ICICI Bank Ltd(Erstwhile Anagram Finance Ltd.), Mumabai V. The DY.CIT., Range-3(1), Mumbai

ITA 1472/AHD/2005

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9400 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 18-09-2008
• Assessment Year: 1994-1995
• Appeal Filed On: 24-05-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Opportunity of being heard; Retrospective amendment; Revised return
• Section: 234B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI . . , , , , BEFORE SHRI G.S.PANNU, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.1472/AHD/2005 ( / ASSESSMENT YEAR: 1994-95) ICICI BANK LIMITED (ERSTWHILE ANAGRAM FINANCE LIMITED) LAXMI TOWERS, C WING, 2 ND FLOOR, BANDRA- KURLA COMPLEX, BANDRA (EAST) MUMBAI - 400051 / VS. THE DEPUTY COMMISSIONER OF INCOME TAX RANGE 3(1) AAYAKAR BHAVAN, 6 TH FLOOR, MUMBAI - 400020 ./ ./ PAN/GIR NO. : AAACA9296J ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 01.07.2016 /DATE OF PRONOUNCEMENT: 25.01.2017 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 10.02.2005 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)XXVII, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 1994-95. ASSESSEE BY: MS. AARTI VISSANJI DEPARTMENT BY: SHRI O.P.MEENA ITA NO.1472/AHD/05 A.Y. 1994-95 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE APPELLANT APPEALS FROM THE ORDER DATED FEBRUARY 10, 2005 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) XXVII MUMBAI (CIT(A) UNDER SECTION 250 OF THE INCOME TAX ACT, 1961 (THE ACT) FOR THE ASSESSMENT YEAR 1994-95 AND RECEIVED BY THE APPELLANT ON MARCH 17, 2005 ON THE FOLLOWING AMONGST OTHER GROUNDS WHICH ARE WITHOUT PREJUDICE TO EACH OTHER. (A) RE: DISALLOWANCE OF DEPRECIATION ON ASSETS LEASED TO GEB AND PRAKASH INDUSTRIES RS.1,02,47,527 (PARA 3 PAGE 2 OF THE ORDER) 2. THE CIT(A) ERRED IN DISALLOWING DEPRECIATION AMOUNTING TO RS.1,02,47,527/- ON ASSETS LEASED TO GUJARAT ELECTRICITY BOARD AND PRAKASH INDUSTRIES FOLLOWING ORDER PASSED FOR THE ASSESSMENT YEAR 1993-94 (B) RE: DISALLOWANCE OF DEPRECIATION ON LEASED ASSETS (PARA NO.5-8, PAGE NOS. 5-14 OF THE ASSESSMENT ORDER) 3. THE ASSESSING OFFICER ERRED IN LAW AND ON FACTS IN DISALLOWING THE DEPRECIATION ON VARIOUS ASSETS AMOUNTING TO RS.86,67,685 ON THE UNDER MENTIONED GROUNDS:- RS. A) SUPPLIER NOT IN EXISTENCE 8,07,325/- B) SUPPLIER DENIED SUPPLY OF ASSETS 28,60,360 C) ASSETS NOT IN EXISTENCE 50,00,000 86,67,685 4. WITHOUT PREJUDICE THE ASSESSING OFFICER GROSSLY ERRED IN LAW AND ON FACTS IN REJECTING THE APPELLANTS ALTERNATIVE CLAIM THAT IF THE CLAIM FOR DEPRECIATION WERE TO BE DISALLOWED FOR THE REASONS STATED HEREINBEFORE THEN THE CORRESPONDING LEASE RENT RECEIVED BY THE APPELLANT OUGHT TO BE EXCLUDED. ITA NO.1472/AHD/05 A.Y. 1994-95 3 5. THE CIT(A), IN VIEW OF THE FACTS AND DOCUMENTS OR RECORD, ERRED IN HOLDING THAT THE LEASE TRANSACTION ARE NOT GENUINE AND HENCE DISALLOWING DEPRECIATION FOLLOWING THE DECISION IN THE CASE OF MIDEAST PORTFOLIO MANAGEMENT SERVICES (87 ITD 537) AND DECISION OF SUPREME COURT IN THE CASE OF MCDOWELL (154 ITR 148) (D) RE: DISALLOWANCE OF DEPRECIATION ON TRANSACTION WITH GEB RS.3,91,63,200 (PARA NO.8, PAGE NO. 12-14 OF THE ORDER) 6. THE CIT(A) ERRED IN DISALLOWING THE DEPRECIATION ON ASSETS LEASED TO GUJARAT ELECTRICITY BOARD AMOUNTING TO RS.3,91,63,200/- 7. THE CIT(A) ERRED IN HOLDING THAT THE THERE WAS NO INTENTION TO PASS ON PROPERTY TO THE APPELLANT AND OWNERSHIP NEVER VESTED WITH THE APPELLANT. (E) RE: DISALLOWANCE OF DEPRECIATION IN SALE AND LEASE BACK TRANSACTIONS RS.25,01,250 8. THE CIT(A) ERRED IN DISALLOWING DEPRECIATION OF SALE AND LEASE BACK TRANSACTION ENTERED BY THE APPELLANT AMOUNTING TO RS.25,01,250 9. THE CIT(A) ERRED IN HOLDING THAT EXPLANATION 4A TO SECTION 43(1) OF THE ACT IS MERELY DECLARATORY. 