DCIT 4(3)(1), MUMBAI V. TAUIRAN IRON & STEEL CO. P.LTD, MUMBAI

ITA 1284/MUM/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7339 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: K
• Assessment Year: 2009-2010
• Appeal Filed On: 05-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESHPANDEDR
• Assessee Lawyers: K B DESAI
• Keywords: Depreciation; Wholly owned subsidiary; Notional interest; Commercial expediency; Revised return; Revenue expenditure
• Section: 143(3); 32

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -KBENCH MUMBAI , , , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND SANDEEP GOSAIN,JUDICIAL MEMBER ./I.T.A./1284/MUM/2015, /ASSESSMENT YEAR: 2009-10 DCIT-4(3)(1) 6 TH FLOOR, ROOM NO.649 AAYAKAR BHAVAN MUMBAI-400 020. VS. M/S. TAURIAN IRON & STEEL CO.PVT.LTD. 302A, POONAM CHAMBERS DR. ANNIE BESANT ROAD, WORLI MUMBAI-400 018. PAN:AAACT 4814 A ./I.T.A./1281/MUM/2015, /ASSESSMENT YEAR: 2009-10 M/S. TAURIAN IRON & STEEL CO.PVT.LTD. MUMBAI-400 018. VS. DCIT-4(3)(1) AAYAKAR BHAVAN, MUMBAI-400 020. ( / APPELLANT) ( / RESPONDENT) REVENUE BY: SHRI SAURABH DESHPANDE-DR ASSESSEE BY: SHRI K.B. DESAI / DATE OF HEARING: 22/03/2018 / DATE OF PRONOUNCEMENT : 11/05/2018 ,1961 254(1) ORDER U/S.254(1)OF THE INCO ME-TAX ACT,1961(ACT) , - PER RAJENDRA, AM - CHALLENGING THE ORDER,DATED 04/12/2014,OF THE CIT(A )-58 MUMBAI THE ASSESSEE AND THE ASSESSING OFFICER (A.O) HAVE FILED THE PRESENT APPE ALS.ASSESSEE- COMPANY IS ENGAGED IN THE BUSINESS OF TRADING AND PROCESSING OF IRON ORE, MI NING ACTIVITY OF IRON ORE CONTRACT BASIS AT JHARKHAND AND GENERATION OF WIND POWER. IT ALSO SEL LS PROCESSED IRON ORE BOTH IN DOMESTIC AND INTERNATIONAL MARKET.IT FILED ITS RETURN OF INCOME ON 30/09/2009 AND SUBSEQUENTLY FILED A REVISED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.20.77 CRORES.ASSESSMENT WAS COMPLETED ON 26/03/2013 DETERMINING THE TOTAL INCOM E OF THE ASSESSEE AT RS.28.98 CRORES U/S. 144C R.W.S. 143(3) OF THE ACT. ITA/1284/MUM/2015 (REVENUES APPEAL) : 2. FIRST GROUND OF APPEAL IS ABOUT DIRECTING THE AO TO MODIFY THE ADDITION OF INTEREST OF RS.1.27 CRORES ON THE INTEREST FREE ADVANCES GIVE N TO THE AE.S. DURING THE TP PROCEEDINGS, THE TPO NOTED THAT DURING THE YEAR UNDER CONSIDERAT ION THE ASSESSEE HAD ADVANCED MONEY TO ITS FOUR AE.S,NAMELY,PT TAURIAN IRON AND STEEL INDO NESIA ( RS.694.57 LAKHS); TAURIAN GLOBAL INVESTMENT LTD.,DUBAI(RS.870.43 LAKHS); PT. ENERGY RESOURCES SEA INDONESIA (RS.4.22 LAKHS) 1284 & 1281/M/15 M/S. TAURIAN IRON & STEEL COMPANY.PVT.LTD. 2 AND TRANSWORLD ACQUISITION PTE LTD. SINGAPORE, (RS. 1.33 LAKHS), THAT ASSESSEE HAD NOT CHARGED ANY INTEREST ON THE ADVANCES MADE TO THE A E.S.VIDE ITS LETTER DATE 13/6/2012, THE ASSESSEE EXPLAINED TO THE TPO THAT IT HAD REMITTED THE INTEREST FREE ADVANCES TO SUPPORT BUSINESS OF THE AE.S AT THE INITIAL STAGE AS PER TH E REQUIREMENT AND IN VIEW OF COMMERCIAL EXPEDIENCY,THAT NO NOTIONAL INTEREST COULD BE CHAR GED AS THE ADVANCES WERE MADE IN THE ORDINARY COURSE OF BUSINESS.ON 21/12/2001 THE ASSES SEE STATED THAT NO NOTIONAL INTEREST COULD BE CHARGED AGAINST THE ADVANCES. HOWEVER, THE TPO PROPOSED TO CHARGE ARMS LENGTH INTEREST @ 13% ON THE ADVANCES MADE TO THE AE.S AS UNDER :- I. PT TAURIAN IRON & STEEL INDONESIA - RS.1,12,67,7 42/- II. PT. ENERGY RESOURCES SEA, INDONESIA - RS.10,98,16 6/- III. TRANSWORLD ACQUISITION PTE. LTD. - RS.4,109/- IV. TAURIAN GLOBAL INVESTMENT LTD. - RS.3,60,0 23/- ACCORDINGLY,THE AO MADE AN ADDITION OF RS.1,27,30,0 40/- TO THE TOTAL INCOME OF THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA) AND MADE DETAILED SUBMISS IONS.AFTER CONSIDERING THE AVAILABLE MATERIAL,HE HELD THAT IN THE EARLIER YEAR IDENTICAL ISSUE WAS DELIBERATED UPON BY THE THEN FAA, THAT CERTAIN FACTS FOR THE YEAR UNDER CONSIDERATION WERE NOT THERE IN THE PRECEDING YEAR, THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE H AD ADVANCED AN AMOUNT OF MORE THAN RS.50 CRORES TO ITS AE.S AS AGAINST RS.5.28 LAKHS F OR THE EARLIER YEAR, THAT THE ASSESSEE HAD NOT CHARGED ANY INTEREST ON THE ADVANCES MADE TO THE A E.S, THAT IN THE PREVIOUS YEAR THE EXPENSES CLAIMED BY THE ASSESSEE WERE RELATED TO TRAVELLING, LODGING AND BOARDING, THAT FOR THE YEAR UNDER APPEAL THOSE FACTS WERE NOT EXISTING, THAT TH E ASSESSEE HAD CONTENDED THAT INTEREST CHARGED BY THE AO WAS QUITE HIGH,THAT IT HAD REQUES TED TO APPLY LIBOR PLUS RATE, THAT THE REQUEST MADE BY THE ASSESSEE WAS REASONABLE.HE DIRE CTED THE AO TO CHARGE THE RATE OF INTEREST AS SIX (6) MONTHS LIBOR PLUS 150 BASIS POINT. 