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Facts
The assessee, Quick Heal Technologies Limited, was initially subjected to an addition of Rs. 2,05,87,000/- for disallowance of depreciation on an office building for AY 2014-15, which was challenged before the CIT(A)/NFAC. The CIT(A)/NFAC deleted this addition, leading the Revenue to appeal, primarily contending that the CIT(A) erred by admitting additional evidence without providing the AO an opportunity to examine it, in violation of Rule 46A. The assessee maintained that the property was purchased in 2009, put to use in FY 2013-14, and all evidence of ownership and use was either before the AO or was supplementary in nature presented to the CIT(A).
Held
The Tribunal affirmed the CIT(A)'s decision, ruling that the assessee had adequately demonstrated ownership, possession, and that the building was put to use during AY 2014-15 through relevant documents. It concluded that the additional evidence submitted to the CIT(A) was merely supplementary, reinforcing previously made claims, and that the Revenue failed to present any material to rebut the assessee's claim. Consequently, the Tribunal found no infirmity in the CIT(A)'s order and dismissed the Revenue's appeal.
Key Issues
Whether the CIT(A) correctly admitted additional evidence under Rule 46A without allowing the AO an opportunity to examine it, and whether the assessee was entitled to claim depreciation on the office building for AY 2014-15 based on proof of ownership, possession, and 'put to use' criteria.
Sections Cited
14A, 143(3), 263, Rule 46A, Rule 8D(2)(iii)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI MANISH BORAD & MS. ASTHA CHANDRA
आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the Revenue is directed against the order dated 06.06.2025 of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [“CIT(A)/NFAC”] pertaining to Assessment Year (“AY) 2014-15.
The Revenue has raised the following grounds of appeal :-
1. On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in allowing the appeal of the assessee and deleting the addition made by the AO of Rs. 2,05,87,500/- based on the documentary evidences furnished by the assessee during the appellate proceedings, without appreciating that these documents/evidences were never produced by the assessee before the AO during the assessment proceedings but produced for the first time before the Id. CIT(A) and therefore, the same would fall in the category of additional evidences within the meaning of Rule 46A of the 1.T. Rules.
2. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in admitting the additional evidences furnished by the assessee without recording a clear finding as to the circumstances as detailed in sub-rule (1) of Rule 46/1 under which it merited admission as additional evidence, thereby violating the mandate contained in sub- rule (2) of Rule 46A.
3. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in admitting the additional evidences furnished by the assessee without giving the AO reasonable opportunity to examine the same and to furnish any evidence to rebut the same, thereby grossly disregarding the requirements as mandated in Rule 46A(3) of the I.T. Rules.
The appellant craves leave to add to, amend, alter any of the above grounds of appeal.”
3. Briefly stated the facts are that the assessee is a company engaged in the business of manufacturing and trading of antivirus software and providing IT related service. For AY 2014-15, the assessee filed its return of income on 29.11.2014 declaring total income at Rs.93,14,29,280/-. The case of the assessee was selected for scrutiny through CASS. The Ld. Assessing Officer (“AO”) completed the assessment vide his order dated 26.12.2016 passed u/s 143(3) of the Income Tax Act, 1961 (the “Act”) by making an addition on account of disallowance u/s 14A amounting to Rs.53,91,377/-. The Ld. CIT(A) confirmed the action of the Ld. AO. On further appeal, the Tribunal vide order dated 12.03.2019 set aside the issue to the file of the Ld. AO directing him to recompute the disallowance under Rule 8D(2)(iii) by considering the related investment yielding exempt income. Thereafter, the Ld. Pr. CIT assumed jurisdiction u/s 263 of the Act. Pursuant to the order of the Pr. CIT passed u/s 263 of the Act dated 28.03.2019 an addition of Rs.2,05,87,000/- was made on account of disallowance of depreciation claimed by the assessee on office building situated at S. No. 1442-1445, Thube Park, Shivaji Nagar, Pune.