10. THE CIT(A) ERRED IN APPLYING DECISION IN THE CASE OF MCDOWELL (154 ITR 148) AND MIDEAST PORTFOLIO MANAGEMENT SERVICES (87 ITD 537). (F) RE: INTEREST U/S.234B 11. THE CIT(A) ERRED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN CONFIRMING LEVY OF INTEREST UNDER SECTION 234B OF THE ACT FOR ALLEGED FAILURE OF APPELLANT FOR MAKING LESS PAYMENT OF ADVANCE TAX. ITA NO.1472/AHD/05 A.Y. 1994-95 4 (G) GENERAL: 12. THE ORDER OF THE CIT(A) OUGHT TO BE SUITABLY MODIFIED BY GRANTING THE AFORESAID, OTHER PROPER AND CONSEQUENTIAL RELIEFS TO THE APPELLANT. 13. THE APPELLANT CRAVES LEAVE AND RESERVES ITS RIGHTS TO VARY, AMEND, ALTER AND / OR ADD TO THE GROUNDS OF APPEAL AND TO PRODUCE SUCH ORAL AND DOCUMENTARY EVIDENCE AND FILE SUCH COMPILATION OF DOCUMENTS AS MAY BE NECESSARY AT THE TIME OF HEARING OF THE APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME FOR A.Y.1994-95 ON 30.11.1994 DECLARING TOTAL INCOME TO THE TUNE OF RS.NIL. THE SAID RETURN OF INCOME WAS DULY PROCESSED U/S.143(1)(A) OF THE INCOME TAX ACT, 1961( IN SHORT THE ACT) WITHOUT MAKING ANY ADJUSTMENT THEREIN. REVISED RETURN FOR INCOME DATED 08.01.1996 WAS FILED DECLARING TOTAL INCOME AT RS.NIL. THE REVISED RETURN WAS FILED ON ACCOUNT OF CERTAIN CHANGES MADE BY THE ASSESSEE AS A CONSEQUENCE OF REVISION OF DEPRECIATION CLAIM MADE DURING THE COURSE OF PROCEEDINGS OF A.Y.1993-94. THE EFFECT OF THE SAID DEPRECIATION CLAIM WAS ALSO MODIFIED FOR A.Y.1994-95 ACCORDINGLY. NOTICE U/S.143(2) OF THE ACT WAS ISSUED AND DULY SERVED UPON THE ASSESSEE. 4. THE ASSESSEE IS A PUBLIC LIMITED COMPANY, THE SHARES OF THE COMPANY ARE QUOTED IN THE STOCK EXCHANGE. THE COMPANY IS CARRYING ON BUSINESS OF INDUSTRIAL LEASING, HIRE AND PURCHASE. RECENTLY THE COMPANY HAS DIVERSIFIED INTO RETAIL FINANCING I.E. BASICALLY DEALING IN ITA NO.1472/AHD/05 A.Y. 1994-95 5 HIRE AND PURCHASE OF CARS AND THEIR EQUIPMENTS FOR PERSONAL USE. FOR THE PURPOSE OF CARRYING THE BUSINESS OF HIRE AND PURCHASE FINANCING, THE COMPANY HAS OBTAINED LOANS FROM FINANCIAL INSTITUTIONS AND BANKS AND ALSO OBTAINED DEPOSITS AND INTER CORPORATE LOANS APART FROM HAVING SHARE HOLDERS FUNDS AND ITS DISPOSAL. THE BUSINESS OF LEASE AND HIRE PURCHASE FINANCING WAS BEING CARRIED OUT BY THE ASSESSEE FROM AHMEDABAD BEING ITS CORPORATE OFFICE AS WELL AS THEIR BRANCHES SITUATED ALL OVER THE COUNTRY. THE ASSESSEE RAISED THE CLAIM OF DEPRECIATION ON ASSETS LEASED TO THE SAME FIRM WHICH HAS BEEN MENTIONED IN THE ASSESSMENT ORDER AND THE CLAIM OF THE ASSESSEE WAS DECLINED BY THE ASSESSING OFFICER AND THE SAID ORDER WAS CONFIRMED BY THE CIT(A), THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US AND RAISED THE GROUNDS AS MENTIONED ABOVE. ISSUE NO.1 & 2:- 5. ACCORDING TO THESE ISSUES THE ASSESSEE HAS RAISED THE ISSUE OF DISALLOWANCE OF DEPRECIATION ON ASSETS LEASED TO GEB AND PRAKASH INDUSTRIES TO THE TUNE OF RS.1,02,47,527/-. THE CIT(A) HAS DECIDED THIS ISSUE IN PARA NO.3 OF HIS ORDER IN WHICH HE HELD THAT THIS ISSUE HAS BEEN DECIDED BY HIM IN THE A.Y.1993-94, THEREFORE, THE CIT(A) DECIDED THIS ISSUE AGAINST THE ASSESSEE. THE FINDING OF THE CIT(A) IN THIS REGARD IS HEREBY REPRODUCED BELOW:- ITA NO.1472/AHD/05 A.Y. 1994-95 6 3.2 THIS ISSUE CAME UP FOR CONSIDERATION BEFORE ME IN THE EARLIER YEAR ALSO AND I HAVE DECIDED THIS ISSUE AGAINST THE APPELLANT. FOLLOWING MY FINDING GIVEN IN THE EARLIER, THIS YEAR ALSO THE ISSUE UNDER CONSIDERATION IS DECIDED AGAINST THE APPELLANT AND THE ADDITION MADE BY THE ASSESSING OFFICER IS CONFIRMED ON THIS POINT. 