2019 (7) TMI 81 - AT - Income Tax

Disallowance of depreciation on building - no completion certificate from Local Authority or Concerned Authority was provided by the assessee to the Department - HELD THAT - As decided in M/S. NIRAMAYA MEDICAL FOUNDATION RESEARCH CENTRE, 2013 (7) TMI 1132 - ITAT 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. 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. 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. Disallowance of depreciation on furniture and fixtures - addition on furniture and fixtures in the case of assessee during the assessment year under appeal - 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 - HELD THAT - 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. DR could not controvert these facts by placing any other submissions or material on record. Even, CIT (Appeals) has not brought any specific or cogent reasons for disallowing depreciation claimed for furnitures and fixtures. The order of CIT(Appeals) surrounds on surmises, suspicion and guess work and therefore, is not legally acceptable.- Ground No.2 raised in appeal by the assessee is allowed.

Summary

Issues:
1. Disallowance of depreciation claimed on building additions.
2. Disallowance of depreciation claimed on furniture and fixtures.
3. Addition made on account of income difference.

Analysis:

Issue 1: Disallowance of Depreciation on Building Additions
The assessee's appeal challenged the disallowance of depreciation on building additions by the Assessing Officer. The Assessing Officer disallowed depreciation on the grounds that the building was not completed and put to use before the specified date. The assessee argued that a completion certificate from the architect was provided to the Department, which was not considered by the Revenue Authorities. The Commissioner of Income Tax (Appeals) upheld the disallowance citing lack of proper completion certificate. However, the appellate tribunal referred to a similar case where it was held that the absence of a completion certificate cannot be the sole reason to disallow depreciation if the building is used for business purposes. As the assessee had a completion certificate and utilized the building for business, the tribunal allowed ground No.1 raised by the assessee.

Issue 2: Disallowance of Depreciation on Furniture and Fixtures
The second issue pertained to the disallowance of depreciation claimed on furniture and fixtures by the Assessing Officer. The Revenue contended that the materials for the furniture were procured on a date that made it impossible to complete the fixtures by the specified deadline. However, the assessee presented evidence showing that the materials were acquired before the deadline, even though the accounting was done later. The tribunal found that the Revenue's argument lacked substantiation and the Commissioner of Income Tax (Appeals) did not provide valid reasons for disallowing the depreciation. Therefore, the tribunal directed the Assessing Officer to allow depreciation on the furniture and fixtures, leading to the allowance of ground No.2 raised by the assessee.

Issue 3: Addition on Account of Income Difference
The third issue, which was not pressed by the assessee during the hearing, concerned an addition made due to a variance between the assessee's returns and the ITS data. Since the assessee did not pursue this ground, it was dismissed as "not pressed."

In conclusion, the appellate tribunal partially allowed the assessee's appeal, overturning the disallowance of depreciation on building additions and furniture and fixtures. The judgment emphasized the importance of utilizing assets for business purposes, even in the absence of certain documentation, to justify depreciation claims.