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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI ANIL CHATURVEDI, AM & SHRI PARTHA SARATHI CHAUDHURY, JM
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM :
This appeal preferred by the assessee emanates from the order of the Ld. Commissioner of Income Tax(Appeals)-6, Pune dated 04.04.2016 for the assessment year 2010-11 as per the following grounds of appeal on record:
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“1. The learned Commissioner of Income Tax(Appeals)-6 Pune has erred in confirming the disallowance of amount of depreciation of Rs.8,81,838/-claimed by the appellant company on the additions made to building. 2. The learned Commissioner of Income Tax(Appeals)-6 Pune has also erred in disallowing the amount of depreciation of Rs.93,209/- claimed by the appellant company on the additions made to furniture and fixtures even though all the details related thereto were submitted. 3. The learned Commissioner of Income Tax(Appeals)-6 Pune has also erred in confirming the addition of Rs.1,623/- merely due to difference in ITS data i.e on account of income which does not belong to the appellant company in any way. 4. The appellant craves leave to add, modify, expand the ground(s) of appeal and lay/produce the additional evidence(a) at the time of hearing.”
The brief facts of the case are that the assessee company is engaged in the business of manufacturing of polyurethane plants, varnishes and lacquers. The assessee had filed return of income on 13.10.2010 declaring total income at Rs.4,71,83,780/-. The Assessing Officer completed assessment u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) on 26.03.2013 determining total income at Rs.4,83,06,990/-. The Assessing Officer disallowed depreciation claimed on building amounting to Rs.8,81,838/- holding that the assessee failed to establish that the building was completed and put to use before 31.03.2010. Similarly, the Assessing Officer disallowed depreciation of Rs.93,209/- claimed on the furniture and fixtures holding that the furniture and the fixture work was not completed by 31.03.2010. The third addition of Rs.1,48,167/- made on account of the difference noticed between the assessee‟s returns and the ITS data.
At the time of hearing, the Ld. AR of the assessee submitted that he is not pressing ground No.3 in the grounds of appeal. Therefore, in view of the submission of the Ld. AR, ground No.3 raised in appeal by the assessee is dismissed as „not pressed‟.
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3.1 That with regard to ground No.1, the Ld. AR reiterated the submissions as placed before the Sub-ordinate Authorities and submitted that the only reason for disallowing the claim of depreciation amounting to Rs.8,81,838/- since no completion certificate from Local Authority or Concerned Authority was provided by the assessee to the Department. The Ld. AR invited our attention to Page 72 of the paper book where completion certificate has been given dated 02.03.2010 by the architect of the building and this has been placed on record before the Department. However, this was not considered by the Revenue Authorities. Just because, there was no completion certificate produced from the local authority, depreciation was denied by the Department.
3.2 That further, the Ld. AR of the assessee submitted that on perusal of the order of the Ld. Commissioner of Income Tax (Appeals), he has upheld the disallowance made by the Assessing Officer again on same premise that no proper completion certificate evidencing that the works of the building has been completed prior to 31.03.2010 was filed before the Department. Furthermore, regarding the certificate from architect dated 02.03.2010, the Ld. Commissioner of Income Tax (Appeals) was of the opinion that such certificate has been issued by the architect at the instance of the assessee and therefore, he did not rely on that certificate. But this opinion of the Ld. Commissioner of Income Tax(Appeals) is not backed by any corroborative or supportive evidences. It is just guess work and merely an opinion based on suspicion. In support of his contentions, the Ld. AR of the assessee has placed reliance on the decision of the Co-ordinate Bench of the Tribunal, Pune in the case of DCIT Vs. M/s. Niramaya Medical Foundation & Research Centre, ITA No.708/PN/2012 for the assessment year 2003-04 decided on 05.07.2013.
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Per contra, on this issue, the Ld. DR placed strong reliance on the orders of the Sub-ordinate Authorities.
We have perused the case records and heard the rival contentions. We observe that in the case of DCIT Vs. M/s. Niramaya Medical Foundation & Research Centre (supra.), the Co-ordinate Bench of the Tribunal, Pune on similar facts and circumstances, has held as under:
“5. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions relied on by both the sides. There is no dispute to the fact that the building which is owned by the assessee and is used for running the hospital is incomplete since the completion certificate has not been obtained by the assessee from the local authority and the building is not complete in every respect as per the approved plan. At the same time, there is also no dispute to the fact that the building has been used for the purpose of business. There is also no dispute to the fact that as against the turnover of Rs.26,88,092/- in the A.Y. 2002-03 the turnover during the year has increased to Rs.1,27,28,062/-. Therefore, the submission of the assessee before the Assessing Officer that the higher turnover could not have been achieved without use of the building and equipment should not have been brushed aside by the Assessing Officer. Merely because the completion certificate has not been obtained since the building was not complete in every respect as per the approved plan cannot be a ground to disallow the claim of depreciation especially when the building has been utilised for the purpose of business which is proved by the huge increase in turnover during the year. Under these circumstances and in absence of any contrary material we find no reason why depreciation should be disallowed. In this view of the matter and in view of the detailed discussion by the Ld.CIT(A) allowing the claim of depreciation we find no infirmity in his order. Accordingly, the same is upheld. Grounds raised by the Revenue are accordingly dismissed.”
