DCIT, CC-21, V. VLS Finance Ltd.,

ITA 3659/DEL/2001

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 7002 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 1998-1999
• Appeal Filed On: 03-09-2001
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M W HAQUE
• Assessee Lawyers: RAJESH JHALANI; M P MEHROTRA
• Keywords: Depreciation

Judgement Text

IN THE INCOME TA X AP PELLA TE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE H ON'BLE SENIOR VICE P RESIDENT, SHRI R.P. GARG AN D HON'BLE JUDICIA L MEMBER, SHRI RAJPAL YADAV ITA NO.3659/DEL./2001 (ASSESSMENT YEAR : 1998-99 ) DCIT, CENTRAL CIRCLE 21, VS. M/S. VLS F INANCE L I MITED, NEW DELHI. C-489, DEFENCE COLON Y, NEW DELHI. (P AN : AAACV0130D) (APP EL LANT ) (RES PONDENT ) ASS ESS EE BY : S/SH RI M.P. MEHROT RA & RAJESH JHALANI REVENU E BY : SHRI M.W. HAQUE, CI T DR O R D E R GARG, SENIOR VP : T HIS APPEAL IS FILED BY THE REVENUE AGAINST THE O RDER OF CIT (APPEALS) FOR T HE ASSES SM EN T Y EAR 1998-99. FOLLOWING GROUND OF APPEAL IS RAISED : ON T HE FACTS AND IN THE CIRCUM STANCE S OF THE CASE THE LD. CI T (A) HAS ERRED IN DI RECTING THE A.O. T O ALLOW DEP RECIATION ON ASSET S SUPPLIES ON HIRE PU RCHASE SYSTEM A MOUNTING TO RS.4,98,32,419/- IGNORING THE BOARDS CIRCULA RS NO.9 DT. 23.03.43, BOARDS CI RCULAR D T.26.6.59, 15.7.63, TECHNICAL INSTRUCTIONS OF NOVEM BER 1962 AND THE DECISIONS OF JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF ADDL.CI T VS. GENERAL INDUSTRIES CORPO RATION 155 ITR 430 AND CI T VS. NAGPUR GOLDEN TRANSPORT COMP ANY 233 ITR 398. 2 ITA NO.3659/DEL./2001 2. AFTER HEAR ING THE PA RTIES, WE FIND T HAT T HE MATTERS IS COVERED IN FAVOUR OF THE ASSES SEE AND AGAINST THE R EVENUE IN ASSESS EES OWN CASE FOR T HE ASSE SS ME NT Y EARS 1995-96, 1996 -97 AND 1997-98 IN I TA NO.1754 & 1755/DEL/2001 & IT A NO.1948/DEL/2001 VIDE ORDE R DATED 30.1.2009. T HE RELEVANT DISCUSSION IN PA RA 7 OF THE SAID O RDER IS R EPRODUCED BELOW : 7. WE HAVE CONSIDERED THE R IVAL SUB MIS SIONS. AT THE OUTSET, THE DECISION IN THE CASE OF S PL. BENCH AS REFERRED TO BY THE L D. DR WOULD NOT APPL Y, AS T HE DECISION OF THE SPL. BENCH WAS I N THE CASE OF VARIOUS STATE ELECTRICIT Y BOARDS WHO HAD DONE SALE AND LEASE BACK OF THE ASSET S BY BOOK ENTRIES WHEREAS THE ASSET CONTINUED TO BE SHOWN IN THE ACCOUNT OF THE BOARD AS THE OWNER OF THE ASSET AND THE ASSES SEE DID NOT HAVE AN Y RIGHT TO SELL THOSE ASSETS AND THE RE WAS NO INTENTION TO T RANSFER OWNERSHIP I N THE ASSET TO THE ASSES SEE THEREIN. IT WAS UNDER THOSE CONSIDERATION THAT THE SPL. BENCH OF THE TR IBUNAL THEREIN HAD HELD T HAT THE T RANSACTIONS THEREIN WERE ONE OF FINANCIAL TRANSACTIONS AND DEPRECIATION WAS NOT AVAILABLE ON SUCH ASSET. THE DECISION AS REFER RED TO B Y THE R EVENUE IN THE CASE OF NAGPUR GOLDEN TRANSPORT CO. AS ALSO THE DECISION IN THE CASE OF GENERAL INDUSTR IES CORPORATION ALSO DOES NOT APPL Y TO THE ASSE SSEE S CASE, INSOFAR AS IN THE LATTER DECISION, THE HON'BLE SUPREME COURT AS I N THE CASE OF SHAAN FINACNE CO.PVT. L TD., REFERRED TO SUPRA CATEGORICALLY HELD THAT FOR IN TERPRETING A TAXING STATUTE ESPECIALLY IN THE CASE OF EXE MPTION PROVISION FULL EFFECT IS TO BE GIVEN AND IN T HE CASE OF AN ASSE SSE E WHO WAS HIRING DIFFERENT MACHINERY AND WHERE THE INCOME DERIVED B Y THE ASSE SSE E FRO M HIRING OF SUCH MA CHINERY IS TREATED AS BUSINESS INCO ME, THE ASSESS EE MU ST BE CONSIDERED AS HAVING USED SUCH MACHINERIE S FOR THE PURPOSE OF ITS BUSINESS AND BY THE T RANSACTION THE HIRER WOULD NO T ACQUIRE ANY NEW ASSET, BUT IT IS ONLY ONE OF BAIL MENT. IN THE CIRCUM STANCE S, IN VIEW OF THE LAW AS LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF SHAAN FINANCE PV T. L TD., WE A RE OF THE VIEW THAT THE ASSET AS 3 ITA NO.3659/DEL./2001 OWNED B Y T HE ASSESS EE AND WHICH IS USED IN THE BUSINESS OF HIRING AS DONE BY T HE ASSES SEE IS ENTITLED TO DEPRECIATION IN THE HANDS OF T HE ASSES SEE. I N THE CIRCU MSTANC ES, THE FINDINGS OF THE CIT (A) FOR THE AYS 1995-96 & 96-97 STANDS R EVERSED AND THAT OF THE AY 1997-98 STANDS CONFIRM ED. 3. IN VIEW OF THE ABOVE POSITION, WE FOLLOW THE AFORESAID ORDER OF THE TR IBUNAL RENDE RED IN ASSE SSE ES OWN CASE IN EARLIER ASSE SS ME NT YE ARS AND ACCORDINGLY THE APPEAL OF THE REVENUE IS DISM IS SED. O RDER PRONOUNCED IN OPEN COURT ON THIS 24 TH DAY OF APRIL 2009. ( RAJPAL YADAV) (R. P. GARG) JUDICIAL MEM BER SENIOR VICE P RESIDENT DATED THE 24 TH DA Y OF AP RIL 2009/ TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-V II I, NEW DELHI. 5.CIT (I TAT), NEW DELHI. AR, I TA T NEW DE LHI.