4. BEFORES US,THE DEPARTMENTAL REPRESENTATIVE (DR) STA TED THAT NOW THE BLOOMBERG DATA IS AVAILABLE FOR DECIDING THE EXACT RATE OF INTEREST,T HAT THE FILE SHOULD BE SENT BACK TO THE AO/TPO. THE AUTHORISED REPRESENTATIVE (AR)STATED TH AT THE FIGURE ADOPTED BY THE FAA WAS ACTUALLY INCORRECT, THAT HE HAD ADOPTED THE FIGURE OF RS.50 CRORES AS AGAINST RS.19.50 CRORES , THAT THE FAA HAD TRIED TO DISTINGUISH THE CASES REL IED UPON BY HIS PREDECESSOR. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS BEFORE US. WE FIND THAT THE FAA HAS REFERRED TO THE ORDERS OF HIS PREDECESSORS FOR THE EARLIER YEAR, THAT LATER ON HE DECIDED 1284 & 1281/M/15 M/S. TAURIAN IRON & STEEL COMPANY.PVT.LTD. 3 THE ISSUE REFERRING TO THE DELAYED PAYMENT OF SHARE APPLICATION MONEY. IN OUR OPINION,THE ISSUE NEEDS FURTHER VERIFICATION.THEREFORE, IN THE INTEREST OF JUSTICE,WE ARE RESTORING BACK THE ISSUE TO THE FILE OF THE TPO/AO FOR FRESH ADJUDICAT ION. HE IS DIRECTED TO AFFORD A REASONABLE OPPORTUNITY TO THE ASSESSEE AND ADOPT CORRECT FIGUR E FOR DETERMINING THE ALP. GROUND NO.1 IS ALLOWED IN FAVOUR OF AO,IN PART. 6. NEXT TWO GROUNDS ARE ABOUT INTEREST ON SHARE APPLI CATION MONEY AND DEPRECIATION OF LEASED ASSETS RESPECTIVELY.REPRESENTATIVES OF BOTH THE SID ES AGREED THAT GS.OA-2 AND 3 ARE COVERED BY THE ORDER OF THE TRIBUNAL,DELIVERED FOR THE EAR LIER AY.(ITA/5920/MUM/2012;DTD. 16/09/ 2016). DEALING WITH THE ISSUE OF INTEREST ON SHARE APPLICA TION MONEY,THE TRIBUNAL HAS DECIDED THE MATTE AS UNDER: 31. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF EITHER SIDE AND PERUSED THE RELEVANT MATERIALS ON RECORD, INCLUDING THE ORDERS OF THE AU THORITIES BELOW AND ARE OF THE CONSIDERED OPINION THAT THOUGH IT IS CLAIMED THAT AMOUNTS AGGR EGATING TO US $ 8,60,000 HAD BEEN REMITTED BY THE ASSESSEE COMPANY BY WAY OF 'SHARE A PPLICATION' MONEY TO ITS WHOLLY OWNED SUBSIDIARY COMPANY (FOR SHORT `WOS') VIZ, TAURIAN C ISA AT ITA NO.5920/12 36 ABDIDJAN IVORY COAST OF WEST AFRICA UNDER THE AUTOMATIC ROUT E OF 'FOREIGN EXCHANGE MANAGEMENT ACT, 1999' (FOR SHORT TEMA') FOR OVERSEAS DIRECT INVESTM ENT IN TERMS OF NOTIFICATION NO. FEMA 120/RB-2004, DT. 07/07/2004 R.W CLAUSE (A) OF SUB-S ECTION (3) OF SEC. 6 OF THE TEMA', AFTER DUE COMPLIANCE OF THE STATUTORY PROVISIONS CONTEMPL ATED UNDER LAW, HOWEVER IT ALSO REMAINS A MATTER OF FACT THAT AS AGAINST THE REMITTANCE OF US $ 8,60,000 (RUPEE EQUIVALENT OF RS. 1,51,18,263/-), SHARES NUMBERING 31,120 WORTH US $ 6,60,000 ONLY WERE ALLOTTED TO THE ASSESSEE COMPANY, WHILE FOR THE BALANCE AMOUNT OF U S $ 2,00,000 (SUPRA) WAS REFUNDED BY THE 'AMOS' TO THE ASSESSEE COMPANY. THUS THE ADJUDI CATION AS REGARDS THE COLOR AND CHARACTER OF THE REMITTANCE BY THE ASSESSEE COMPANY TO ITS AE/WOS HAS TO BE GATHERED IN THE BACKDROP OF THE AFORESAID FACTUAL POSITION. THOUGH WE ARE IN AGREEMENT WITH THE CONTENTION OF THE ASSESSEE COMPANY THAT RE-CHARACTERIZATION OF A TRANSACTION IS PERMISSIBLE ONLY WHERE THE ECONOMIC SUBSTANCE OF A TRANSACTION DIFFERS FROM IT S FORM, AND WHERE THE FORM AND SUBSTANCE OF THE TRANSACTION ARE THE SAME BUT ARRANGEMENTS MA DE IN RELATION TO THE TRANSACTION, VIEWED IN THEIR TOTALITY, DIFFER FROM THOSE WHICH WOULD HA VE BEEN ADOPTED BY INDEPENDENT ENTERPRISES BEHAVING IN A COMMERCIALLY RATIONAL MANNER, PURSUAN T WHERETO IT IS NOT PERMISSIBLE ON THE PART OF THE REVENUE/DEPARTMENT TO CARRY OUT RE- CHA RACTERIZATION OF A SHARE APPLICATION MONEY AS A LOAN DUE TO DELAY IN ALLOTMENT OF SHARES , HOWEVER IN LIGHT OF THE FACTS INVOLVED IN THE CASE OF THE PRESENT ASSESSEE COMPANY, THOUGH WE FIND OURSELVES TO BE IN AGREEMENT WITH THE CONTENTION OF THE LD. A.R THAT TO THE EXTENT 31 ,120 SHARES WORTH US $ 6,60,000 HAD BEEN ALLOTTED TO THE ASSESSEE COMPANY, THE RE-CHARACTERI ZATION BY THE AO/TPO OF THE REMITTANCE MADE BY THE ASSESSEE COMPANY BY WAY OF SHARE APPLIC ATION MONEY TO ITS `WOS' TO