YOGESH M MODI,MUMBAI vs. ITO 25(1)(5), MUMBAI

This appeal by assessee Under section 253 of the Income-Tax Act (“The Act”) is directed against the order of ld. CIT(A)-37, Mumbai dated 02.09.2016 for Assessment Year (AY) 2012-13. The assessee has raised solitary grounds of appeal that learned Commissioner (Appeals) erred in confirming the disallowance of Rs. 4,11,677/- being depreciation claimed on industrial shed for the reasons that asset was not put to use.

Brief facts of the case are that assessee filed return of income for relevant assessment year on 4th July 2012 declaring total income of Rs. 16,69,131/-. The assessment was completed on 13 March 2015 under section 143(3). The assessing officer while passing assessment order besides other additions and disallowance, disallowed depreciation on industrial premises/ shed. On appeal before Commissioner (Appeals) the action of assessing officer for disallowance of depreciation was confirmed. Further, aggrieved by the order of Commissioner (Appeals) the assessee has filed present appeal before us.

We have heard learned AR of the assessee and learned DR for the revenue and perused the material on record carefully. The learned AR of the assessee argued that the assessee made the extension on the factory building by getting the approval plan sanctioned from the local authority on 5 August 2011. The asset/ factory shed was put to use before 31March 2012. The assessee furnished complete evidence with regard to sanction a plan and completion certificate and other evidences to substantiate his contention including the occupancy certificate for claiming depreciation of building asset. The assessing officer disallowed the depreciation holding that inspection of construction of site was inspected on 30 April 2012. The learned Commissioner (Appeals) also confirmed the action of assessing officer observing that sanction plan was issued only on 12 July 2012. The lower authority failed to appreciate that the industrial shed already exist in the previous year and there was an extension of the premises. On the other hand learned DR for the revenue supported the order of authorities below. It was further argued that the assessee has no 2 shown any evidence to substantiate the fact that the additional asset was put to use before 31.03.2012.

We have considered the rival submission of the parties and have gone through the orders of authorities below. The assessing officer while framing assessment order asked the assessee to furnish the justification of claim of depreciation of asset for financial year ended on 2012. The assessee furnished the details of asset added during the financial year ended on 2012. The assessee further contended that extension of factory building was approved by the local authority by letter dated 05th August 2011, the assessee had put to use the asset before 31 March 2012. The assessee also furnished the copy of completion certificate and occupancy certificate dated 12 July 2012 issued by competent authority. The contention and the documentary evidences furnished by assessee were not accepted by assessing officer holding that the date of inspection in the occupancy certificate is mentioned as 30 April 2012. The assessing officer disallowed appreciation of Rs. 1,80,950/-. The assessing officer also disallowed 10% depreciation on purchases of Rs.23,07,269/- holding that assessee has shown bogus purchases transaction. The assessing officer disallowed appreciation of Rs. 2,30,727/-being 10% of alleged bogus purchases. Thus, the assessing officer disallowed total depreciation of Rs.4,11,677/- (Rs, 180950 + Rs. 2,30,727/-). We have noted that no appeal against the disallowance of Rs.2,30,727/- was filed by assessee 3 Yogesh Modi before Commissioner (Appeals). In our view the disallowance of depreciation of Rs. 2,30,727/- attains finality. Before us, the dispute is limited to the depreciation of Rs. 1,80,950/-, though the assessee has mentioned the figure of disallowance of depreciation for Rs. 4,11,677/- in the grounds of appeal