In the above referred case, it has been categorically held by the Co- ordinate Bench of the Tribunal, Pune that merely because completion certificate has not been obtained, it cannot be the ground to disallow the claim of depreciation especially when the building has been utilized for the purpose of business.
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Reverting to the facts of the present case, the assessee has the completion certificate from the architect of the building dated 02.03.2010, that further the building has also been utilized for the purpose of business. The Revenue on suspicion has doubted the genuineness and authenticity of the certificate of the Architect placed on record without any corroborative or supportive evidences which is not legally justifiable. In such circumstances, respectfully following the decision of Co-ordinate Bench of the Tribunal, Pune as referred herein above, we allow ground No.1 raised in appeal by the assessee.
The ground No.2 relates to disallowance of depreciation on furniture and fixtures. The company had claimed to have made an addition of Rs.3,34,074/- to the furniture and fixtures before 30.09.2009 and an addition of Rs.18,64,173/- after 30.09.2009. The Assessing Officer noticed that the material like plywood, veneer were purchased on 31.03.2010 and hence could not have been utilized for making the furniture ready by 31.03.2010. Therefore, the Assessing Officer disallowed the claim of the assessee that the furniture and fixtures amounting to Rs.18,64,173/- has been completed and disallowed the depreciation claimed on the same of Rs.93,209/-.
At the time of hearing, the Ld. AR of the assessee invited our attention to pages 23 to 71 of the paper book wherein the copy of purchase vouchers have been placed and on the basis of these documents, the Ld. AR submitted that the actual date of invoice is prior to 31.03.2010 though the accounting of invoice is done on 31.03.2010. That further the materials were also received much prior to 31.03.2010 The Ld. AR of the assessee in the written submissions filed before us has made a table which is reproduced herein below:
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Sr. Name of the Date of Date of Date put to Amount Reference No. party & item invoice accounting use No. of invoice 1 Om Plywood- 15/03/2010 31/03/2010 31/03/2010 45,720/- Annex- Commercial 3(b) Ply 2 Om Plywood- 15/03/2010 31/03/2010 31/03/2010 4,002/- Annex- Teak wood 3(c) 3 Arati 08/03/2010 31/03/2010 31/03/2010 4,260/- Annex- Plywood- 3(d) Veener Wenge 4 Arati 08/03/2010 31/03/2010 31/03/2010 748/- Annex- Plywood- 3(e) LH Panel in 5 Arati 18/03/2010 31/03/2010 31/03/2010 5,144/- Annex- Plywood- Sal 3(f) wood 6 Arati 18/03/2010 31/03/2010 31/03/2010 13,325/- Annex- Plywood- 3(g) Commply 7 Arati 25/03/2010 31/03/2010 31/03/2010 125/- Annex- Plywood- 3(h) Masking Tape 8 Ratan Glass- 31/03/2010 31/03/2010 31/03/2010 6,987/- Annex- Table top 3(i) glass
The Ld. AR submitted that as per the above table, it is crystal clear that the date of invoice is much prior to 31.03.2010 and therefore, these furnitures and fixtures were utilized within 31.03.2010 and hence, the claim of depreciation should be allowed on these furnitures.
Per contra, the Ld. DR has placed strong reliance on the orders of the Sub-ordinate Authorities.
We have perused the case records and heard the rival contentions. We have also analyzed the facts and circumstances of this case. There has been addition on furniture and fixtures in the case of assessee during the
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assessment year under appeal. The Revenue denied the depreciation on the ground that these furnitures and fixtures were not utilized within 31.03.2010, since as per the Revenue the date of procurement of these furnitures was itself 31.03.2010. However, the assessee has placed on record complete information in tabulation form which has been made part of this order wherein it is evident that the date of invoice was much prior to 31.03.2010 whereas only the date of accounting of invoice was 31.03.2010 and also the materials were received prior to 31.03.2010. The Ld. DR could not controvert these facts by placing any other submissions or material on record. Even, the Ld. Commissioner of Income Tax (Appeals) has not brought any specific or cogent reasons for disallowing depreciation claimed for furnitures and fixtures. The order of Ld. Commissioner of Income Tax (Appeals) surrounds on surmises, suspicion and guess work and therefore, is not legally acceptable.
In view of the matter, we set aside the order of the Ld. Commissioner of Income Tax (Appeals) on the issue and direct the Assessing Officer to allow depreciation on these furniture and fixtures to the assessee. Thus, ground No.2 raised in appeal by the assessee is allowed.
In the result, appeal of the assessee is partly allowed. 12.
Order pronounced on 27th day of June, 2019.
Sd/- Sd/- ANIL CHATURVEDI PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 27th June, 2019. SB
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आदेश की प्रनिलऱपप अग्रेपषि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. 3. The CIT(Appeals)-6, Pune. 4. The Pr. CIT-5, Pune. , आयकर अऩीऱीय अधधकरण, “ए” बेंच, 5. ववभागीय प्रतततनधध ऩुणे / DR, ITAT, “A” Bench, Pune. गार्ड फ़ाइऱ / Guard File. 6.
// True Copy // आदेशानुसार / BY ORDER,
तनजी सधचव / Private Secretary आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune.
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Date 1 Draft dictated on 26.06.2019 Sr.PS/PS 2 Draft placed before author 27.06.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order