THE SAID EXTENT, AS A LOAN DUE TO DELAY IN ALLOTMENT OF SHAR ES IS NOT PERMISSIBLE IN THE EYES OF LAW, BUT ARE UNABLE TO PERSUADE OURSELVES TO ACCEPT THE CONT ENTION OF THE LD. A.R THAT A SIMILAR TREATMENT IS ALSO TO BE ACCORDED TO THE BALANCE AMO UNT OF US $ 2,00,000 (SUPRA) WHICH HAD BEEN REFUNDED BY THE WOS TO THE ASSESSEE COMPANY. I N OTHER WORDS, TO BE BRIEF AND EXPLICIT, TO THE EXTENT THE REMITTANCE OF US $ 6,60,000 MADE BY THE ASSESSEE COMPANY TO ITS `WOS' BY WAY OF SHARE APPLICATION MONEY IS CONCERNED, AGAINS T WHICH 31,120 SHARES HAD BEEN ALLOTTED TO THE ASSESSEE COMPANY, THOUGH INVOLVING SOME DELA Y, TO THE SAID EXTENT THE AO/TPO HAD ERRED IN RE-CHARACTERIZING THE SHARE APPLICATION MO NEY, AS A LOAN DUE TO DELAY IN ALLOTMENT OF SHARES. THE AFORESAID VIEW SO ARRIVED AT BY US IS F ORTIFIED BY THE JUDGMENT OF THE HON'BLE HIGH 1284 & 1281/M/15 M/S. TAURIAN IRON & STEEL COMPANY.PVT.LTD. 4 COURT OF JURISDICTION SO PASSED IN THE CASE OF DIRE CTOR OF INCOME TAX (INTL. TAXATION) VS. BESIX KIER DABHOL SA (26 TAXMANN.COM 169)(BOM). HOW EVER, AS REGARDS THE BALANCE AMOUNT OF REMITTANCE OF US $ 2,00,000 (SUPRA) MADE BY THE ASSESSEE COMPANY TO ITS `WOS', AGAINST WHICH NO SHARES WERE ALLOTTED AND THE AMOUNT WAS RE FUNDED TO THE ASSESSEE COMPANY, WE ARE OF THE CONSIDERED VIEW THAT THE FACTUM OF ADVANCING OF THE SAID AMOUNT BY THE ASSESSEE COMPANY TO ITS `WOS', AND THE REFUNDING OF THE SAME BY THE `WOS' AFTER ENJOYING THE SAID AMOUNTS, AS SUCH, WOULD SAFELY FALL WITHIN THE REAL M OF A SIMPLICITER ADVANCE, WHICH THEREIN WOULD RENDER THE COLOR AND CHARACTER TO SUCH TRANSA CTION, AS THAT OF BEING A 'LOAN TRANSACTION'. IN THIS REGARD IT WOULD BE RELEVANT A ND PERTINENT TO POINT OUT THAT THE HOST OF DECISIONS/ORDERS OF DIFFERENT BENCHES OF THE TRIBUN ALS SO RELIED UPON BY THE LD. A.R OF THE ASSESSEE COMPANY TO SUPPORT HIS CONTENTION THAT REC HARACTERIZING OF THE SHARE APPLICATION MONEY REMITTED BY THE ASSESSEE COMPANY TO ITS 'WOS' , EVEN TO THE EXTENT WHERE NO SHARES HAD BEEN ALLOTTED AGAINST THE SAME AND AMOUNTS HAD BEEN REFUNDED TO THE ASSESSEE COMPANY, IS FOUND TO BE ABSOLUTELY MISCONCEIVED, BECAUSE A BARE PERUSAL OF THE SAID ORDERS/DECISIONS THEREIN REVEALS THAT IN THE SAID CASES, SHARES HAD BEEN ALLOTTED TO THE RESPECTIVE ASSESSES, WHILE FOR IN THE CASE OF THE PRESENT ASSESSEE COMPA NY, THE FACT AS IT SO REMAINS IS THAT TO THE EXTENT REMITTANCE OF US $ 2,00,000 HAD BEEN MADE BY THE ASSESSEE COMPANY TO ITS 'WOS', NO SHARES WERE ALLOTTED TO THE ASSESSEE COMPANY, BUT R ATHER AFTER A SUBSTANTIAL DELAY THE SAID AMOUNT WAS REFUNDED BY THE 'WOS'. THAT STILL FURTHE R IT CAN SAFELY AND INESCAPABLY BE CONCLUDED THAT AS THE REMITTANCE OF US $ 2,00,000 M ADE BY THE ASSESSEE COMPANY TO ITS 'WOS' DID NOT SEE THE LIGHT OF THE DAY AND THUS NEVER CRY STALLIZED INTO ALLOTMENT OF ANY SHARES TO THE ASSESSEE COMPANY, BUT RATHER AS A MATTER OF FACT CU LMINATED INTO REFUND OF THE SAID AMOUNT TO THE ASSESSEE COMPANY, THEREFORE ON CONSIDERATION OF THE SAID TRANSACTION IN TOTALITY, AS SUCH, THE SAME AT NO STAGE COULD BE CHARACTERIZED AS A RE MITTANCE TOWARDS SHARE APPLICATION MONEY, PURSUANT WHERETO THE ISSUE OF ANY RE-CHARACT ERIZATION WOULD NEVER ARISE. IN THIS REGARD IT WOULD FURTHER BE RELEVANT AND PERTINENT T O POINT OUT THAT NOW WHEN THE ECONOMIC SUBSTANCE OF THE REMITTANCE OF US $ 2,00,000 (SUPRA ) BY THE ASSESSEE COMPANY TO ITS 'WOS' TOWARDS SHARE APPLICATION MONEY, CAN SAFELY AND INE SCAPABLY BE HELD TO BE IN THE NATURE OF A TRANSACTION DIFFERENT FROM ITS FORM, AND RATHER AS A MATTER OF FACT THE ARRANGEMENTS MADE IN RELATION TO THE AFORESAID TRANSACTION, VIEWED IN TH EIR TOTALITY, DIFFER FROM THOSE WHICH WOULD HAVE BEEN ADOPTED BY THE ASSESSEE COMPANY BEHAVING IN A COMMERCIALLY RATIONAL MANNER, NO EMBARGO UNDER SUCH FACTUAL CIRCUMSTANCES CAN BE PLA CED AS REGARDS RE-CHARACTERIZATION OF SUCH REMITTANCE TOWARDS SHARE APPLICATION MONEY AS A LOAN TRANSACTION. 