4. Aggrieved by the above disallowance of depreciation on office building by the Ld. AO, the assessee carried the matter before the Ld. CIT(A)/NFAC. The Ld. CIT(A)/NFAC after considering the assessee’s submissions on the impugned issue which is recorded on pages 7 to 12 of his appellate order deleted the entire addition by observing as under : “4.5 Now, coming to ground number 1 regarding the disallowance of depreciation amounting to Rs. 2,05,87,500/-, the Ld AO has made the disallowance mainly on the following ground: i) Occupancy certificate from Municipal Corporation dtd. 26/11/2012 is in the name of Vijay Narayan Jalan.
ii) The MSEB bill submitted by the assessee dated dtd. 05/10/2019 is of current period and the assessee has not submitted any document to substantiate that it had actually received the connection from MSEB in A.Y. 2014-15. iii) The only evidence which proves the ownership of the assessee is the sale deed which was executed on 28/04/2014 related to assessment year 2015- 16. The appellant has clarified the above points as follows: i) The property mentioned above was purchased by the company vide sales agreement dated 29 December 2009 (refer page no. 57 of the submission). The said agreement was registered as per Section 17(1A) of the Registration Act and stamp duty for the same was paid appropriately. ii) Pending the registration of the property in the name of the company the permissions were issued by the Pune Municipal Corporation on 26 November 2011 (refer page no. 54 and 55 of the submission) in the name of erstwhile owner being M/s Jalan Construction Company (Vijay Narayan Jalan). iii) Further, to substantiate the claim that the said property was put to use by the company in the financial year 2013-14, we had submitted electricity bill for the month of September 2019 (refer page no. 63 of the submission) which contains the date of connection as 03 July 2013 as an evidence of commencement of use of the said premises. I have carefully perused the submission of the Assessee. The property in this case was purchased by the company vide sales agreement dated 29th December, 2009 and was subsequently registered on 28th April, 2014. Pending registration of the property in the name of the company, the construction permissions were issued by the Pune Municipal Corporation on 26th November 2011 in the name of erstwhile owner being M/s Jalan Construction Company (Vijay Narayan Jalan). However, the property was all along in the possession of the Assessee. The electricity bill submitted by the Assessee also clarifies that the electric connection date is 3rd July 2013. Further, in support of his contention the Appellant has furnished the copy of Shop license issued in the name of the Assessee Company dated 05/08/2013. The Appellant has also furnished monthly summary of electricity bill for the period from July 2013 to March 2014 showing average electricity consumption of about Rs.4.5 lacs per month starting from July, 2013 which clearly shows that the property was put to use during the financial year 2013-14 starting from July 2013. In view of the facts as discussed above the Assessee is entitled to depreciation on Shop during the F.Y. 2013-14. Accordingly, the addition made by the AO on account of disallowance of depreciation amounting to Rs. 2,05,87,500/- is deleted.
In the result, the appeal is being treated as partly allowed.
5. The Ld. DR submitted that the assessee has submitted additional evidence(s) before the Ld. CIT(A)/NFAC which he has accepted and taken into account while deciding the impugned issue in favour of the assessee without obtaining any comments from the Ld. AO. Thus, the Ld. AO had no opportunity to examine these additional evidences and submit his response to rebut the same which is in violation of the requirements mandated under Rule 46A(iii) of the Income Tax Rule, 1962 by the Ld. CIT(A)/NFAC. He, therefore, prayed that the issue may be set aside to the file of the Ld. AO for decision afresh after verifying the additional evidences filed by the assessee before the Ld. CIT(A)/NFAC.