6. THE FINDING OF THE CIT(A) WHILE DECIDING THIS ISSUE FOR THE A.Y.1993-94 HAS BEEN DEALT BY THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD BENCH IN ITA NO.1178/AHD/2005 AND THE FOLLOWING FINDING HAS BEEN GIVEN:- 8.1 HAVING CONSIDERED TO RIVAL SUBMISSIONS AND THE FACTS AND CIRCUMSTANCES, FIRST OF ALL, WE ARE OF THE OPINION THAT THE CIT(APPEALS) WAS NOT JUSTIFIED IN REJECTING THE ASSESSEES CLAIM OF DEPRECIATION AND HOLDING THAT THE TRANSACTION IN QUESTION WERE IN THE NATURE OF FINANCING TRANSACTIONS SIMPLY BY OBSERVING THAT FACTS AND CIRCUMSTANCES OF THE CASE WAS SIMILAR TO THE FACTS AND CIRCUMSTANCES OF THE CASE OF ICICI BANK LTD. BECAUSE PRIOR TO AMALGAMATION / TAKING OVER THE AFFAIRS OF M/S.ANAGRAM FINANCE LTD. BY ICICI BANK LTD., M/S.ANAGRAM FINANCE LTD. WAS AN INDEPENDENT LIMITED COMPANY (DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 1993-94) AND WAS CARRYING ON INDEPENDENT BUSINESS OF LEASING AND FINANCING. ITA NO.1472/AHD/05 A.Y. 1994-95 7 THEREFORE, THE NATURE OF TRANSACTION CARRIED ON BY M/S.ANAGRAM FINANCE LTD. SHOULD HAVE BEEN CONSIDERED INDEPENDENTLY IRRESPECTIVE OF THE FINDINGS IN THE CASE OF ICICI BANK LTD. 8.2 FURTHER, HAVING CONSIDERED THE SUBMISSIONS MADE BY THE PARTIES, FACTS AND CIRCUMSTANCES OF THE CASE AND THE DECISION RELIED UPON BY THE PARTIES AS WELL AS THE FACT THAT THE ORDER OF CIT(APPEALS) IS NOT A SPEAKING ORDER AS WELL AS IN THE INTEREST OF SUBSTANTIAL JUSTICE, WE RESTORE THE ISSUE RELATING TO THE NATURE OF TRANSACTIONS WITH GEB AND M/S.PRAKASH INDUSTRIES LTD. AS WELL AS LEVY OF INTEREST U/S.234-B AND 234-C OF THE ACT, BACK TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTIONS THAT THE SAME BE DECIDED AFRESH IN ACCORDANCE WITH LAW AND THE DECISIONS TO BE RELIED UPON BY THE ASSESSEE. FURTHER, IN CASE THE TRANSACTIONS ARE FOUND TO BE IN THE NATURE LEASE TRANSACTIONS, CLAIM OF DEPRECIATION BE ALLOWED AND IF THE TRANSACTIONS ARE FOUND TO BE SIMPLY OF FINANCING THEN ONLY INTEREST PART EMBEDDED IN THE RECEIPTS CLAIMED TO HAVE BEEN RECEIVED AS LEASE RENTALS BE TAXED. THE ASSESSEE WILL BE PROVIDED A PROPER OPPORTUNITY OF BEING HEARD. THE ORDERS OF CIT(APPEALS) AND OF THE ASSESSING OFFICER ON THESE ISSUES ARE, THEREFORE, SET ASIDE. ITA NO.1472/AHD/05 A.Y. 1994-95 8 8.3 WE, FURTHER DIRECT THE ASSESSING OFFICER TO DECIDE THE NATURE OF TRANSACTIONS KEEPING IN VIEW OF THE FACT THAT DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 1993-94, M/S.ANGARAM FINANCE LTD. WAS INDEPENDENT LIMITED COMPANY AND WAS CARRYING ON INDEPENDENT BUSINESS AND WITHOUT BEING INFLUENCED BY ANY ORDER IN THE CASE OF ICICI BANK LTD. 7. IN VIEW OF THE FINDING OF THE ABOVE SAID ORDER PASSED BY THE HONBLE ITAT AHEMEDABAD BENCH (SUPRA), WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND RESTORE THE ISSUE TO THE ASSESSING OFFICER TO DECIDE THE SAID ISSUE IN VIEW OF THE OBSERVATIONS MADE BY THE HONBLE ITAT AHEMADABAD BENCH (SUPRA) IN ACCORDANCE WITH LAW BY GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, THESE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO.3 TO 5:- 8. UNDER THESE ISSUES THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF THE DEPRECIATION ON LEASED ASSETS WITH USHA INDIA