32. THAT STILL FURTHER WE ARE NOT IMPRESSED BY THE CON TENTION OF THE LD. A.R OF THE ASSESSEE COMPANY THAT AS THE BUSINESS OF A `WOS' IS TO BE TR EATED AS THE BUSINESS OF THE 'HOLDING COMPANY', THEREFORE GOING BY THE SAID POSITION OF L AW, AS THE FRUITS OF THE INVESTMENT BY THE ASSESSEE COMPANY IN ITS `WOS' WERE SOLELY TO BELONG TO THE ASSESSEE COMPANY (I.E THE 'HOLDING COMPANY), AS THE LATTER REMAINED THE SOLE AND ABSOLUTE OWNER OF THE SAID `WOS', THUS GIVING OF THE MONEY TO THE 'WOS' AND USE OF TH E SAID MONEY BY THE LATTER, THE ASSESSEE COMPANY IN ITS STATUS AS THAT OF BEING THE SOLE OWN ER OF THE SUBSIDIARY COMPANY, REMAINS THE BENEFICIARY OF ALL THE GAINS OF THE SUBSIDIARY COMP ANY, THEREFORE NON ALLOTMENT OF THE SHARES TO THE ASSESSEE COMPANY DURING THE PERIOD OF PAYMEN T OF THE SHARE APPLICATION MONEY TILL THE ACTUAL DATE OF ALLOTMENT, WOULD THEREFORE NOT GO TO PREJUDICE THE POSITION OF THE ASSESSEE COMPANY IN ANY WAY. THE RELIANCE PLACED UPON BY THE LD. A.R OF THE ASSESSEE COMPANY ON THE JUDGMENTS OF THE HON'BLE HIGH COURTS, IS FOUND TO B E MISCONCEIVED, AS THE SAME ARE FOUND TO BE DELIVERED IN CONTEXT OF SEC. 36(1)(III) OF THE ' ACT' AND IN REFERENCE OF THE ISSUE UNDER CONSIDERATION IN THE PRESENT CASE. 33. THAT IN LIGHT OF OUR AFORESAID OBSERVATIONS, WE HE REIN SET ASIDE THE ORDER OF THE LD. CIT(A), TO THE EXTENT THE LATTER HAD UPHELD THE ORD ER OF THE A.0 TREATING REMITTANCES TO THE EXTENT OF US $ 6,60,000/- BY THE ASSESSEE COMPANY T O ITS 'AE', I.E M/S TAURIAN CISA AT ABDIDJAN IVORY COAST OF SOUTH AFRICA (THE 'WOS' OF THE ASSESSEE COMPANY) TOWARDS 'SHARE APPLICATION' MONEY, AS LOANS AND ADVANCES, AND ON T HE SAID BASIS HAD THUS SUSTAINED THE CONSEQUENT ADJUSTMENT/ADDITION TOWARDS IMPUGNED INT EREST COMPUTED @14% P.A W.R.T THE SAID AMOUNT IN THE HANDS OF THE ASSESSEE COMPANY. T HAT THE ORDER OF THE LD. CIT(A), TO THE EXTENT RELATABLE TO REMITTANCE OF US $ 2,00,000 TO ITS AFORESAID 'WOS', AND THE CONSEQUENT 1284 & 1281/M/15 M/S. TAURIAN IRON & STEEL COMPANY.PVT.LTD. 5 ADJUSTMENT/ADDITION AS REGARDS THE SAME IS HOWEVER SUSTAINED, HOWEVER THE A.O/TPO IS HEREIN DIRECTED TO WORK OUT AND RESTRICT THE SAID A DJUSTMENT/ADDITION BY ADOPTING RATE OF INTEREST AS 6 MONTHS LIBOR PLUS 150 BASIS POINT FOR THE DELAYED RECEIPT OF THE PAYMENTS BY THE ASSESSEE COMPANY FROM ITS AFORESAID WOS/AE. THU S IN LIGHT OF OUR AFORESAID OBSERVATIONS, THE GROUND OF APPEAL NO. 4 AND GROUND OF APPEAL NO. 5 SO RAISED BY THE ASSESSEE COMPANY, ARE THUS PARTLY ALLOWED. RESPECTFULLY,FOLLOWING THE ABOVE,WE DIRECT THE AO/T PO TO WORK OUT AND RESTRICT THE SAID ADJUSTMENT BY ADOPTING RATE OF INTEREST AS 6 MONTHS LIBOR PLUS 150BPS FOR THE DELAYED RECEIPT OF THE PAYMENT. 7 .GROUND NO. 3 DEALS WITH LEASE RENTAL.WE FIND THAT ISSUE OF LEASE RENTAL I.E. FINANCIAL LEASE OR OPERATING LEASE HAS BEEN DELIBERATED UPON BY THE T RIBUNAL IN THE EARLIER YEAR AS UNDER: 34. THE ASSESSEE COMPANY VIDE ITS 'GROUND OF APPEAL NO. 6' HAD CHALLENGED THE ORDER OF THE LD. CIT(A) WHO HAD UPHELD THE DISALLOWANCE OF 'LEAS E RENTALS' MADE BY THE A.O AND HAD CONCURRED WITH THE A.O THAT THE 'LEASE TRANSACTION' EXECUTED BY THE ASSESSEE COMPANY WAS A FINANCE LEASE' AND NOT AN 'OPERATING LEASE'. 35. THE FACTS PERTAINING TO THE ISSUE UNDER CONSIDERAT ION ARE THAT THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF MINING AND WIND POWER HA D IN THE PERIOD RELEVANT TO A.Y. 2006-07 AND 2007-08 TAKEN RAILWAY WAGONS (2 RAKES) ON LEASE, AN D TREATING THE SAID LEASE TRANSACTION AS AN 'OPERATING LEASE', HAD THUS CLAIMED THE LEASE RENTA L CHARGES AS AN EXPENSES AS PER THE PROVISIONS OF THE 'ACT', WHILE FILING ITS 'RETURN OF INCOME' F OR BOTH OF THE AFORESAID ASSESSMENT YEARS. HOWEVER, THE ASSESSEE COMPANY FOLLOWING THE 'ACCOUN TING STANDARD 19' (AS 19) ON LEASE (BOTH FOR 'OPERATING LEASE' AND 'FINANCE LEASE') AS ISSUED BY THE ICAI, HAD THEREIN IN ITS 'BOOKS OF ACCOUNTS' TREATED THE SAME AS A 'FINANCE LEASE' AND ACCORDING LY THE VALUE OF ASSETS TAKEN ON LEASE WERE CAPITALIZED AS 'FIXED ASSETS' AND 'INTEREST' AND 'D EPRECIATION' ON THE SAID ASSETS., I.E WAGONS WERE DEBITED IN THE 'P &. LOSS A/C' AS AN EXPENSE. THE A SSESSEE COMPANY WHILE FILING ITS 'RETURN OF INCOME' FOR THE YEAR UNDER CONSIDERATION, DISALLOWE D THE 'DEPRECIATION' AND THE EXPENSES IN THE 'COMPUTATION OF INCOME' AND CLAIMED THE 'LEASE RENT AL' OF RS. 9,70,34,749/- AS AN EXPENSE BY TREATING THE LEASE AS ON 'OPERATING LEASE'. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE COMPANY JUSTIFYING ITS ENTITLEMENT TOWARDS THE 'LEASE RENTALS' THEREIN SUBMITTED THAT THE TREATMENT OF THE LEASE AS A 'FINANCE LEASE' IN THE 'BOOKS OF ACCOUNTS', AS PER AS-19 (SUPRA) WAS NOT TO HAVE ANY IMPACT ON ALLOWABILITY OF THE SAID 'LEASE RENTAL' AS AN EXPENSE IN THE HANDS OF THE ASSESSEE COMPANY, AND IN SUPPORT OF ITS AFORESAID C ONTENTION RELIED UPON THE CBDT CIRCULAR NO. 2; DATED. 09/02/2001, WHICH THEREIN PROVIDED THAT A S PER THE NEW 'ACCOUNTING STANDARDS' ISSUED BY THE ICAI, THE LESSEES WERE REQUIRED TO CARRY OUT CA PITALIZATION OF THE ASSETS IN LEASE TRANSACTIONS. THE ASSESSEE COMPANY IN ORDER TO DRIVE HOME ITS CON TENTION THAT THE LEASE TRANSACTION WAS IN THE NATURE AS THAT OF AN 'OPERATING LEASE' AND NOT A 'F INANCE LEASE' TRANSACTION, THEREIN DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS REFERRED TO CE RTAIN ARTICLES PROVIDED FOR IN THE 'LEASE AGREEMENT' WITH M/S SREI INFRASTRUCTURE FINANCE LTD ., WHO AS PER THE ASSESSEE COMPANY WAS THE SOLE AND ABSOLUTE OWNER OF THE WAGONS. THE ASSESSEE COMPANY IN ITS ATTEMPT TO FURTHER FORTIFY ITS CONTENTION THEREIN SUBMITTED BEFORE THE A.0 THAT IN THE PERIOD RELEVANT TO A.Y. 2006-07 THEY HAD ENTERED INTO A SIMILAR TRANSACTION FOR ONE WAGON AN D HAD GIVEN SAME TREATMENT IN THE 'BOOKS OF ACCOUNTS' AND THE 'RETURN OF INCOME', AS WAS SO DON E BY IT DURING THE YEAR UNDER CONSIDERATION, WHICH AFTER THOROUGH PERUSAL WAS ACCEPTED BY THE A. 0 WHILE FRAMING THE ASSESSMENT U/S 143(3) FOR A.Y. 2006-07 IN THE HANDS OF THE ASSESSEE COMPANY. IT WAS HOWEVER FAIRLY CONCEDED BY THE ASSESSEE COMPANY DURING THE COURSE OF THE ASSESSMEN T PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION, THAT UNLIKE THE ACCEPTANCE BY THE A. 0 OF THE LEASE TRANSACTION AS AN 'OPERATING LEASE TRANSACTION' IN A.Y. 2006-07 AND ALLOWING OF THE LEASE RENTAL AS AN EXPENDITURE IN THE HANDS OF THE ASSESSEE COMPANY, AS CLAIMED BY THE LATTER I N ITS 'RETURN OF INCOME', THE A.0 WHILE FRAMING OF ASSESSMENT IN THE HANDS OF THE ASSESSEE COMPANY FOR A.Y. 2007-08, DID NOT FIND FAVOUR WITH THE CLAIM OF THE ASSESSEE COMPANY AS REGARDS THE 'LEASE RENTALS', AND THUS DISALLOWED THE SAME BY HOLDING THAT THE LEASE TRANSACTION WAS A 'FINANCE L EASE' TRANSACTION, AGGRIEVED WITH WHICH AN 1284 & 1281/M/15 M/S. TAURIAN IRON & STEEL COMPANY.PVT.LTD. 6 APPEAL WAS FILED WITH THE LD. CIT(A), WHO THOUGH VI DE HIS ORDER DATED. 08/12/2009 UPHELD THE ORDER OF THE A.0 AND CONCLUDED THAT THE LEASE TRANS ACTION WAS A 'FINANCE LEASE', BUT DIRECTED THE A.0 TO ALLOW THE CLAIM OF THE ASSESSEE COMPANY TOWA RDS 'DEPRECIATION' AND 'INTEREST'. 36. THAT THE A.O WHILE FRAMING THE ASSESSMENT IN THE H ANDS OF THE ASSESSEE COMPANY FOR THE YEAR UNDER CONSIDERATION, NOT FINDING FAVOUR WITH THE CO NTENTIONS OF THE ASSESSEE COMPANY THAT THE 'LEASE TRANSACTION' WAS IN SUM AND SUBSTANCE AN 'OP ERATING LEASE' AND NOT A 'FINANCE LEASE', THEREIN REFERRING TO VARIOUS ARTICLES OF THE 'LEASE AGREEMENT', SCHEDULES TO THE 'BALANCE SHEET' OF THE ASSESSEE COMPANY [SCHEDULE 3, SCHEDULE 19 NOT E 5 & NOTE 1(H), SCHEDULE II OF THE 'BALANCE SHEET', I.E NOTE TO THE ANNEXURES OF 'FIXE D ASSETS'], WHICH DID GO TO PROVE BEYOND ANY SCOPE OF DOUBT THAT THE ASSESSEE COMPANY WAS THE SO LE AND ABSOLUTE OWNER OF THE WAGONS, THEREIN HELD THAT THE ASSESSEE COMPANY THUS HAD RIGHTLY CAP ITALIZED THE VALUE OF ASSETS AS 'FIXED ASSETS', WHICH AS PER THE A.0 WAS THE CORRECT POSITION OF LA W. THE A.0 FURTHER REFERRING TO THE AS-19 WHICH PROVIDES FOR GUIDELINES BOTH FOR THE 'FINANCE LEASE ' AND 'OPERATING LEASE' ,AND REFERRING TO VARIOUS CLAUSES OF THE 'LEASE AGREEMENT' (SUPRA), THEREIN C ONCLUDED THAT THE ASSESSEE COMPANY HAD MISCONCEIVED THE SCOPE OF CBDT CIRCULAR NO. 2; DT. 09/02/2011, BECAUSE ACCORDING TO THE A.0 THOUGH THE CIRCULAR UNDOUBTEDLY PROVIDED THAT THE A CCOUNTING STANDARDS BY ITSELF WILL NOT HAVE ANY IMPLICATION ON THE ALLOWANCE OF DEPRECIATION ON ASS ETS UNDER THE PROVISIONS OF THE INCOME TAX ACT, HOWEVER THE SAME COULD NOT BE STRETCHED TO MEAN THA T IN CASE OF A 'FINANCE LEASE' THE PAYMENTS MADE WOULD BE ALLOWED AS A REVENUE EXPENDITURE. THU S THE A.0 OBSERVING THAT THE LEASE TRANSACTION OF THE ASSESSEE COMPANY, AS PER THE VAR IOUS CLAUSE OF THE 'LEASE