The Ld. AR, on the other hand, supported the order of the Ld. CIT(A)/NFAC and submitted that the evidences filed by the assessee before him are only in the nature of supplementary evidences which have been filed only in support of its claim. It is the submission of the Ld. Counsel for the assessee that the alleged additional evidence filed by the assessee before the Ld. CIT(A)/NFAC has been filed only to support the assessee’s claim regarding the ownership and use of the building during the relevant AY for claiming depreciation. Referring to chart of events placed on page 1 of the paper book containing chronology of transaction in connection with acquisition of building and its use during the relevant AY 2014-15, he reiterated that the observation of the Ld. AO that the assessee became real owner of the building on which depreciation is claimed only in AY 2015-16 thereby denying the depreciation on the said building is incorrect. He submitted that the property was in possession of the assessee in the relevant AY and has also been put to use during the relevant AY which has already been substantiated by filing the relevant documents before the Ld. AO such as copies of completion and occupation certificate and the electricity bill mentioning the date of connection as 03.07.2013 (page 223 of the paper book refers). The so called additional evidence which was not filed before the Ld. AO but before the Ld. CIT(A)/NFAC is the copy of Shop Act License issued in the name of the assessee dated 05.08.2013 and monthly statement electricity bill for the period from July 2013 to March 2014 showing average consumption of about Rs.4.5 lakhs evidencing that the property was in active use during the FY 2013-14. He, therefore, submitted that the order of the Ld. CIT(A)/NFAC be upheld and the grounds raised by the Revenue should be dismissed.
We have heard the Ld. Representatives of the parties and perused the material available on record. The facts of the case are not in dispute. We find that the assessee has duly demonstrated before the Ld. AO as well as the Ld. CIT(A)/NFAC that the assessee has rightly claimed the depreciation after ownership rights are received and the asset was put to use in business of the assessee by filing all the relevant details/documents during the assessment and appellate proceedings. The claim of the assessee has been substantiated by the various evidences filed by the assessee both before the Ld. AO as well as the Ld. CIT(A)/NFAC, the details of which are provided on page 292 of the paper book and is reproduced below :
Further, the Chronology of transaction in connection with acquisition of building and its use as furnished by the assessee is as under:
From the above, it is clear that the assessee after obtaining the occupancy and completion certificate on 01.12.2012 occupied the premises and thereafter also took electricity connection on 03.07.2013. Only the final sale deed was entered on 28.04.2014. We, therefore, find force in the contention of the Ld. AR that the assessee has rightly claimed depreciation after ownership rights have been received by the assessee and the premises was put to use in FY 2013-14. The Ld. DR is aggrieved by the order of the Ld. CIT(A)/NFAC for the reason that the assessee has filed certain additional evidence, in support of its claim of depreciation which the Ld. CIT(A)/NFAC has taken into account without affording any opportunity to the Ld. AO to examine and furnish any evidence to rebut the same. It is the submission of the Ld. AR that the additional evidences filed before the Ld. CIT(A)/NFAC are only the supplementary evidences which have been filed in support of the claim already made by the assessee. These evidences were filed by the assessee only to further establish the fact that the assessee was in due possession of the said premises which was duly put to use in AY 2014-15. We find that the assessee has only filed two new documents/details before the Ld. CIT(A)/NFAC, first being the shop license dated 05.08.2013 and the second being the monthwise summary of electricity bill from July 2013 to March 2014 showing an average monthly consumption of electricity evidencing that the property was in active use during the AY 2014-15. This was filed in addition to the electricity bill indicating the date of connection in the name of the assessee as 03.07.2013 which was already on record with the Ld. AO. These facts are contrary to the finding of the Ld. AO that the assessee has not submitted any document to substantiate that it had actually received the connection from MSEB in AY 2014-15 and that the assessee was actually the owner during the relevant AY 2014-15. In our considered view, the assessee has duly proved the ownership/possession of the building and the asset being put to use during the relevant AY 2014- 15 by furnishing all the relevant supporting documents/details/evidences for its claim of depreciation on the said building/premises during the relevant AY 2014-15 under consideration. The Revenue has not brought on record any material/evidence to rebut the claim of the assessee. It therefore appears that the Ld. AO has not completely considered the submissions/evidences furnished by the assessee before him. On the contrary, the Ld. CIT(A)/NFAC has allowed the assessee’s claim of depreciation only after considering the submissions of the assessee along with the supporting documents/evidence which were also available before the Ld. AO and further, taking support from the fresh evidence furnished by the assessee which, in our view, only supplements the claim of the assessee. Under these circumstances and the facts of the case, we do not find any infirmity in the order of the Ld. CIT(A)/NFAC which is hereby upheld. There is thus, no merit in the grounds raised by the Revenue. Accordingly, the grounds of appeal raised by the Revenue are dismissed.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 05th December, 2025.