LTD., SAYAJI HOTELS AND SHAAN PACKAGING ON THE GROUND OF THAT THE LETTERS WERE ISSUED TO THE SUPPLIER WHICH WERE RETURNED UNSERVED THEREFORE THE SUPPLIER WERE NOT IN EXISTENCE. SO FAR AS IN THE CASE OF DISALLOWANCE OF THE DEPRECIATION ON LEASED ASSETS WITH KEDIA CASTLE DELLON IND. ITA NO.1472/AHD/05 A.Y. 1994-95 9 (EARLIER KNOWN AS CASTLE DOUGLAS), KHATAU JUNKER, GEB, WESTERN PAQUES IS CONCERNED THE DEPRECIATION WAS DISALLOWED ON ACCOUNT OF THIS FACT THAT THE SUPPLIER DENIED THE SUPPLY OF ASSETS AND THE PLANT WAS NOT IN EXISTENCE. FIRSTLY, WE TAKE THE DISALLOWANCE OF DEPRECIATION ON THE LEASED ASSETS RELATED TO USHA INDIA LTD., SAYAJI HOTELS AND SHAAN PACKAGING WHICH WAS DECLINED BY THE ASSESSING OFFICER ON THE GROUND OF THAT THE LETTERS WERE WRITTEN TO THE SUPPLIER BUT THE SAME WERE RETURNED UNSERVED. THE CIT(A) HAS ALSO OBSERVED THAT NO SUPPLIER WAS IN EXISTENCE AND THE SAME WAS WITHIN THE ARRANGEMENT AND THE EVIDENCE FILED TO PROVE THE EXISTENCE OF THE SUPPLIER WAS NOT SUFFICIENT HENCE THE LEASE/SALE IS UN-GENUINE. THE ASSESSEE PRODUCED CERTAIN DOCUMENTS TO PROVE THE GENUINENESS OF THE CLAIM WITH REGARD TO THE USHA INDIA LTD. :- 1. INVOICE FROM LUPTRON DATED MARCH 12, 1994 FOR SUPPLY OF DIESEL GENERATING SET LORRY NO.UP-65/A-4113 THUS CONFIRMING DELIVERY OF ASSETS. (LIES AT PAGE 26 OF THE PAPER BOOK). 2. CONFIRMED DELIVERY RECEIPTS OF THE ASSET. (LIES AT PAGE 29 OF THE PAPER BOOK). 3. ASSESSEES CONFIRMATION LETTER DATED 31.03.1994 FROM USHA (INDIA) LTD. (LIES AT PAGE 27 OF THE PAPER BOOK). ITA NO.1472/AHD/05 A.Y. 1994-95 10 4. COPY OF LETTER DATED 14.02.1997 FROM USHA (INDIA) LTD. REG. DECLARATION OF ASSETS LEASED. (LIES AT PAGE 28 OF THE PAPER BOOK). 5. COMPANYS CONFIRMATIONS REGARDING ASSETS LEASED BY VIRTUE OF LETTER DATED 27.02.1997 TO ACIT, AHD GIVING DECLARATION FROM USHA INDIA CONFIRMING RECEIVING ASSETS FROM SUPPLIER LUPTRON LTD. (LIES AT PAGE 14 OF THE PAPER BOOK). 9. SO FAR AS THE ASSET WAS IN EXISTENCE AND WAS LEASED WITH THE SAYAJI HOTELS IS CONCERNED THE ASSESSEE HAS RELIED UPON THE FOLLOWING DOCUMENTS:- 1. INVOICE FROM A-ONE TRADERS DATED FEBRUARY 27 TH , 1994. (LIES AT PAGE 30 OF THE PAPER BOOK). 2. INVOICE FROM FREEZE COOL REFRIGERATION AND AIR CONDITIONERS. (LIES AT PAGE 31 OF THE PAPER BOOK). 3. LEASED CONFIRMATION FROM SAYAJI HOTELS LIMITED BY VIRTUE OF DATED FEBRUARY 14, 1997 CONFIRMING ASSETS TAKEN BY THE ASSESSEE. (LIES AT PAGE 32 OF THE PAPER BOOK). 4. LETTERS FROM SAYAJI HOTELS LIMITED DATED 1 ST MARCH, 1997 CONFIRMING TO THE ASSESSING RELATING ASSETS TAKEN ON LEASED. (LIES AT PAGE 102 OF THE ASSESSMENT ORDER). 5. COMPANIES CONFIRMATION LETTER DATED 17.02.1997 TO ACIT, AHD. (LIES AT PAGES 4&5 OF THE PAPER BOOK). ITA NO.1472/AHD/05 A.Y. 1994-95 11 6. COPY OF LETTER DATED 25.03.1997 TO ACIT, AHD IN VIEW WITH THE DECLARATION GIVEN BY THE LESSEE ASSET IS IN EXISTENCE. (LIES AT PAGES 19 & 20 OF THE PAPER BOOK). 10. SO FAR AS THE EXISTENCE OF ASSETS AND LEASED WITH THE SHAAN PACKAGING IS CONCERNED, THE ASSESSEE HAS ALSO RELIED UPON THE FOLLOWING DOCUMENTS:- 1. INVOICE FROM SHRIRAM SALES & SERVICES DATED 23 RD MARCH 1994 FOR SUPPLY OF GOODS. (LIES AT PAGE 33 OF THE PAPER BOOK). 2. CERTIFICATE FROM BANK OF BARODA FOR ISSUING CHEQUE IN FAVOUR OF SRIRAM SALES AND SERVICES. (LIES AT PAGE 35 OF THE PAPER BOOK). 3. LESSESSS CONFIRMATION DATED 21.02.1997 REGARDING ASSETS LEASED FROM ANAGRAM. (LIES AT PAGE 34 OF THE PAPER BOOK). 