AGREEMENT', DISCLOSURES MADE BY THE ASSESSEE COMPANY IN ITS 'FI NANCIAL STATEMENTS' ETC., PROVED BEYOND ANY SCOPE OF DOUBT THAT THE SAME WAS A 'FINANCE LEASE', WHICH FINDING OF HIS PREDECESSOR IN A.Y. 2007- 08 HAD ALSO BEEN UPHELD BY THE LD. CIT(A), THEREFOR E PROCEEDED WITH AND DISALLOWED THE AMOUNT OF RS. 9,70,34,749/- SO CLAIMED BY THE ASSESSEE COM PANY AS A REVENUE EXPENDITURE. THAT AS REGARDS THE 'DEPRECIATION' AND 'INTEREST' OF RS. 2, 68,14,392/- AND RS. 73,67,890/-, RESPECTIVELY, AS HAD BEEN CLAIMED BY THE ASSESSEE COMPANY IN ITS `PR OFIT & LOSS A/C', THE A.0 REFUSED TO TAKE COGNIZANCE OF THE SAME FOR THE REASON THAT THE ASSE SSEE COMPANY ITSELF HAD GIVEN UP THE SAID CLAIM. THE A.0 WHILE DECLINING TO CONSIDER THE ENTI TLEMENT OF THE ASSESSEE COMPANY TOWARDS 'DEPRECIATION' AND 'INTEREST', THEREIN FORTIFIED HI S ACT BY PLACING RELIANCE ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF : GOETZ INDIA LTD. VS. CIT (2006) 157 TAXMANN 1 (SC), ON THE BASIS OF WHICH THE A.0 CONCLUDED THAT HE WAS DI VESTED OF HIS POWER TO ENTERTAIN A CLAIM OF THE ASSESSEE AFTER FILING OF THE 'RETURN OF INCOME', AS SUCH A CLAIM COULD ONLY BE ENTERTAINED BY HIM ON THE BASIS OF A REVISED 'RETURN OF INCOME' FILED BY AN ASSESSEE. 37. THAT ON APPEAL THE LD. CIT(A) REFERRING TO THE OBS ERVATIONS OF THE A.0 AS REGARDS THE ISSUE UNDER CONSIDERATION, COUPLED WITH THE FACT THAT THE ASSESSEE COMPANY THOUGH HAD RAISED A SPECIFIC 'GROUND OF APPEAL NO. 8' AS REGARDS THE DISALLOWANC E OF THE 'LEASE RENTALS' OF RS. 9,70,34,749/-, ALONGWITH AN ALTERNATIVE PLEA THAT IN CASE THE ADDI TION WAS TO BE UPHELD, THEN THE ASSESSEE COMPANY BE ALLOWED THE 'FINANCE CHARGES' AND 'DEPRE CIATION', AS PER THE PROVISIONS OF THE 'ACT', HOWEVER DURING THE COURSE OF PROCEEDINGS BEFORE HIM , NO SUBMISSION IN SUPPORT OF THE AFORESAID CONTENTIONS WAS RAISED BY THE LD. A.R OF THE ASSESS EE COMPANY, EXCEPT FOR STATING THAT THE ISSUE WAS COVERED AGAINST IT AS PER THE ORDER OF THE LD. CIT(A) IN A.Y. 2007-08, THEREFORE RELYING ON THE ORDER OF HIS PREDECESSOR FOR A.Y. 2007-08, PROCEEDE D WITH AND DISMISSED THE GROUND OF APPEAL PERTAINING TO THE ISSUE UNDER CONSIDERATION. XXX 39. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF EITHER SIDE AND PERUSED THE RELEVANT MATERIALS ON RECORD, INCLUDING THE ORDERS OF THE AUTHORITIES BEL OW AND AFTER PERUSING THE MATERIAL ON RECORD FIND OURSELVES TO BE IN AGREEMENT WITH THE FINDINGS OF THE LOWER AUTHORITIES THAT AS THE ASSESSEE COMPANY AS PER VARIOUS ARTICLES OF THE 'LEASE AGREE MENT', SCHEDULES TO THE 'BALANCE SHEET' OF THE ASSESSEE COMPANY [SCHEDULE 3, SCHEDULE 19 - NOTE 5 & NOTE 1(H), SCHEDULE II OF THE 'BALANCE SHEET', I.E NOTE TO THE ANNEXURES OF 'FIXED ASSETS' ], IS PROVED BEYOND ANY SCOPE OF DOUBT TO BE THE SOLE AND ABSOLUTE OWNER OF THE WAGONS, THEREFORE TH E LOWER AUTHORITIES HAVE RIGHTLY HELD THAT THE LEASE TRANSACTION WAS IN THE NATURE AS THAT OF A 'F INANCE LEASE' AND NOT AN 'OPERATING LEASE', PURSUANT WHERETO THE 'LEASE RENTAL' OF RS. 9,70,34, 749/- CLAIMED BY THE ASSESSEE COMPANY AS AN 1284 & 1281/M/15 M/S. TAURIAN IRON & STEEL COMPANY.PVT.LTD. 7 EXPENSE IN THE 'COMPUTATION OF INCOME' HAD RIGHTLY BEEN DISALLOWED BY THE A.0 AND UPHELD BY THE LD. CIT(A). THUS TO THE EXTENT THE DISALLOWANCE OF THE 'LEASE RENTAL' OF RS. 9,70,34,749/- BY THE A.0 HAD BEEN SUSTAINED BY THE LD.CIT(A), WE UPHOLD THE ORDER OF THE LD. CIT(A) TO THE SAID EXTENT. HOWEVER, WE ARE NOT PERSUADED TO ACCEPT THE FINDING OF THE AUTHORITIES BELOW THAT DESPITE THE FACT THAT THE ASSESSEE COMPANY FOLLOWING THE 'ACCOUNTING STANDARD 19' (AS 19) ON LEASE AS ISSUED BY THE ICAI, IN ITS 'BOOKS OF ACCOUNTS' HAD REFLECTED THE VALUE OF WAGONS AS 'FIXED ASSETS' IN ITS 'BALANCE SHEET' AND CATEGORICALLY RAISED ITS CLAIM TOWARDS 'INTEREST' AND 'DEPRECIATION' ON THE SAID ASSETS., AND DEBITED THE SAME IN ITS `13 & LOSS A/C ' AS AN EXPENSE, BUT BEING OF THE VIEW THAT THE LEASE TRANSACTION WAS A 'OPERATING LEASE', HAD THUS WHILE FILING THE 'RETURN OF INCOME' FOR THE YEAR UNDER CONSIDERATION, DISALLOWED THE 'DEPRECIATION' AND THE 'INTEREST' IN THE 'COMPUTATION OF INCOME' AND CLAIMED THE 'LEASE RENTAL' OF RS. 9,70, 34,749/- AS AN EXPENSES BY TREATING THE LEASE AS ON 'OPERATING LEASE', HOWEVER NOW WHEN THE SAID CLA IM OF THE ASSESSEE COMPANY HAD NOT FOUND FAVOUR WITH THE LOWER AUTHORITIES WHO THEREIN HELD THAT THE LEASE TRANSACTION WAS IN THE NATURE AS THAT OF A FINANCE LEASE AND NOT AN OPERATING LEASE AND ON THE SAID BASIS DISALLOWED THE CLAIM OF THE ASSESSEE COMPANY AS REGARDS LEASE RENTAL' OF RS . 