference made at the instance of the Revenue, the following questions have been referred by the Tribunal to this court under Section 256(2) of the Income-tax Act, 1961 : "1. Whether on a correct interpretation of the provisions of income-tax law, the Tribunal was correct in not admitting the additional ground taken by the Department that the Commissioner of Income-tax (Appeals) erred in not giving opportunity of being heard to the Departmental Valuation Officer in the matter of working out the cost of construction of the flats and other units at 10, Gurusaday Road, Calcutta ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in upholding the order of the Commissioner of Income-tax (Appeals) deleting the addition made under Section 69B of the Income-tax Act, 1961 ? 3. Whether, on the facts and in the circumstances of the case and also on a correct interpretation of the provision of Section 22 of the Income-tax Act, 1961, the Tribunal was correct in law in upholding the order of the Commissioner of Income-tax (Appeals) that the Income-tax Officer erred in concluding that the annual letting value of the flats at 10, Gurusaday Road, Calcutta, was assessable in the hands of the assessee and thereby deleting the addition made on the point ?"
(2.) The facts as found by the Tribunal are as under : This reference relates to the income-tax assessment of the assessee, a partnership firm for the financial year ending March 31, 1975, corresponding to the assessment year 1975-76. The assessee-firm is engaged in the business of constructing multi-storeyed buildings and selling offices and flats therein. The dispute, in this reference, relates to the construction of a multi-storeyed building at No. 10, Gurusaday Road, Calcutta. The assessee started making preparations for construction of a ten-storeyed building at No. 10, Gurusaday Road, Calcutta. The construction work was taken up in 2 phases, one comprising the main building consisting of forty-nine flats and the other comprising the annexe building consisting of thirty flats together with garage-cum-servants quarters block. The work of the foundation at the main building was started towards the end of 1965 and almost completed in the financial year ending March 31, 1967. Owing to sluggish market conditions, there was no further progress in construction during the next three years. The foundation work was carried out by the assessee-firm on its own.
(3.) On or about November 24, 1970, the assessee-firm entered into a construction agreement with Messrs. B. C. Mitra, contractors, for carrying out the further construction work. The contractor was to be paid at the rate of Rs. 25 per sq. ft. of the carpet area of the flats constructed. The main building was completed by February, 1973. Work on the second phase relating to the construction of annexe building was started in April, 1972, and the same was constructed by May, 1975. This construction was also carried out by Messrs. B. C. Mitra, contractors, who agreed to be paid Rs. 27.50 per sq. ft. in respect of the ground floor and Rs. 34.50 per sq. ft. in respect of the other floors. The garage-cum-servants' quarters were constructed by Messrs. B. S. Construction. But there is no dispute in regard to the construction of the garage-cum-servants' quarters.;