4. COMPANYS CONFIRMATIONS REGARDING ASSETS LEASED BY VIRTUE OF LETTER DATED 27 TH FEBRUARY 1997 TO ACIT, AHD. GIVING DECLARATION FROM SHAAN PACKAGING CONFIRMING RECEIVING ASSETS. (LIES AT PAGE 12 OF THE PAPER BOOK). 5. LETTER DATED 25 TH MARCH 1997 TO ACIT, AHD ATTACHING CERTIFICATE FROM BANK OF BARODA CERTIFYING PAYMENTS MADE.(LIES AT PAGE 20 OF THE PAPER BOOK). ITA NO.1472/AHD/05 A.Y. 1994-95 12 11. WHETHER THE SUPPLIER DENIED THE SUPPLY OF THE ASSET TO THE TUNE OF RS.28,60,360/-IN CONNECTION WITH KEDIA CASTLE IS CONCERNED, THE ASSESSEE HAS RELIED UPON THE FOLLOWING DOCUMENTS:- KEDIA CASTLE DELLON IND (EARLIER KNOWN AS CASTLE DOUGLAS):- 1. INVOICE FROM T.S.ENGINEERING WORKS DATED 29 TH SEPTEMBER 1993 FOR SUPPLY OF GOODS CONTAINS GRN NO.1995 AND IS SIGNED BY THE STORES MANAGERS.(LIES AT PAGE 36 OF THE PAPER BOOK). 2. INSURANCE POLICY DATED 19 TH MARCH 1996 FOR STORAGE TANK. (LIES AT PAGE 37 TO 38 OF THE PAPER BOOK). 3. CERTIFICATE FROM BANK OF BARODA FOR ISSUING CHEQUE IN FAVOUR OF T.S.ENGG. (LIES AT PAGE 35 OF THE PAPER BOOK). 4. COMPANIES CONFIRMATIONS REGARDING ASSETS LEASED VIDE LETTER DATED 17 TH FEBRUARY 1997 TO ACIT, AHD ENCLOSING COPY OF INVOICE AND INSURANCE POLICY. ALSO CONFIRMING THAT LEASE RENTS HAVE BEEN ACCOUNTED FOR IN THE ACCOUNTS FOR 31 ST MARCH 1994.(LIES AT PAGE 2 OF THE PAPER BOOK). 5. LETTER DATED 27 TH FEBRUARY 1997 TO ACIT, AHD INFORMING OF LETTER WRITTEN TO LESSEES TO GET CONFIRMATION OF SUPPLY OF ASSET FROM SUPPLIERS.(LIES AT PAGE 14 OF THE PAPER BOOK). 6. LETTER DATED 11 TH MARCH 1997 TO ACIT, AHD ESTABLISHING OWNERSHIP OVER THE ASSETS EVIDENCED FROM THE INVOICE AND ITA NO.1472/AHD/05 A.Y. 1994-95 13 INSURANCE POLICY SUBMITTED.(LIES AT PAGE 17 OF THE PAPER BOOK) 7. LETTER DATED 25 TH MARCH 1997 TO ACIT, AHD ESTABLISHING OWNERSHIP OVER THE ASSETS EVIDENCED FROM THE INVOICE AND INSURANCE POLICY SUBMITTED.(LIES AT PAGE 21 OF THE PAPER BOOK). 12. SO FAR AS THE EXISTENCE OF THE ASSET AND LEASED IN THE MATTER OF KHATAU JUNKER IS CONCERNED, THE ASSESSEE HAS RELIED UPON THE FOLLOWING DOCUMENTS :- 1. CONFIRMATION RECEIPT FROM NILE DATED 24 TH NOVEMBER 1995.(LIES AT PAGE 41 OF THE PAPER BOOK). 2. CONFIRMATION TO ASSESSING OFFICER DATED 7 TH NOVEMBER 1997 FROM SUPPLIER. (LIES AT PAGE 39 OF THE PAPER BOOK). 3. CONFIRMATION TO ANAGRAM FINANCE DATED 10 TH NOVEMBER 1997 FROM SUPPLIER. (LIES AT PAGE 40 OF THE PAPER BOOK). 4. ON TERMINATION OF LEASE AGREEMENT ASSET SOLD TO LESSEE AND CONSIDERATION DULY RELECTED IN ANAGRAMS ACCOUNTS. (LIES AT PAGE 51 OF CIT(A) GROUNDS). 5. COMPANYS CONFIRMATIONS REGARDING ASSETS LEASED LETTER DATED 17 TH FEBRUARY 1997 TO ACIT, AHD CONFIRMING LEASE WITH KHATAU JUNKER, RECEIPT OF PAYMENT RECEIVED BY SUPPLIER AND LEASE RENTALS ACCOUNTED FOR IN THE YEAR ENDED 31 ST MARCH, 1994.(LIES AT PAGE 2 AND 3 OF THE PAPER BOOK). ITA NO.1472/AHD/05 A.Y. 1994-95 14 6. LETTER DATED 27 TH FEBRUARY 1997 TO ACIT, AHD INFORMING OF LETTER WRITTEN O LESSEES TO GET CONFIRMATION OF SUPPLY OF ASSET FROM SUPPLIERS. (LIES AT PAGE 14 OF THE PAPER BOOK). 7. LETTER DATED 11 TH MARCH 1997 TO ACIT, AHD STATING THAT IN VIEW OF INVOICE AS WELL AS RENTALS RECEIVED FROM LESSEE THE EXISTENCE OF THE ASSET IS ESTABLISHED.(LIES AT PAGE 17 OF THE PAPER BOOK). 13. SO FAR AS THE EXISTENCE OF ASSET AND LEASED IN THE MATTER OF GEB IS CONCERNED, THE ASSESSEE HAS RELIED UPON THE FOLLOWING DOCUMENTS :- 1. INVOICE FROM JAIPUR METALS AND ELECTRICALS LIMITED DATED 30 TH OCTOBER 1993 INCLUDING EXCISE AND CST. (LIES AT PAGE 42 OF THE PAPER BOOK). 