9,70,34,749/-, PURSUANT THERETO WE ARE OF THE VIEW THAT THE ASSESSEE COMPANY WAS DULY ENTITLED TO WARDS THE 'DEPRECIATION' AND 'INTEREST' OF RS. 2,68,14,392/- AND RS. 73,67,890/-, RESPECTIVELY, AS HAD BEEN REFLECTED/CLAIMED BY IT IN ITS 'I' & LOSS A/C'. THAT AS REGARDS THE ENTITLEMENT OF THE A SSESSEE COMPANY TOWARDS ITS CLAIM OF 'DEPRECIATION', IT WOULD BE RELEVANT AND PERTINENT TO POINT OUT THAT EXPLANATION 5 TO SECTION 32 OF THE 'ACT' PROVIDES THAT THE PROVISIONS OF SUB-SECTI ON (1) OF SEC. 32 SHALL APPLY, WHETHER OR NOT THE ASSESSEE HAS CLAIMED THE DEDUCTION IN RESPECT OF DE PRECIATION AT THE TIME OF COMPUTING HIS TOTAL INCOME, OR NOT. NOW WHEN IN THE PRESENT CASE THE A. 0 HAD DISALLOWED THE CLAIM OF THE ASSESSEE COMPANY TOWARDS 'LEASE RENTALS' OF RS. 9,70,34,749/ -, BY HOLDING THAT AS THE ASSESSEE COMPANY WAS THE SOLE AND ABSOLUTE OWNER OF THE WAGONS AND T HUS THE LEASE TRANSACTION WAS IN THE NATURE AS THAT OF A 'FINANCE LEASE' AND NOT AN 'OPERATING LEA SE', THEREFORE AS A CONSEQUENCE THERETO, IT WAS OBLIGATORY ON THE PART OF THE AO TO HAVE ALLOWED 'D EPRECIATION' ON THE WAGONS OWNED BY THE ASSESSEE COMPANY AND USED BY THE LATTER FOR THE PUR POSE OF ITS BUSINESS. 40. WE ARE FURTHER NOT IMPRESSED BY THE ORDER OF THE L D. CIT(A) WHO VIDE HIS OBSERVATIONS RECORDED AT PAGE 42 PARA 9.3 OF HIS ORDER, HAD UPH ELD THE DISALLOWANCE BY THE A.0 OF THE 'LEASE RENTALS' OF RS. 9,70,34,749/- SO CLAIMED BY THE ASS ESSEE COMPANY, BY HOLDING THAT THE 'LEASE TRANSACTION' WAS A 'FINANCE LEASE' AND NOT AN 'OPER ATING LEASE', AND WHILE SO CONCLUDING HAD STRONGLY RELIED ON THE ORDER SO PASSED BY HIS PREDE CESSOR WHILE DISPOSING OF THE APPEAL OF THE ASSESSEE COMPANY FOR THE IMMEDIATELY PRECEDING YEAR , I.E A.Y. 2007-08, VIDE APPEAL NO. CIT(A)- 8/CIR-4/234/0-9-10, HOWEVER WHILE PLACING RELIANCE ON THE ORDER OF HIS PREDECESSOR, THE LD. CIT(A) GRAVELY ERRED IN LOSING SIGHT OF THE FACT TH AT HIS PREDECESSOR THOUGH HAD CONFIRMED THE DISALLOWANCE OF 'LEASE RENTALS', BUT WHILE SO DOING HAD CATEGORICALLY ALLOWED THE CLAIM OF THE ASSESSEE COMPANY TOWARDS ITS ENTITLEMENT TOWARDS 'I NTEREST' AND 'DEPRECIATION'. THUS THE HALF HEARTED APPROACH TO THE ISSUE UNDER CONSIDERATION B Y THE LD. CIT(A) IS DEPRECATED AND WE ARE CONSTRAINED TO HOLD THAT THE REVENUE AUTHORITIES WH ILE FOLLOWING AND ADOPTING THE ORDERS OF THEIR PREDECESSORS SHOULD BE CAREFUL AND IN CASE IF SUCH FINDINGS ARE TO BE ADOPTED, THEN THOSE HAVE TO BE ADOPTED IN SUM AND SUBSTANCE, AND NOT ON THE BAS IS OF A SELF SUITING WHIMSICAL PIECE MEAL MANNER. THAT AS REGARDS THE RELIANCE PLACED BY THE A.0 ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF : GOETZ INDIA LTD. VS. CIT (20 06) 157 TAXMANN 1 (SC), WHICH DEBARS THE A.0 TO ALLOW A NEW CLAIM OF AN ASSESSEE, WHICH THE LATT ER HAD NOT RAISED IN ITS 'RETURN OF INCOME', EXCEPT BY WAY OF FILING A REVISED 'RETURN OF INCOME ', WITHOUT GOING INTO THE ISSUE AS TO WHETHER THE CLAIM RAISED BY THE ASSESSEE COMPANY IN THE PRESENT CASE TOWARDS 'DEPRECIATION' AND 'INTEREST', AND DULY REFLECTED BY THE LATTER IN THE `PROFIT & L OSS A/C', BUT HAD BEEN ADDED BACK BY THE ASSESSEE COMPANY IN ITS 'COMPUTATION OF INCOME', BEING OF TH E VIEW THAT THE LEASE TRANSACTION WAS IN THE NATURE AS THAT OF AN 'OPERATING LEASE' AND NOT A 'F INANCE LEASE', COULD IN THE BACKDROP THE SAID FACTUAL POSITION BE HELD TO BE IN THE NATURE AS THA T OF 'NEW CLAIM', THEREIN DEBARRING THE A.0 TO ALLOW THE SAID CLAIM OF THE ASSESSEE COMPANY, WE BE ING OF THE VIEW THAT IN LIGHT OF THE FACT THAT THE LEASE TRANSACTION IS IN THE NATURE AS THAT OF A 'FI NANCE LEASE' AND NOT AN 'OPERATING LEASE', THEREFORE THE ASSESSEE COMPANY WOULD DULY STAND ENT ITLED TOWARDS THE CONSEQUENTIAL CLAIM OF 'DEPRECIATION' AND 'INTEREST' AS HAD BEEN SO RAISED BY IT IN ITS 'I' & LOSS A/C'. THAT AS REGARDS THE 1284 & 1281/M/15 M/S. TAURIAN IRON & STEEL COMPANY.PVT.LTD. 8 JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF GOETZ INDIA LTD.(SUPRA), IT WOULD BE RELEVANT AND PERTINENT TO POINT OUT THAT THE HON'BLE SUPREME COU RT HAD CLEARLY HELD THAT THE OBSERVATIONS IN THE SAID JUDGMENT WERE IN CONTEXT OF THE POWERS OF THE A.0 AND THE SAME WERE NOT TO IMPINGE ON THE POWERS OF THE TRIBUNAL, AND HAD HELD AS UNDER:- 'WE MAKE IT CLEAR THAT THE ISSUE IN THIS CASE IS LIMITED TO THE POWERS OF THE ASSESSING AUTHORITY AN D DOES NOT IMPINGE ON THE POWERS OF TRIBUNAL UNDER S. 254 OF THE INCOME TAX ACT, 1961.' 41. THUS IN LIGHT OF OUR AFORESAID OBSERVATIONS, WE HE REIN SET ASIDE THE ORDER OF THE LD. CIT(A) TO THE EXTENT THE LATTER HAD UPHELD THE ORDER OF THE A .0 WHO DESPITE HOLDING THE LEASE TRANSACTION AS THAT BEING IN THE NATURE AS THAT OF A 'FINANCE LEAS E', HAD HOWEVER DECLINED TO ALLOW THE CLAIM OF THE ASSESSEE COMPANY TOWARDS 'DEPRECIATION' AND 'IN TEREST', AND HEREIN DIRECT THE A.0 TO VERIFY THE AMOUNT OF LOAN AND THE AMOUNTS OF INTEREST PAYMENTS MADE BY THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATION TOWARDS SUCH LOANS TAKEN F OR PURCHASE OF RAILWAY WAGONS THROUGH FINANCE LEASE METHOD AND ALLOW THE CLAIM OF INTERES T PAYMENT ACCORDINGLY. STILL FURTHER THE A.O IS DIRECTED TO VERIFY THE RATE AND AMOUNT OF DEPRECIAT ION ON THE RAILWAY WAGONS TO WHICH THE ASSESSEE COMPANY WOULD STAND ENTITLED AS PER SEC. 3 2(1) OF THE 'ACT' R.W THE INCOME TAX RULES AND ALLOW DEPRECIATION IN THE HANDS OF THE ASSESSEE COM PANY. THUS THE 'GROUND OF APPEAL NO. 6' IS PARTLY ALLOWED IN LIGHT OF OUR AFORESAID OBSERVATIO NS. RESPECTFULLY FOLLOWING THE ABOVE ORDER,WE DIRECT TH E AO TO FOLLOW THE DIRECTIONS OF THE TRIBUNAL FOR THE EARLIER YEAR APPEARING AT PARAGRAP H NO.41.GROUND NO.3 STANDS DECIDED ACCORDINGLY. 8. LAST GROUND OF APPEAL IS ABOUT ALLOWING DEPRECIATIO N OF RS. 42,924/- ON MOTOR CAR. DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT THE AS SESSEE HAD PURCHASED A CAR IN THE NAME OF THE DIRECTOR,THAT DEPRECIATION WAS CLAIMED FOR T HE SAID CAR.HE HELD THAT THE ASSESSEE WAS NOT OWNER OF THE CAR,THAT IT WAS NOT ENTITLED TO CL AIM DEPRECIATION FOR THE VEHICLE. 9 .IN THE APPELLATE PROCEEDINGS,THE FAA HELD THAT IDE NTICAL GROUND WAS DEALT WITH BY HIS PREDECESSOR WHILE DECIDING THE APPEAL FOR THE AY.20 07-08,WHEREIN THE THEN FAA HAD REFERRED TO AN ORDER OF THE TRIBUNAL(ITA/289/MUM/20 09,AY.2005-06),THAT THERE WAS NO CHANGE IN THE FACTS. 10 .BEFORE US,THE DR SUPPORTED THE ORDER OF THE AO .TH E AR RELIED UPON THE ORDER OF THE FAA AND STATED THAT WHERE THE ASSESSEE WAS IN POSSESSIO N OF AN ASSET AND WAS USING FOR ITS BUSINESS OWNERSHIP OF SUCH ASSETS SHOULD BE PRESUMED,THAT TI TLE DEEDS WERE NOT NECESSARY AS LONG AS ASSESSEE HAD DOMINION OVER THE ASSETS,THAT DE FACTO OWNERSHIP WAS TO BE LOOKED INTO AND NONT DE JURE OWNERSHIP.HE REFERRED TO THE CASES OF INDIA N RAILWAY FINANCE CORPORATION(362 ITR 548),MYSORE MINERALS (239 ITR 775)GUPTA GLOBAL EXIM (P.)LTD.(305 ITR 132). 11. WE HAVE HEARD THE RIVAL SUBMISSION.WE FIND THAT IN THE CASE OF GUPTA GLOBAL EXIM(P.)LTD. FOLLOWING THE ORDER OF THE TRIBUNAL EARLIER YEAR(SU PRA),WE DECIDE THE GROUND NO.4 AGAINST THE AO,AS THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY INFIRMITY. ITA/1281/MUM/2015: 1284 & 1281/M/15 M/S. TAURIAN IRON & STEEL COMPANY.PVT.LTD. 9 12. SOLITARY GROUND OF APPEAL,RAISED BY THE ASSESSEE,PE RTAINS TO .WHILE DECIDING THE FIRST GROUND OF APPEAL FILED BY THE AO WE HAVE RESTORED BACK THE ISSUE TO THE FILE OF THE AO/ TPO.THE AO WOULD ALSO MAKE VERIFICATION ABOUT THE C ORRECT FIGURE OF DISPUTED AMOUNT-THE FAA HAS ADOPTED A FIGURE OF 50 CRORES,AS AGAINST RS . 19.25 CRORE CLAIMED BY THE ASSESSEE. GROUND NO. 1 IS DECIDED IN FAVOUR OF THE ASSESSEE,I N PART. AS A RESULT, APPEALS FILED BY THE ASSESSING OFFICER AND THE ASSESSEE STAND PARTLY ALLOWED. ! ' # $ % ! ' # $ % ! ' # $ % ! ' # $ % &'( )&* +, &'( )&* +, &'( )&* +, &'( )&* +, . .. . ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MAY , 2018. SD/- SD/- ( / SANDEEP GOSAIN ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 11. 05.2018. JV.SR.PS. /COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR K BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.