2. COMPANYS CONFIRMATIONS REGARDING ASSETS LEASED LETTER DATED 17 TH FEBRUARY 1997 TO ACIT, AHD SUBMITTING INVOICES ENIDENCING PURCHASE OF ASSETS.(LIES AT PAGE 6 & 7 OF THE PAPER BOOK). 3. LETTER DATED FEBRUARY 27 TH , 1997 TO ACIT, AHD ENCLOSING COPY OF DEMAND DRAFT GIVEN TO JAIPUR METALS & ELECTRICALS. ALSO MADE WITHOUT PREJUDICE CLAIM TO ALLOW PRINCIPAL PORTION OF RENTALS IF LEASE TREATED AS FINANCE TRANSACTION. (LIES AT PAGE 13 OF THE PAPER BOOK). ITA NO.1472/AHD/05 A.Y. 1994-95 15 4. LETTER DATED 11 TH MARCH 1997 TO ACIT, AHD REQUESTING FOR CROSS EXAMINATION OF SUPPLIER DENYING SUPPLY. (LIES AT PAGE 18 OF THE PAPER BOOK). 5. LETTER DATED 25 TH MARCH 1997 TO ACIT, AHD CONFIRMING THAT IN VIEW OF PAYMENTS MADE, LEASE RENTALS RECEIVED FROM LESSEE, OWNERSHIP OF LESSOR ESTABLISHED. (LIES AT PAGE 21 AND 22 OF THE PAPER BOOK). 14. SO FAR AS EXISTENCE OF ASSET AND LEASED IN THE MATTER OF WESTERN PAQUES (SLB) IS CONCERNED, THE ASSESSEE HAS ALSO RELIED UPON THE FOLLOWING DOCUMENTS:- 1. LEASE AGREEMENT DATED 28 TH JULY WITH WESTERN PAQUES LTD.(LIES AT PAGE 43 TO 57 OF THE PAPER BOOK). 2. INVOICE FROM WESTERN PAQUES INDIA LIMITED DATED 3 RD JULY 1993. (LIES AT PAGE 58 TO 59 OF THE PAPER BOOK). 3. INSURANCE POLICY FOR EFFLUENT TREATMENT PLANT DATED 10 TH JANUARY 1994.(LIES AT PAGE 61 OF THE PAPER BOOK). 4. REPORT DATED 4 TH MARCH 1996 OF THE ADDL. DIT (INV.) REFERS TO PILOT PLANT RECETED AND PUT TO USE FROM MARCH TO MAY 1994. (LIES AT PAGE 115 OF THE ASST. ORDER). 5. LETTER FROM WESTERN PAQUES INDIA LIMITED DATED 17 TH SEPTEMBER 17, 1993 CONFIRMING THE ASSET LOCATION. (LIES AT PAGE 60 OF THE PAPER BOOK). ITA NO.1472/AHD/05 A.Y. 1994-95 16 6. LETTER DATED 17 TH FEBRUARY, 1997 TO ACIT, AHD GIVING LETTER DATED 03.03.1997 RECEIVED FROM WESTERN PAQUES CONFIRMING LEASE OF BIO GAS PLANT TO ANAGRAM. ALSO CONFIRMED SALE CONSIDERATION PAID AND RECEIPT OF LEASE RENTALS. ALSO ASKED FOR COPY OF SEARCH REPORT OF ADDL. DIRECTOR (INV), PUNE. (LIES AT PAGE 5 TO 6 OF THE PAPER BOOK). 7. LETTER DATED 17 TH FEBRUARY 1997 TO ACIT, AHD STATING THAT SINCE TRANSACTION WITH WESTERN IS SALE AND LEASEBACK THE QUESTION OF ACTUAL DELIVERY OF ASSETS DOES NOT ARISE. ALSO IN VIEW OF PAYMENTS MADE, INSURANCE POLICY OWNERSHIP OF ANAGRAM OVER THE ASSETS ESTABLISHED. (LIES AT PAGE 8 TO 10 OF THE PAPER BOOK). 8. LETTER DATED 25 TH MARCH 1997 TO ACIT, AHD SUBMITTING LETTER FROM WESTERN PAQUES CONFIRMING EXISTENCE OF THE ASSETS AND THAT NO DEPRECIATION WAS CLAIMED BY THEM. (LIES AT PAGE 22 TO 23 OF THE PAPER BOOK). 15. THE CLAIM OF THE ASSESSEE WAS DECLINED ON THE GROUND OF THAT THE LETTERS WERE WRITTEN TO THE SUPPLIER WHICH WERE RETURNED UNSERVED AND THE SUPPLIER DENIED THE SUPPLY OR PLANT WAS NOT IN EXISTENCE. ON APPRAISAL OF THE ABOVE SAID EVIDENCE PRODUCED BEFORE US THE FINDING OF THE ASSESSING OFFICER AS WELL CIT(A) DOES NOT SEEM REASONABLE. THE EVIDENCE ADDUCED BY THE ASSESSEE NOWHERE EXAMINED AND DISCUSSED BY THE ASSESSING OFFICER AS WELL AS CIT(A). SINCE THE MATTER OF ITA NO.1472/AHD/05 A.Y. 1994-95 17 CONTROVERSY HAS NOT BEEN DECIDED BY DISCUSSING THE EVIDENCE ADDUCED BY THE ASSESSEE, THEREFORE IN THE SAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE CIT(A) IS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW. THEREFORE, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO EXAMINE THE ISSUE AFRESH IN THE LIGHT OF THE EVIDENCE ADDUCED BY THE ASSESSEE AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO.6 & 7:- 16. UNDER THESE ISSUES THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF DEPRECIATION ON THE TRANSACTION WITH GEB. SO FAR AS THE DISALLOWANCE ON DEPRECIATION ON THE TRANSACTION WITH GEB IS CONCERNED, THE SAME IS DECLINED BY THE ASSESSING OFFICER ON THE GROUND OF THAT THE SUPPLIER SOLD THE GOODS TO THE GEB AND THE GEB HAS NOT TRANSFER THE OWNERSHIP TO ANAGRAM AND THE MACHINERY WAS NOT SUPPLIED BECAUSE ONLY PARTS WERE SUPPLIED. IN THIS REGARD THE ASSESSEE HAS SUBMITTED THE FOLLOWING EVIDENCE BEFORE US. 1. ANNEXURE A BEING STATEMENT SHOWING THE DETAILS OF ASSETS TAKEN ON LEASE FROM ANAGRAM FINANCE BY GEB. (LIES AT PAGE 62 OF THE PAPER BOOK). ITA NO.1472/AHD/05 A.Y. 1994-95 18 2. INVOICE FROM SIMCO ENGINEERING LTD. DATED 27 TH JULY 1993. (LIES AT PAGE 63 OF THE PAPER BOOK). 3. INVOICE FROM BARODA ELECTRIC METERS LTD. DATED 15 TH JULY 1993. (LIES AT PAGE 64 OF THE PAPER BOOK). 4. INVOICE FROM KHATAU JUNKER LIMITED DATED 27 TH JULY 1993. (LIES AT PAGE 65 OF THE PAPER BOOK). 5. INVOICE FROM SHAKTI CAPACITORS PVT. LTD. DATED 16 TH JUNE 1993. (LIES AT PAGE 66 OF THE PAPER BOOK). 6. INVOICE FROM SHREEM CAPACITORS PVT. LTD. DATED 29 TH JULY 1993.(LIES AT PAGE 67 OF THE PAPER BOOK). 7. INVOICE FROM ASEA BROWN BOVERI LTD. DATED 27 TH JULY 1993. (LIES AT PAGE 68 OF THE PAPER BOOK). 8. INVOICE FROM BHEL DATED 26 TH JULY 1993. (LIES AT PAGE 69 TO 70 OF THE PAPER BOOK). 9. INVOICE FROM BHEL DATED 27 TH JULY 1993. (LIES AT PAGE 71 OF THE PAPER BOOK). 10. INVOICE FROM BHEL DATED 27 TH AUGUST 1993. (LIES AT PAGE 72 OF THE PAPER BOOK). 11. INVOICE FROM BARODA ELECTRIC METERS LTD. DATED NOVEMBER 7, 1993.(LIES AT PAGE 73 TO 74 OF THE PAPER BOOK). 12. INVOICE FROM BARODA ELECTRIC METERS LTD. DATED NOVEMBER 21, 1993. (LIES AT PAGE 75 OF THE PAPER BOOK). ITA NO.1472/AHD/05 A.Y. 1994-95 19 13. INVOICE FROM ANDRA PRADESH ELECTRICAL EQUIPMENT CORPORATION DATED NOVEMER 7, 1993. (LIES AT PAGE 76 OF THE PAPER BOOK). 14. INVOICE FROM JAIPUR METAL AND ELECTRICALS LIMITED DATED OCTOBER 30, 1993. (LIES AT PAGE 77 OF THE PAPER BOOK). 15. LESSEES CONFIRMATION LETTER FROM GUJARAT ELECTRICITY BOARD DATED MARCH 25, 1997 CONFIRMING PURCHASE OF ASSETS. (LIES AT PAGE 78 TO 79 OF THE PAPER BOOK). 16. COMPANYS CONFIRMATIONS REGARDING ASSETS LEASED LETTER DATED FEBRUARY 17, 1997 TO ACIT, AHD GIVING INVOICE OF SIMCO ENGG. ONE OF THE SUPPLIER. (LIES AT PAGE 5 OF THE PAPER BOOK). 17. LETTER DATED FEBRUARY 27, 1997 TO ACIT, AHD INFORMING THE AO THAT THE NAME OF SIMCO HAD CHANGED TO SEA HORSE IND. LTD. (LIES AT PAGE 12 OF THE PAPER BOOK). 18. LETTER DATED MARCH 25, 1997 TO ACIT, AHD SUBMITTING THAT EVIDENCE OF DISBURSEMENT, INSTALLATION AND PUT TO USE CERTIFICATE OWNERSHIP HAS BEEN ESTABLISHED. (LIES AT PAGE 20 OF THE PAPER BOOK. 17. THE ASSESSING OFFICER AS WELL AS CIT(A) HAS DECLINED THE CLAIM OF THE ASSESSEE ON ACCOUNT OF THIS FACTS THAT THE SUPPLIER SOLD THE GOODS TO THE GEB AND THE GEB DID NOT TRANSFER THE OWNERSHIP TO ANAGRAM AND THE MACHINERY WAS NOT SUPPLIED BECAUSE PARTS WERE SUPPLIED. THE ITA NO.1472/AHD/05 A.Y. 1994-95 20 EVIDENCE ADDUCED BY THE ASSESSEE NOWHERE EXAMINED AND DISCUSSED BY THE ASSESSING OFFICER AS WELL CIT(A). SINCE THE MATTER OF CONTROVERSY HAS NOT BEEN DECIDED BY DISCUSSING THE EVIDENCE ADDUCED BY THE ASSESSEE, THEREFORE IN THE SAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE CIT(A) IS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW. THEREFORE, WE SET ASIDE THE FINDING OF THE CIT(A) ON THESE ISSUES AND DIRECT THE ASSESSING OFFICER TO EXAMINE THE ISSUES AFRESH IN THE LIGHT OF THE EVIDENCE ADDUCED BY THE ASSESSEE BY GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, THESE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO.8 TO 10 18. UNDER THESE ISSUES THE ASSESSEE CHALLENGED THE DISALLOWANCE OF DEPRECIATION IN SALE AND LEASE BACK TRANSACTION OF RS.25,01,250/-. AT THE TIME OF ASSESSMENT, IT WAS FOUND THAT JAI PRAKASH IND. SOLD THE ASSET TO ANAGRAM FINANCE LTD. WHICH WAS THEN LEASED BACK TO JAI PRAKASH IND. THE ASSESSEE PURCHASED THE SAID MACHINERY FROM M/S.JAYPEE REVA CEMENT. ON ENQUIRY M/S.JAYPEE REVA CEMENT REPLIED VIDE THEIR LETTER DATED 18.10.1997 THAT SINCE THE OLD AND USED CONSTRUCTION MATERIAL WAS ACQUIRED IN THE PRECEDING YEARS AND DEPRECIATION @ 100% WAS CLAIMED AND ALLOWED THEREFORE NO W.D.V. OF SUCH MATERIAL IN THEIR BOOKS. THEREFORE, IN VIEW OF THE SAID CIRCUMSTANCES ASSESSING OFFICER DISALLOWED THE SAID CLAIM. ON APPEAL THE CIT(A) CONFIRMED THE SAME. WE HAVE HEARD THE ARGUMENT ITA NO.1472/AHD/05 A.Y. 1994-95 21 ADVANCED BY THE LEARNED REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. THE CONTENTION OF THE ASSESSEE IS THAT THE EXPLANATION 4A OF SECTION 43(1) OF THE ACT INSERTED ON 1 ST OCTOBER 1996 WAS NOT CLARIFACTORY IN NATURE HENCE IT IS NOT HAVING RETROSPECTIVE EFFECT, THEREFORE, IN THE SAID CIRCUMSTANCES THE DISALLOWANCE OF THE DEPRECIATION ON SALE AND LEASE BACK TRANSACTION OF RS.25,01,250/- IS LIABLE TO BE ALLOWED. IN SUPPORT OF THE CONTENTION THE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE UPON THE LAW SETTLED IN BERLIA CHEMICALS & TRADERS (P) LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX, ITAT, MUMBAI B BENCH IN ITA NO.7510/BOM/1993 DECIDED ON 25.10.1999 AND ALSO HONBLE MADRAS HIGH COURT IN CASE TITLED AS OM SINDHOORI CAPITAL INVESTMENTS LTD. VS. JOINT COMMISSIONER OF INCOME TAX REPORTED IN 274 ITR 427 WHEREIN IT IS SPECIFICALLY HELD THAT THE LAW APPLICABLE IN CONNECTION WITH EXPLANATION 4A TO THE SECTION 43(1) OF THE ACT W.E.F. 01.10.1996. UNDOUBTEDLY, THE PRESENT CASE IS FOR THE A.Y.1994-95 AND THE CIT(A) HAS DECLINED THE CONTENTION OF THE ASSESSEE ON THE GROUND OF THAT THE EXPLANATION 4A TO THE SECTION 43(1) OF THE ACT WAS CLARIFACTORY IN NATURE WHEREAS THE LEGAL POSITION IS QUITE DIFFERENT WHICH HAS BEEN DISCUSSED ABOVE SPECIFICALLY IN VIEW OF THE LAW SETTLED IN BERLIA CHEMICALS & TRADERS (P) LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX, ITAT, MUMBAI B BENCH IN ITA NO.7510/BOM/1993 DECIDED ON 25.10.1999 AND ALSO HONBLE MADRAS HIGH COURT IN CASE TITLED AS OM SINDHOORI CAPITAL INVESTMENTS LTD. VS. JOINT COMMISSIONER OF INCOME ITA NO.1472/AHD/05 A.Y. 1994-95 22 TAX REPORTED IN 274 ITR 427. ACCORDINGLY, WE ARE OF THE VIEW THAT THE DISALLOWANCE ON DEPRECIATION ON SALE OF LEASE BACK TRANSACTION TO THE TUNE OF RS.25,01,250/- IS WRONG AGAINST LAW AND FACTS WHICH IS NOT LIABLE TO BE SUSTAINABLE. ACCORDINGLY, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND ALLOWED THE DEPRECIATION ON SALE OF LEASED BACK TRANSACTION OF RS.25,01,250/-. THIS ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO.11:- 19. THE ISSUE NO.11 IS IN CONNECTION WITH THE LEVY OF INTEREST U/S.234 OF THE ACT. IT IS CONSEQUENTIAL ON THE BASIS OF THE DEMAND THEREFORE THE SAME IS NOT REQUIRED TO BE ADJUDICATED. 20. ACCORDINGLY, APPEAL OF THE ASSESSEE IS HEREBY PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JANUARY, 2017 SD/- SD/- (G.S.PANNU) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 25 TH JANUARY, 2017 MP ITA NO.1472/AHD/05 A.Y. 1994-95 23 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI