DCIT, Bangalore V. M/s. BPL Ltd., Bangalore

ITSSA 42/BANG/2008

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6510 (ITAT-BANGALORE)
• Duration Of Justice: 11 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-07-2019
• Assessment Year: misc
• Appeal Filed On: 02-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V ARVIND DEPT
• Assessee Lawyers: S PARTHASARTHI
• Keywords: Gift; Depreciation; Search and seizure; Retrospective amendment; Question of law; Valuation report; Block assessment; Unabsorbed depreciation; Reassessment proceedings; TDS; Set aside
• Section: 143(3); 201; 147; 148; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER I T (SS) A NO. 39 /BANG/20 08 BLOCK ASSESSMENT PERIOD: 1989 - 90 TO 1999 - 2000 M/S. BPL LIMITED, BPL TOWERS, NO. 13, KASTURBA ROAD, BANGALORE 560 001. PAN: AAACB 9461B VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II, BANGALORE. APPELLANT RESPONDENT & IT(SS)A NO. 42 /BANG/2008 BLOCK ASSESSMENT PERIOD: 1989 - 90 TO 1999 - 2000 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 11 (2), BANGALORE. VS. M/S. BPL LIMITED, BPL TOWERS, NO. 13, KASTURBA ROAD, BANGALORE 560 001. PAN: AAACB 9461B APPELLANT RESPONDENT ASSESSEE BY : SHRI S. PARTHASARTHI, ADVOCATE REVENUE BY : SHRI K.V. ARVIND, STANDING COUNSEL FOR DEPT. DATE OF HEARING : 29 .0 7 .2019 DATE OF PRONOUNCEMENT : 25 . 10 .2019 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE AND THESE ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A)-V, BANGALORE DATED 28.03.2008 FOR THE BLOCK ASSESSMENT PERIOD FROM 1989-90 TO 1999-2000 TILL THE DATE OF SEARCH. 2. THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL ARE AS UNDER. 1. THE ORDER OF THE CIT(A) IN SO FAR AS IT IS PREJUDICIAL TO THE REVENUE, IS OPPOSED TO LAW AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITIONS OF RS.45,05,821/-AND RS.35,92,358/- MADE BY THE ASSESSING OFFICER BY IT(SS)A NOS. 39 & 42/BANG/2008 PAGE 2 OF 18 DISALLOWING THE EXCESS DEPRECIATION CLAIMED, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE CIT(A) ERRED IN DELETING THE ABOVE MENTIONED ADDITIONS WITHOUT APPRECIATING THE FACTS STATED IN DETAIL IN THE RELEVANT ASSESSMENT ORDER AND THE DEPARTMENTAL VALUATION OFFICER'S REPORT AND WITHOUT APPRECIATING THE PROVISIONS OF SECTION 158BB AND THE PROVISIONS OF SECTION 158B(B), AS AMENDED BY THE FINANCE ACT, 2002, WITH RETROSPECTIVE EFFECT FROM 1.7.1995. 4. THE CIT(A) FAILED TO TAKE INTO CONSIDERATION THE RATIO OF THE DECISION OF THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. AJAY KUMAR SHARMA REPORTED IN 259 ITR 240. 5. THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.6,34,480/- MADE BY THE ASSESSING OFFICER BY RESTRICTING THE DEPRECIATION CLAIMED ON THE COMMERCIAL VEHICLES TO 50%, ON THE GROUND THAT THE VEHICLES WERE PUT TO USE FOR A PERIOD OF LESS THAN 180 DAYS. 6. THE CIT(A) ERRED IN ALLOWING RELIEF ON THE GROUND OF BENEFICIAL OWNERSHIP OF THE VEHICLES, WITHOUT APPRECIATING THAT APART FROM OWNERSHIP, THE PERIOD FOR WHICH THE VEHICLES WERE PUT TO USE WAS RELEVANT AND IT WAS CLEAR FROM THE ASSESSMENT ORDER THAT THE COMMERCIAL VEHICLES WERE REGISTERED AFTER 30.9.1994 AND PUT TO USE FOR A PERIOD OF LESS THAN 180 DAYS. 7. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE A.0 RESTORED. 8. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AMEND OR TO DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. 3. SIMILARLY, THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LEARNED CIT(A) TO THE EXTENT THE DISALLOWANCES AS MADE BY THE AO ARE SUSTAINED, IS BAD AND OUGHT TO BE SET ASIDE. 2. WITHOUT PREJUDICE, THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE ASSESSMENT AS FRAMED IS BAD IN LAW AND THEREFORE LIABLE TO BE SET ASIDE. 3. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE LEASE TRANSACTION ITSELF HAVING BEEN HELD TO BE SHAM BY THE AO, NO FURTHER ENHANCEMENT WAS POSSIBLE OF THE LEASE AMOUNT MUCH LESS ANY INTEREST RELATED THERETO. 4. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE ACT PROVIDES LIMITATION TO FRAME AN ASSESSMENT ORDER AND THEREFORE, WHAT IS NOT ASSESSED WITHIN THE TIME LIMIT AS PROVIDED UNDER THE STATUTE CANNOT BE IT(SS)A NOS. 39 & 42/BANG/2008 PAGE 3 OF 18 SOUGHT TO BE ASSESSED UNDER THE GUISE OF ENHANCEMENT AND BROUGHT TO TAX IN AN APPELLATE PROCEEDINGS WHICH ONLY MAKES THE PROVISION IN THE STATUTE REDUNDANT. 5. IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) OUGHT NOT TO HAVE DISALLOWED THE BUSINESS LOSS AMOUNTING TO RS.1,81,25,000/- AS CLAIMED BY THE APPELLANT AS THE SAME WAS INCIDENTAL TO AND DURING THE COURSE OF BUSINESS OF THE APPELLANT. 6. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE PROPOSAL AS FORWARDED BY THE ADDL.CIT DID NOT CONSTITUTE ANY SANCTION TO ASSESS ANYTHING THAT COULD NOT BE DONE WITHIN THE TIME LIMITATION AS LAID DOWN UNDER THE ACT AND MOREOVER, IT IS NOT PROVIDED IN THE ACT THAT THE CIT(A) SHOULD HEED TO THE PROPOSALS OF ANY OFFICER OTHER THAN THE AO, AND THEREFORE ENHANCEMENT AS DONE WAS ILLEGAL, WITHOUT SANCTION OF LAW, THUS SUFFERS FROM LEGAL INFIRMITY. 7. WITHOUT PREJUDICE, THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE AGREEMENT ITSELF PROVIDED FOR ADJUSTMENT AS AGAINST THE ACTUAL PAYMENT, AND EVEN THE ADJUSTMENT WAS AN OUTGO IN THE HANDS OF THE APPELLANT, THEREFORE, NO ENHANCEMENT WAS REQUIRED TO BE MADE. 8. FOR THESE AND SUCH OTHER GROUNDS THAT ARE URGED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED BY DELETING THE DISALLOWANCES AS CONFIRMED BY THE CIT(A). 4. THE RELEVANT BRIEF FACTS AS NOTED BY THE AO IN THE ASSESSMENT ORDER ARE THAT A SEARCH WAS CONDUCTED IN THE ASSESSEES PREMISES ON 27.08.1998 SIMULTANEOUSLY AT PALAKKAD AND BANGALORE. THE SEARCH AT PALAKKAD WAS FINALLY CONCLUDED ON THE SAME DAY I.E. ON 27.08.1998 BUT THE SEARCH AT BANGALORE WAS TEMPORARILY CONCLUDED ON THE SAID DATE AND WAS RESUMED SUBSEQUENTLY AND THE LAST PANCHNAMA WAS DRAWN ON 08.10.1998. IN PARA 1.4 OF THE ASSESSMENT ORDER, IT IS NOTED BY THE AO THAT DURING POST-SEARCH PROCEEDINGS, THE ASSESSEE COMPANY FILED A DECLARATION U/S. 132(4) OF THE IT ACT DATED 24.09.1998 BEFORE THE ADDL. DIRECTOR OF INCOME-TAX (INV.), UNIT-I, BANGALORE. THE GIST OF SAID DECLARATION IS REPRODUCED BY THE AO IN PARA 1.4 OF THE ASSESSMENT ORDER AS PER WHICH, IT IS STATED THAT WITH AN INTENTION TO BUY PEACE AND AVOID LITIGATION, THE ASSESSEE DECLARED THE SUM OF RS. 725 LAKHS BEING THE CLAIM OF DEPRECIATION MADE FOR THE ASSESSMENT YEAR 1995-96 AS INCOME LIABLE TO BE COMPUTED UNDER THE PROVISIONS OF CHAPTER -XIV B OF THE IT ACT. IN THE SAME PARA, IT IS ALSO NOTED THAT THIS IS ALSO SUBMITTED BY ASSESSEE IN THE SAID DECLARATION THAT DEPARTMENT IS REQUESTED TO ALLOW ALL ELIGIBLE DEDUCTIONS SUCH AS LOSS ARISING ON ACCOUNT OF TRANSACTION, ON IT(SS)A NOS. 39 & 42/BANG/2008 PAGE 4 OF 18 CHEATING, ETC. AS ARE ALLOWABLE UNDER THE IT ACT. THIS WAS ALSO REQUESTED THAT FROM SUCH DECLARED INCOME, THE LEASE RENTALS AND LEASE MANAGEMENT FEE ACCOUNTED AS INCOME FOR THE ASSESSMENT YEAR 1995-96 TILL THE DATE OF SEARCH SHOULD ALSO BE REDUCED. IN PARA NO. 1.5 OF THE ASSESSMENT ORDER, IT IS NOTED BY THE AO THAT THE ASSESSEE WAS ISSUED A NOTICE U/S. 158BC FOR THE BLOCK ASSESSMENT PERIOD 1989-90 TO 1999-2000 ASKING THE ASSESSEE TO FILE RETURN OF INCOME IN FORM NO. 2B WITHIN 30 DAYS OF THE RECEIPT OF THE NOTICE. THE SAID NOTICE WAS SERVED ON THE ASSESSEE ON 19.05.1999. THE ASSESSEE FILED BLOCK RETURN ON 18.06.1999 DECLARING TOTAL UNDISCLOSED INCOME OF RS. 3,85,12,906/- . THIS IS ALSO NOTED BY THE AO THAT THE ASSESSEE COMPANY EVEN PAID THE SELF- ASSESSMENT TAX U/S. 140A OF RS. 2,31,07,744/-. IN PARA NO. 1.6 OF THE ASSESSMENT ORDER, THE AO HAS REPRODUCED THE WORKING OF THE ASSESSEE FOR COMPUTING THIS UNDISCLOSED INCOME OF RS. 3,85,12,906/- AND AS PER THE SAME, THE ASSESSEE HAS CONSIDERED RS. 725 LAKHS AS UNDISCLOSED INCOME REPRESENTING REVERSAL OF DEPRECIATION CLAIMED AND FROM THIS, THE ASSESSEE HAS REDUCED AN AMOUNT OF RS. 1,44,12,094/- BEING LEASE RENTAL ALREADY OFFERED FOR TAX DURING THE BLOCK PERIOD, RS. 14.50 LAKHS BEING LEASE MANAGEMENT FEE RECEIVED AND RS. 181.25 LAKHS ON ACCOUNT OF LOSS ON TRANSACTION. AS PER THE ASSESSMENT ORDER, THE AO DID NOT ALLOW THE CLAIM OF THE ASSESSEE ABOUT LOSS ON TRANSACTION OF RS. 181.25 LAKHS. THE AO ALSO MADE SOME OTHER ADDITIONS BEING RS. 35,92,358/- ON ACCOUNT OF ALLEGED EXCESS CLAIM OF DEPRECIATION IN THE CASE OF SALE AND LEASE TRANSACTIONS WITH MANALI PETROCHEMICALS LTD. AND ALSO MADE DISALLOWANCE OF RS. 45,05,821/- BEING ALLEGED EXCESS CLAIM OF DEDUCTION BY USING FRAUDULENT MEANS WHERE ASSET IS PUT TO USE FOR LESS THAN 180 DAYS. ONE MORE ADDITION WAS MADE BY THE AO OF RS. 6,34,480/- ON ACCOUNT OF ALLEGED EXCESS CLAIM OF DEPRECIATION ON THE VEHICLES LEASED TO M/S. SHRIRAM INVESTMENTS LTD., CHENNAI WHICH ARE ACTUALLY PUT TO USE FOR LESS THAN 180 DAYS. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A). HE DID NOT GRANT ANY RELIEF IN RESPECT OF ADDITION OF RS. 181.25 LAKHS BUT OTHER DISALLOWANCES / ADDITIONS WERE DELETED BY LD. CIT(A). NOW THE REVENUE IS IN APPEAL FOR THE RELIEF ALLOWED BY THE LD. CIT(A) AND THE ASSESSEE IS IN APPEAL FOR THE DISALLOWANCE CONFIRMED BY LD. CIT(A) OF RS. 181.25 LAKHS. IT(SS)A NOS. 39 & 42/BANG/2008 PAGE 5 OF 18 5. THE ASSESSEE HAS ALSO RAISED SOME ADDITIONAL GROUNDS WHICH ARE AS UNDER. 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE HELD THAT THE BLOCK ASSESSMENT AS MADE WAS VOID- AB- INITIO IN THAT THERE WAS NO UNDISCLOSED INCOME AS CONTEMPLATED U/S.158B(B) OF THE INCOME- TAX ACT, 1961. 2. ON THE FACTS THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRECIATED THAT THE PROCEEDINGS U/S.132(1) OF THE ACT WAS UNWARRANTED IN THE CASE OF THE APPELLANT AND CONSEQUENTLY THE SEARCH AND SEIZURE WAS ILLEGAL AND WITHOUT JURISDICTION AND ACCORDINGLY THE BLOCK ASSESSMENT ORDER AS MADE IS REQUIRED TO BE CANCELLED. 3. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRECIATED THAT THE VALIDITY OF SEARCH AND SEIZURE ACTION WAS CHALLENGEABLE IN APPEAL AS HELD BY THE RAJASTHAN HIGH COURT AND CONSEQUENTLY THE COMMISSIONER (A) OUGHT TO HAVE APPRECIATED THAT THE BLOCK ASSESSMENT AS MADE WAS UNLAWFUL AND HE OUGHT TO HAVE CANCELLED THE SAME. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. 6. THE LD. AR OF ASSESSEE HAS FILED THE WRITTEN SUBMISSIONS WHICH ARE REPRODUCED HEREINBELOW. IN FURTHERANCE TO THE SUBMISSIONS MADE AT THE TIME OF HEARING OF THE CASES ON 29TH JULY 2019, IN REPLY TO THE REVENUE'S CONTENTIONS, WE SUBMIT AS UNDER:- 1. FIRST IN RESPONSE TO THE SUBMISSIONS OF THE APPELLANT/RESPONDENT THE REVENUE'S COUNSEL SUBMITTED THAT THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MANISHA A SADHWANI - ITA NO.414 OF 2007 DD ON 25.11.2013 IS NOT TO BE CONSIDERED IN THE LIGHT OF THE AMENDMENT TO SEC.158B(B) OF THE ACT, A COPY OF THE JUDGMENT IS ENCLOSED. IN THIS REGARD WE WISH TO SUBMIT THAT THE AMENDMENT IS NOT APPLICABLE TO THE CASE IN QUESTION. IN THE CASE OF THE ASSESSEE, THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 1995-96 WAS FILED AND THE SCRUTINY ASSESSMENT STOOD COMPLETED ON 19.3.1998. IN THE RETURN OF INCOME FILED BY THE ASSESSEE ALL THE DETAILS WITH REGARD TO THE TRANSACTIONS OF THE ASSESSEE HAD BEEN DISCLOSED AND IN THE SCRUTINY ASSESSMENT THE ASSESSING AUTHORITY HAVING PERUSED THE DETAILS CONCLUDED THE ASSESSMENT WITH THE TOTAL INCOME OF RS.31,87,60,160/-. THE ASSESSMENT ORDER HAS ALREADY BEEN ENCLOSED IN THE PAPER BOOK AT PAGES 84-91. HOWEVER, THE SEARCH U/S.132 OF THE ACT WAS ONLY ON 27TH AUGUST 1998 MUCH LATER THAN THE CONCLUSION OF THE SCRUTINY ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR. ACCORDINGLY, IT IS SUBMITTED THAT THE AMENDED PROVISION HAS NO APPLICATION SINCE ALL THE CLAIMS AND ALLOWANCES MADE IN THE RETURN OF INCOME HAS BEEN DULY CONSIDERED AND ASSESSMENT STOOD CONCLUDED MUCH ANTERIOR TO THE SEARCH. THUS, AS ON THE DATE OF THE IT(SS)A NOS. 39 & 42/BANG/2008 PAGE 6 OF 18 SEARCH IT CANNOT BE SAID THAT THE REVENUE HAS FOUND AFRESH ON ACCOUNT OF SEARCH THAT THE DEDUCTION CLAIMED WAS FOUND TO BE FALSE FOR THE FIRST TIME. THUS, THE JUDGMENT REFERRED TO SUPRA WOULD SQUARELY APPLY AND THE AMENDMENT CANNOT BE PRESSED INTO SERVICE BY THE REVENUE. 2. IN THE REVENUE'S APPEAL, THE REVENUE HAS CONTESTED THE DELETION OF DISALLOWANCE ON ACCOUNT OF DEPRECIATION IN RESPECT OF THE FOLLOWING CASES:- 1. DEPRECIATION ON ACCOUNT OF LEASING OF THE BOILER - MANALI PETROCHEMICAL LTD (FOR SHORT 'MANALI') WHILE SUBMITTING THE DISALLOWANCE OF BUSINESS LOSS CLAIMED BY THE APPELLANT IN THE CASE OF TRANSACTIONS WITH ETK BY WAY OF LEASE THE REVENUE'S COUNSEL REFERRED TO THE OBSERVATIONS OF THE ASSESSING AUTHORITY IN THE ASSESSMENT ORDER TO SUGGEST THAT THE LEASING WAS NOT THE REAL BUSINESS OF THE ASSESSEE. HOWEVER, THE VERY STATEMENT OF THE ASSESSING AUTHORITY IS PROVED TO BE WRONG BY THE FACT THAT THE ASSESSEE HAS LEASED NOT ONLY THE MACHINERY TO ETK BUT IT HAD ALSO LEASED MACHINERY TO MANALI AND ALSO VEHICLE TO M/S.SRIRAM INVESTMENTS LTD., CHENNAI, ON WHICH THE CLAIM OF DEPRECIATION HAD BEEN RESTRICTED. THUS, THE LEASING WAS NOT A UNIQUE EVENT IN RESPECT OF ETK AND IN THE REGULAR COURSE OF BUSINESS. THE ASSESSEE HAD PURCHASED MACHINERY OR PRODUCTS AND LEASED TO VARIOUS COMPANIES. THE FACTUM OF LEASING IN THE OTHER CASES HAVE BEEN ACCEPTED, THOUGH THE QUANTUM WAS RESTRICTED. HERE AGAIN ALL THE TRANSACTIONS WERE REFLECTED IN THE PROFIT AND LOSS, BALANCE SHEET ANNEXED ALONG WITH THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 1995-96 ON WHICH THE ASSESSMENT STOOD CONCLUDED MUCH ANTERIOR TO THE DATE OF SEARCH. THUS, IN THE LIGHT OF THE JUDGMENT REFERRED TO SUPRA, THE DISALLOWANCE AS MADE IN THE BLOCK ASSESSMENT WAS UNCALLED FOR HAS RIGHTLY BEEN HELD BY THE COMMISSIONER (A) AND NO INTERFERENCE IS CALLED FOR. 3. THE GENUINENESS OF THE LEASE TRANSACTIONS WERE NOT DOUBTED IN THE CASE OF MANALI AND SRIRAM INVESTMENT. IN THE CASE OF ETK ALSO THE LEASE TRANSACTION HAS BEEN ESTABLISHED WITH DOCUMENTS TO SUPPORT. THE ASSESSEE IN THE DECLARATION U/S.132(4) HAS WITHDRAWN THE CLAIM OF DEPRECIATION ONLY TO BUY PEACE ON ACCOUNT OF THE ALLEGED STATEMENT GIVEN BY THE LESSEE TO AVOID PROTRACTED LITIGATION, WHICH WOULD NOT MEAN THE TRANSACTION WAS FALSE AND THE CLAIM OF BUSINESS LOSS WAS BOGUS. UNDOUBTEDLY THE ASSESSEE HAD PAID THE ENTIRE SALE CONSIDERATION OF RS.7.25 CRORES TOWARDS THE COST OF PURCHASE WHICH WAS LEASED. THE ASSESSEE HAS ALSO RECEIVED THE DEPOSIT OF 5.43 CR BY WAY OF REFUNDABLE DEPOSIT WHICH CARRIED THE INTEREST AT THE RATE OF 14% FROM THE LEASE. THE RECEIPT OF DEPOSIT IS DULY REFLECTED AND ON THE DEPOSIT THE INTEREST HAD BEEN PROVIDED FOR AND TDS ON INTEREST HAD BEEN DEDUCTED AND PAID TO THE GOVERNMENT ACCOUNT. ALL THESE FACTS ARE NOT UNDER DISPUTE. THOUGH THE INTEREST ACTUALLY WAS NOT PAID TO THE LESSEE IT ACCRUED IN THE RELEVANT ASSESSMENT YEARS FALLING IN THE BLOCK PERIOD. AS STATED EARLIER THE WITHDRAWAL OF DEPRECIATION WAS ONLY TO BUY PEACE AND THE TRANSACTION IN ENTIRETY HAD NOT BEEN WITHDRAWN THOUGH A DECLARATION AND IT WAS ALSO IT(SS)A NOS. 39 & 42/BANG/2008 PAGE 7 OF 18 NOT CONCEDED AS BOGUS. IN THE CIRCUMSTANCES, THE CLAIM OF BUSINESS LOSS CANNOT BE HELD TO BE BOGUS AND SAME HAS RIGHTLY BEEN CLAIMED AND WAS REQUIRED TO BE ALLOWED. SINCE THE TRANSACTION IS GENUINE OTHERWISE, THE INTEREST PROVISION MADE WAS REQUIRED TO BE ALLOWED AS A PART OF BUSINESS DEDUCTION AS RIGHTLY CLAIMED BY THE ASSESSEE WHICH WAS ALLOWED IN THE ORIGINAL ASSESSMENT. HOWEVER, THE DISALLOWANCE WAS MADE IN RESPECT OF THE SAME BY WAY OF ENHANCEMENT IN THE APPELLATE PROCEEDINGS WHICH. IS UNCALLED FOR. AS STATED EARLIER THE BUSINESS TRANSACTION AS ABOVE WAS NOT DECLARED AS BOGUS BY THE ASSESSEE, THE TRANSACTION IS SUPPORTED BY THE LEASE AGREEMENT AND INTEREST IS OBLIGATED TO BE PAID BY THE ASSESSEE TO THE LESSEE. ACCORDINGLY, THE SAME HAD RIGHTLY BEEN PROVIDED IN THE ACCOUNTS AND THE DEDUCTION WAS CLAIMED ACCORDINGLY. THE ASSESSING AUTHORITY HAD RIGHTLY ALLOWED IN THE ORIGINAL ASSESSMENT AND ENHANCEMENT PROPOSED WAS ONLY AN AFTERTHOUGHT AND THE COMMISSIONER(A) SHOULD NOT HAVE ALLOWED THE PROPOSAL AS MADE BY THE ASSESSING AUTHORITY. THUS, THE IMPUGNED ADDITION IN THIS REGARD IS ACCORDINGLY LIABLE TO BE DELETED. 4. IN THE CASE OF THE DISALLOWANCE OF DEPRECIATION WITH REGARD TO THE BOILER LEASED TO MANALI, THE COST OF THE BOILER IS WHAT ACTUALLY PAID BY THE ASSESSEE WHILE PURCHASING ON WHICH RIGHTLY THE DEPRECIATION HAD BEEN CLAIMED. THE ASSESSEE HAS ALSO SUPPORTED THE COST WITH THE VALUATION REPORT. THE ASSESSING AUTHORITY. PRIMA FACIE DID NOT CHALLENGE THE GENUINENESS OF THE LEASE. HE HAD ONLY DISALLOWED THE COST DIFFERENCE BETWEEN THE ACTUAL COST PAID BY THE ASSESSEE AND THE COST AS DETERMINED BY THE DEPARTMENTAL VALUER AND FURTHER HE DISALLOWED THE ALLEGED EXCESS CLAIM OF DEPRECIATION FOR NOT OWNING AND USING THE MACHINERY FOR MORE THAN 180 DAYS IN THE RELEVANT YEAR. IN THIS REGARD, IT IS AN UNDISPUTED FACT THAT THE MACHINERY UNDER USE BY THE MANALI SINCE THEY WERE ALREADY INSTALLED IN THE MANALI WHILE THE SAME WAS PURCHASED BY THE ASSESSEE THROUGH THE FINANCE PROVIDED BY ITC CLASSIC FINANCE LTD. THE BILL FOR PURCHASE WHICH IS DESCRIBED AS OTHER DELIVERY CHALLAN CUM INVOICE ((PAGE 122 OF THE PAPER BOOK- II) IS ENCLOSED WHICH WOULD CLEARLY SHOW THE DATE OF PURCHASE WAS 20.9.1994 WHICH WAS BEYOND 180 DAYS AS ON THAT DATE THE ASSESSEE CAME TO OWN THE MACHINERY AND IT WAS ALREADY PUT TO USE BY THE LESSEE. THE MERE FACT THAT THE PAYMENTS REQUIRED TO BE MADE TO ITC BY THE ASSESSEE WAS BEYOND TIME. IT CANNOT BE SURMISED THAT THE MACHINERY WAS OWNED BY THE ASSESSEE ONLY IN DECEMBER 1994. THE COST PAID IS ALSO AVAILABLE IN THE BILL WHICH HAS BEEN ABSOLUTELY PAID BY THE ASSESSEE. IN THE CIRCUMSTANCES, THE COMMISSIONER (A) EVEN ON MERITS HAD RIGHTLY DELETED THE ADDITION TOWARDS THE DIFFERENCE IN THE COST OF PURCHASE AND ALSO FOR THE USER. OF MACHINERY FOR MORE THAN 180 DAYS. IN THIS REGARD RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS. 1. CIT VS DILIP SINGH SARDARSINGH BAGGA 201 ITR 995 BOM ALSO THE JUDGMENT OF THE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. R.P.G.TELECOM LTD., - ITA NO.240/2001 DD ON 24TH OCTOBER 2007. IT(SS)A NOS. 39 & 42/BANG/2008 PAGE 8 OF 18 THE ABOVE JUDGMENTS ARE ENCLOSED. 5. IN RESPECT OF VEHICLE LEASED TO SRIRAM INVESTMENT, CHENNAI, UNDER SIMILAR CIRCUMSTANCES AND FOR THE REASONS STATED HEREINABOVE THE DISALLOWANCE OF DEPRECIATION HAS RIGHTLY BEEN DELETED BY THE COMMISSIONER (A). ACCORDINGLY, IT IS PRAYED THAT THE DEPARTMENTAL APPEAL MAY KINDLY BE DISMISSED. 7. THIS WAS ONE OF THE SUBMISSION OF LD. AR OF ASSESSEE THAT THE ADDITIONS MADE BY THE AO IN THE ASSESSMENT ORDER CANNOT BE CONSIDERED AS UNDISCLOSED INCOME BECAUSE THESE CLAIMS / DEPRECIATION WERE ALREADY MADE IN THE RETURN OF INCOME FILED BY THE ASSESSEE PRIOR TO THE DATE OF SEARCH AND SIMULTANEOUSLY THE ASSESSMENT WAS ALSO COMPLETED ON 19.03.1998 ALTHOUGH THE SEARCH TOOK PLACE ON 27.08.1998 WHICH IS MUCH LATER THAN THE FINALIZATION OF SCRUTINY ASSESSMENT. HENCE THIS CANNOT BE CONSIDERED AS UNDISCLOSED INCOME. HE SUBMITTED THAT SINCE THE DEPRECIATION CLAIM WAS ALLOWED IN THE ORIGINAL ASSESSMENT COMPLETED U/S. 143(3) OF THE IT ACT, THE SAME CANNOT BE CONSIDERED AS UNDISCLOSED INCOME IN THE BLOCK ASSESSMENT. RELIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. MRS. MANISHA A. SADHWANI IN ITA NO. 414 OF 2007 DATED 25.11.2013, COPY SUBMITTED ALONG WITH THE WRITTEN SUBMISSIONS. RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF CIT VS. DILIP SINGH SARDARSINGH BAGGA AS REPORTED IN (1993) 201 ITR 0995. RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. M/S. RPG TELECOM LTD. IN ITA NO. 240/2001 DATED 24.10.2007, COPY SUBMITTED. 8. AS AGAINST THIS, THE LD. DR OF REVENUE SUPPORTED THE ASSESSMENT ORDER. OUR ATTENTION WAS DRAWN TO PARA NOS. 2.6, 2.8 AND 2.15 OF THE ASSESSMENT ORDER. HE ALSO SUBMITTED THAT AS PER THE PROVISIONS OF SECTION 158B(B), THE TERM UNDISCLOSED INCOME IS DEFINED AND THIS INCLUDES ANY EXPENSE, DEDUCTION OR ALLOWANCE CLAIMED UNDER THIS ACT WHICH IS FOUND TO BE FALSE. HE SUBMITTED THAT THE ASSESSEES CASE FALLS WITHIN THE DEFINITION OF UNDISCLOSED INCOME AS PER THIS CLAUSE OF SECTION 158B. REGARDING THE ISSUE ON MERIT, HE SUPPORTED THE ORDER OF CIT (A) AND SUBMITTED THAT PARA NOS. 8.1 TO 8.7 OF THE ORDER OF LD. CIT(A) ARE RELEVANT IN THIS REGARD AND HE SUPPORTED THE FINDING OF LD. CIT(A) IN THESE PARAS. IT(SS)A NOS. 39 & 42/BANG/2008 PAGE 9 OF 18 9. IN THE REJOINDER, IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT LEASING IS PART OF ASSESSEES BUSINESS. HE ALSO SUBMITTED THAT DECLARATION U/S. 132(4) WAS ONLY WITH THE INTENTION TO BUY PEACE AND THEREFORE, IT CANNOT BE SAID THAT ASSESSEE HAS ACCEPTED THAT THE CLAIM OF DEPRECIATION WAS BOGUS. 10. AT THIS JUNCTURE, THE BENCH OBSERVED THAT AS PER THE JUDGMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS. SUN ENGINEERING WORKS P. LTD. AS REPORTED IN 198 ITR 297, IT WAS HELD BY THE HONBLE APEX COURT THAT IN THE REASSESSMENT PROCEEDINGS, THE ASSESSEE CANNOT MAKE A NEW CLAIM BUT IT WOULD BE OPEN TO AN ASSESSEE TO PUT FORWARD CLAIMS FOR DEDUCTION OF ANY EXPENDITURE IN RESPECT OF THAT INCOME OR THE NON-TAXABILITY OF THE ITEMS AT ALL. THE BENCH OBSERVED THAT ALTHOUGH THIS JUDGMENT OF THE HONBLE APEX COURT IS IN THE CONTEXT OF REASSESSMENT PROCEEDINGS BUT THE FINDING OF HONBLE APEX COURT SEEMS TO BE EQUALLY APPLICABLE IN CASE OF SEARCH ASSESSMENT AS IN THE PRESENT CASE ALSO AND THEREFORE, IF THE ASSESSEE CAN ESTABLISH THAT THE CLAIM NOW BEING MADE BY THE ASSESSEE IN RESPECT OF LOSS ON SALE AND LEASE TRANSACTION IS RELATABLE TO THE INCOME SOUGHT TO BE TAXED NOW BECAUSE OF SEARCH. THE BENCH INVITED THE ARGUMENTS OF BOTH SIDES IN THIS REGARD. IN REPLY, IT WAS SUBMITTED BY LD. DR OF REVENUE THAT THIS JUDGMENT IS IN RESPECT OF REASSESSMENT PROCEEDINGS AND THEREFORE, NOT APPLICABLE IN THE PRESENT CASE. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIRST TAKE UP THE APPEAL OF THE ASSESSEE. WE FIND THAT ALTHOUGH SOME OTHER ISSUES ARE ALSO RAISED BY ASSESSEE IN THIS APPEAL IN ADDITION TO MERIT OF THE DISALLOWANCE OF BUSINESS LOSS AMOUNTING TO RS. 181.25 LAKHS, IT WAS SUBMITTED BY LD. AR OF ASSESSEE IN COURSE OF HEARING BEFORE US THAT THIS ISSUE ON MERIT MAY ONLY BE DECIDED WE FEEL IT PROPER TO FIRST DECIDE ABOUT THIS ARGUMENT OF LD. AR OF ASSESSEE THAT THERE IS NO UNDISCLOSED INCOME IN THE PRESENT CASE ON ACCOUNT OF DEPRECIATION BECAUSE THE DEPRECIATION WAS CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME AND SCRUTINY ASSESSMENT WAS ALSO COMPLETED BEFORE THE DATE OF SEARCH. IN SUPPORT OF HIS CONTENTION, RELIANCE WAS PLACED BY HIM ON THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. MRS. MANISHA A. SADHWANI (SUPRA) AND TWO MORE JUDGMENTS. IN THIS REGARD, WE WOULD FIRST LIKE TO NOTE THAT THE TERM UNDISCLOSED INCOME IS DEFINED IN SECTION 158B(B) AND AS PER THE SAME, THERE IS SOME RETROSPECTIVE IT(SS)A NOS. 39 & 42/BANG/2008 PAGE 10 OF 18 AMENDMENT BY THE FINANCE ACT, 2002 WITH RETROSPECTIVE EFFECT FROM 01.07.1995 WHICH PROVIDED THAT UNDISCLOSED INCOME INCLUDES ANY EXPENSE, DEDUCTION OR ALLOWANCE CLAIMED UNDER THIS ACT WHICH IS FOUND TO BE FALSE. IN THE PRESENT CASE, THE ASSESSEE HAS ADMITTED IN THE STATEMENT U/S. 132(4) OF THE IT ACT THAT THE DEPRECIATION CLAIMED BY THE ASSESSEE IS FALSE AND THEREFORE, IN OUR CONSIDERED OPINION, THIS FORMS PART OF UNDISCLOSED INCOME AS PER THIS AMENDED SECTION OF 158B(B). REGARDING THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. MRS. MANISHA A. SADHWANI (SUPRA), WE FIND THAT IN THIS CASE, THE ISSUE IN DISPUTE WAS REGARDING GIFT CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE AND NOT REGARDING ANY CLAIM FOR EXPENSE, DEDUCTION OR ALLOWANCE AS IN THE PRESENT CASE AND HENCE, IN OUR CONSIDERED OPINION, THIS JUDGMENT OF HON'BLE KARNATAKA HIGH COURT IS NOT APPLICABLE IN THE FACTS OF PRESENT CASE BECAUSE THERE IS RETROSPECTIVE AMENDMENT IN THE PROVISIONS OF SECTION 158 B(B) AS DISCUSSED ABOVE. 12. RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF CIT VS. DILIP SINGH SARDARSINGH BAGGA (SUPRA). IN THIS CASE, THE ISSUE IN DISPUTE WAS REGARDING ALLOWABILITY OF DEPRECIATION ON THE BASIS OF BENEFICIAL OWNERSHIP ALTHOUGH THE VEHICLES WERE REGISTERED IN THE NAME OF ANOTHER PERSON BUT BENEFICIALLY OWNED BY THE ASSESSEE AND TRANSFER WAS NOT AFFECTED UNDER THE MOTOR VEHICLES ACT. THIS JUDGMENT IS RELEVANT IN RESPECT OF THE ISSUE RAISED BY THE REVENUE IN ITS APPEAL AS PER GROUND NOS. 5 AND 6 IN THE APPEAL OF THE REVENUE BUT THIS JUDGMENT IS NOT RELEVANT FOR THE ISSUES RAISED BY THE ASSESSEE IN ITS APPEAL. 13. RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. R.P.G. TELECOM LTD. (SUPRA). IN THIS CASE, ONLY TWO SUBSTANTIAL QUESTION OF LAW WERE CONSIDERED AND DECIDED BY THE HON'BLE KARNATAKA HIGH COURT AS NOTED ON PAGE NOS. 7 AND 8 OF THIS JUDGMENT. AS PER THESE SUBSTANTIAL QUESTIONS OF LAW, THE ISSUE IN DISPUTE WAS THIS AS TO WHETHER THE AO WAS RIGHT IN DETERMINING THE VALUE OF THE SEALER OVEN PURCHASED BY THE ASSESSEE AT A COST OF RS. 75.04 LAKHS WHEN THE ASSESSEE HAS PAID TOTAL CONSIDERATION OF RS. 210 LAKHS TO M/S. TELCO AND THE SECOND QUESTION WAS THIS AS TO WHETHER THE ASSESSEE CAN CLAIM 100% DEPRECIATION WHEN THE SEALER OVEN HAS BEEN LEASED OUT BY HIM TO M/S. TELCO. HENCE IT IS IT(SS)A NOS. 39 & 42/BANG/2008 PAGE 11 OF 18 SEEN THAT THIS JUDGMENT IS ALSO NOT RELEVANT FOR THE PURPOSE OF DECIDING THE APPEAL OF THE ASSESSEE. HENCE, WE HOLD THAT THIS CLAIM OF THE LD. AR OF ASSESSEE IS NOT ALLOWABLE THAT IN THE FACTS OF THE PRESENT CASE, UNDISCLOSED INCOME CANNOT BE ASSESSED IN THE BLOCK ASSESSMENT. NOW, WE PROCEED TO DECIDE THE ISSUE ON MERIT I.E. DISALLOWANCE OF BUSINESS LOSS AMOUNTING TO RS. 181.25 LAKHS. 14. WE FIND THAT THIS ISSUE WAS DECIDED BY CIT (A) AS PER PARA 6.19 ON PAGE 21 OF HIS ORDER AND FOR READY REFERENCE, THIS PARA IS REPRODUCED HEREINBELOW: - 6.19 REGARDING THE LOSS CLAIMED BY THE APPELLANT AMOUNTING TO RS.1,81,25,000, I HAVE GONE THROUGH THE RECORDS OF THE CASE CAREFULLY AND ALSO HEARD THE APPELLANT ON SEVERAL OCCASIONS. I AM OF THE OPINION THAT THERE IS NO PROVISION IN CHAPTER XIV-B OF THE ACT FOR ADJUSTMENT OF LOSSES. THERE IS NO MATERIALS ON RECORD OR FROM SEIZED MATERIAL TO SHOW THAT THE APPELLANT HAS ACTUALLY INCURRED LOSS IN THE SAID TRANSACTION. THIS ADJUSTMENT IS DONE BY THE APPELLANT AT THE TIME OF FILING THE BLOCK RETURNS. THE ASSESSING OFFICER HAS EXAMINED THE SEIZED MATERIAL ABPL(F) 15,I.E. THE LEASE AGREEMENT AND ALSO PROVED BEYOND DOUBT THAT THE SAID AGREEMENT WAS BOGUS AND THE APPELLANT DEPOSITED RS.7.25 CRORES AND GOT BACK RS.5,43,75,000 ON THE SAME DAY AS APPARENT FROM THE BANK ACCOUNT OF THE APPELLANT IN CITIBANK MAINTAINED IN CHENNAI. THE DIFFERENCE OF R.1,81,25,000 (RS 7,25,00,000-5,43,75,0000) WAS DISALLOWED AND THE CLAIM OF LOSS NOT CONSIDERED. THE CLAIM MADE BY THE APPELLANT IS NOT JUSTIFIED. THE DISALLOWANCE MADE BY THE A.O. IS AS PER LAW AND NO INTERFERENCE IS NECESSARY. THEREFORE, THE DISALLOWANCE IS HEREBY, CONFIRMED. 13. WE FIND THAT THE BASIS OF THE ORDER OF CIT (A) ON THIS ISSUE IS THIS THAT THERE IS NO PROVISION IN CHAPTER XIV B OF THE ACT FOR ADJUSTMENT OF LOSSES. NOW WE REPRODUCE THE PROVISIONS OF SECTION 158BB (1) WHICH IS PART OF CHAPTER XIV B OF THE ACT. THIS READS AS UNDER:- COMPUTATION OF UNDISCLOSED INCOME OF THE BLOCK PERIOD. 158BB. (1) THE UNDISCLOSED INCOME OF THE BLOCK PERIOD SHALL BE THE AGGREGATE OF THE TOTAL INCOME OF THE PREVIOUS YEARS FALLING WITHIN THE BLOCK PERIOD COMPUTED, IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT, ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFFICER AND RELATABLE TO SUCH EVIDENCE, AS REDUCED BY THE AGGREGATE OF THE TOTAL INCOME, OR AS THE CASE MAY BE, AS INCREASED BY THE AGGREGATE OF THE LOSSES OF SUCH PREVIOUS YEARS, DETERMINED, (A) WHERE ASSESSMENTS UNDER SECTION 143 OR SECTION 144 OR SECTION 147 HAVE BEEN CONCLUDED PRIOR TO THE DATE OF COMMENCEMENT OF THE SEARCH OR THE DATE OF REQUISITION, ON THE BASIS OF SUCH ASSESSMENTS; IT(SS)A NOS. 39 & 42/BANG/2008 PAGE 12 OF 18 (B) WHERE RETURNS OF INCOME HAVE BEEN FILED UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 BUT ASSESSMENTS HAVE NOT BEEN MADE TILL THE DATE OF SEARCH OR REQUISITION, ON THE BASIS OF THE INCOME DISCLOSED IN SUCH RETURNS; (C) WHERE THE DUE DATE FOR FILING A RETURN OF INCOME HAS EXPIRED, BUT NO RETURN OF INCOME HAS BEEN FILED, (A) ON THE BASIS OF ENTRIES AS RECORDED IN THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE ON OR BEFORE THE DATE OF THE SEARCH OR REQUISITION WHERE SUCH ENTRIES RESULT IN COMPUTATION OF LOSS FOR ANY PREVIOUS YEAR FALLING IN THE BLOCK PERIOD; OR (B) ON THE BASIS OF ENTRIES AS RECORDED IN THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE ON OR BEFORE THE DATE OF THE SEARCH OR REQUISITION WHERE SUCH INCOME DOES NOT EXCEED THE MAXIMUM AMOUNT NOT CHARGEABLE TO TAX FOR ANY PREVIOUS YEAR FALLING IN THE BLOCK PERIOD; (CA) WHERE THE DUE DATE FOR FILING A RETURN OF INCOME HAS EXPIRED, BUT NO RETURN OF INCOME HAS BEEN FILED, AS NIL, IN CASES NOT FALLING UNDER CLAUSE (C); (D) WHERE THE PREVIOUS YEAR HAS NOT ENDED OR THE DATE OF FILING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 HAS NOT EXPIRED, ON THE BASIS OF ENTRIES RELATING TO SUCH INCOME OR TRANSACTIONS AS RECORDED IN THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE ON OR BEFORE THE DATE OF THE SEARCH OR REQUISITION RELATING TO SUCH PREVIOUS YEARS; (E) WHERE ANY ORDER OF SETTLEMENT HAS BEEN MADE UNDER SUB-SECTION (4) OF SECTION 245D, ON THE BASIS OF SUCH ORDER; (F) WHERE AN ASSESSMENT OF UNDISCLOSED INCOME HAD BEEN MADE EARLIER UNDER CLAUSE (C) OF SECTION 158BC, ON THE BASIS OF SUCH ASSESSMENT. EXPLANATION.FOR THE PURPOSES OF DETERMINATION OF UNDISCLOSED INCOME, (A) THE TOTAL INCOME OR LOSS OF EACH PREVIOUS YEAR SHALL, FOR THE PURPOSE OF AGGREGATION, BE TAKEN AS THE TOTAL INCOME OR LOSS COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT WITHOUT GIVING EFFECT TO SET OFF OF BROUGHT FORWARD LOSSES UNDER CHAPTER VI OR UNABSORBED DEPRECIATION UNDER SUB-SECTION (2) OF SECTION 32: PROVIDED THAT IN COMPUTING DEDUCTIONS UNDER CHAPTER VI-A FOR THE PURPOSES OF THE SAID AGGREGATION, EFFECT SHALL BE GIVEN TO SET OFF OF BROUGHT FORWARD LOSSES UNDER CHAPTER VI OR UNABSORBED DEPRECIATION UNDER SUB-SECTION (2) OF SECTION 32; (B) OF A FIRM, RETURNED INCOME AND TOTAL INCOME ASSESSED FOR EACH OF THE PREVIOUS YEARS FALLING WITHIN THE BLOCK PERIOD SHALL BE THE INCOME DETERMINED BEFORE ALLOWING DEDUCTION OF SALARY, INTEREST, COMMISSION, BONUS OR REMUNERATION BY WHATEVER NAME CALLED TO ANY PARTNER NOT BEING A WORKING PARTNER : PROVIDED THAT UNDISCLOSED INCOME OF THE FIRM SO DETERMINED SHALL NOT BE CHARGEABLE TO TAX IN THE HANDS OF THE PARTNERS, WHETHER ON ALLOCATION OR ON ACCOUNT OF ENHANCEMENT; (C) ASSESSMENT UNDER SECTION 143 INCLUDES DETERMINATION OF INCOME UNDER SUB-SECTION (1) OR SUB-SECTION (1B) OF SECTION 143. 14. AS PER THE PROVISIONS OF SECTION 158 BB (1) AS REPRODUCED ABOVE, TOTAL INCOME IS TO BE COMPUTED AS PER THE PROVISIONS OF THE ACT AND FROM THAT ADJUSTMENT IT(SS)A NOS. 39 & 42/BANG/2008 PAGE 13 OF 18 IS TO BE MADE ON ACCOUNT OF INCOME/LOSS AS PER CONCLUDED ASSESSMENT IF ANY. HENCE, FOR COMPUTING UNDISCLOSED INCOME ALSO, COMPUTATION IS REQUIRED TO BE MADE AS PER THE ACT. NOW THE QUESTION IS AS TO WHETHER THIS CLAIM OF THE ASSESSEE ABOUT LOSS OF RS. 181.25 LAKHS IS ALLOWABLE AS PER THE ACT OR NOT. THE CLAIM IS THIS THAT ADVANCES WERE GIVEN IN NORMAL COURSE OF LEASING BUSINESS AND IF SUCH ADVANCE IS NOT RECOVERABLE, IT IS A BUSINESS LOSS. ADMITTEDLY, THIS CLAIM WAS NOT MADE PRIOR TO SEARCH AND HENCE, THE QUESTION IS WHETHER THIS CLAIM CAN BE MADE AFTER SEARCH. ON THIS ASPECT, THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS. SUN ENGINEERING WORKS P. LTD. (SUPRA) COMES TO THE RESCUE OF THE ASSESSEE. WE HAVE ALREADY NOTED THAT ALTHOUGH THIS JUDGMENT IS IN RESPECT OF REASSESSMENT PROCEEDINGS BUT IN OUR CONSIDERED OPINION, THE FINDING OF HONBLE APEX COURT SEEMS TO BE EQUALLY APPLICABLE IN CASE OF SEARCH ASSESSMENT AS IN THE PRESENT CASE ALSO. RELEVANT PARA IS PARA 27 WHICH IS AS UNDER:- 27. AS A RESULT OF THE AFORESAID DISCUSSION, WE FIND THAT, IN PROCEEDINGS UNDER S. 147 OF THE ACT, THE ITO MAY BRING TO CHARGE ITEMS OF INCOME WHICH HAD ESCAPED ASSESSMENT OTHER THAN OR IN ADDITIONAL TO THAT ITEM OR TIMES WHICH HAVE LED TO THE ISSUANCE OF THE NOTICE UNDER S. 148 AND WHERE REASSESSMENT IS MADE UNDER S. 147 IN RESPECT OF INCOME WHICH HAS ESCAPED TAX, THE ITO'S JURISDICTION IS CONFINED TO ONLY SUCH INCOME WHICH HAS ESCAPED TAX OR HAS BEEN UNDERASSESSED AND DOES NOT EXTEND TO REVISING, REOPENING OR RECONSIDERING THE WHOLE ASSESSMENT OR PERMITTING THE ASSESSEE THE REAGITATE QUESTIONS WHICH HAD BEEN DECIDED IN THE ORIGINAL ASSESSMENT PROCEEDINGS. IT IS ONLY THE UNDERASSESSMENT WHICH IS SET ASIDE AND NOT THE ENTIRE ASSESSMENT WHEN REASSESSMENT PROCEEDINGS ARE INITIATED. THE ITO CANNOT MAKE AN ORDER OF REASSESSMENT INCONSISTENT WITH THE ORIGINAL ORDER OF ASSESSMENT IN RESPECT OF MATTERS WHICH ARE NOT THE SUBJECT MATTER OF PROCEEDINGS UNDER S. 147. AN ASSESSEE CANNOT RESIST VALIDLY INITIATED REASSESSMENT PROCEEDINGS UNDER THIS SECTION MERELY BY SHOWING THAT OTHER INCOME WHICH HAD BEEN ASSESSED ORIGINALLY WAS AT TOO HIGH A FIGURE EXCEPT IN CASES UNDER S. 152(2). THE WORDS 'SUCH INCOME' IN S. 147 CLEARLY REFER TO THE INCOME WHICH IS CHARGEABLE TO TAX BUT HAS 'ESCAPED ASSESSMENT' AND THE ITO'S JURISDICTION UNDER THE SECTION IS CONFINED ONLY TO SUCH INCOME WHICH HAS ESCAPED ASSESSMENT. IT DOES NOT EXTEND TO RECONSIDERING GENERALLY THE CONCLUDED EARLIER ASSESSMENT. CLAIMS WHICH HAVE BEEN DISALLOWED IN THE ORIGINAL ASSESSMENT PROCEEDING CANNOT BE PERMITTED TO BE REAGITATED ON THE ASSESSMENT BEING REOPENED FOR BRINGING TO TAX CERTAIN INCOME WHICH HAD ESCAPED ASSESSMENT BECAUSE THE CONTROVERSY IT(SS)A NOS. 39 & 42/BANG/2008 PAGE 14 OF 18 ON REASSESSMENT IS CONFINED TO MATTERS WHICH ARE RELEVANT ONLY IN RESPECT OF THE INCOME WHICH HAD NOT BEEN BROUGHT TO TAX DURING THE COURSE OF THE ORIGINAL ASSESSMENT. A MATTER NOT AGITATED IN THE CONCLUDED ORIGINAL ASSESSMENT PROCEEDINGS ALSO CANNOT BE PERMITTED TO BE AGITATED IN THE REASSESSMENT PROCEEDINGS UNLESS RELATABLE TO THE TIMES SOUGHT TO BE TAXED AS 'ESCAPED INCOME'. INDEED, IN THE REASSESSMENT PROCEEDINGS FOR BRINGING TO TAX ITEMS WHICH HAD ESCAPED ASSESSMENT, IT WOULD BE OPEN TO AN ASSESSEE TO PUT FORWARD CLAIMS FOR DEDUCTION OF ANY EXPENDITURE IN RESPECT OF THAT INCOME OR THE NON-TAXABILITY OF THE ITEMS AT ALL. KEEPING IN VIEW THE OBJECT AND PURPOSE OF THE PROCEEDINGS UNDER S. 147 OF THE ACT WHICH ARE FOR THE BENEFIT OF THE REVENUE AND NOT AN ASSESSEE, AN ASSESSEE CANNOT BE PERMITTED TO CONVERT THE REASSESSMENT PROCEEDINGS AS HIS APPEAL OR REVISION, IN DISGUISE, AND SEEK RELIEF IN RESPECT OF ITEMS EARLIER REJECTED OR CLAIM RELIEF IN RESPECT OF ITEMS NOT CLAIMED IN THE ORIGINAL ASSESSMENT PROCEEDINGS, UNLESS RELATABLE TO 'ESCAPED INCOME', AND REAGITATE THE CONCLUDED MATTERS. EVEN IN CASES WHERE THE CLAIMS OF THE ASSESSEE DURING THE COURSE OF REASSESSMENT PROCEEDINGS RELATING ON THE ESCAPED ASSESSMENT ARE ACCEPTED, STILL THE ALLOWANCE OF SUCH CLAIMS HAS TO BE LIMITED TO THE EXTENT TO WHICH THEY REDUCE THE INCOME TO THAT ORIGINALLY ASSESSED. THE INCOME FOR PURPOSES OF 'REASSESSMENT' CANNOT BE REDUCED BEYOND THE INCOME ORIGINALLY ASSESSED. 15. IN VIEW OF THIS JUDGMENT, IN REASSESSMENT, AN ASSESSEE CAN PUT FORWARD CLAIMS FOR DEDUCTION OF ANY EXPENDITURE IN RESPECT OF THAT INCOME OR THE NON- TAXABILITY OF THE ITEMS AT ALL WHICH IS SOUGHT TO BE TAXED IN REASSESSMENT BUT SUCH DEDUCTION HAS TO BE RESTRICTED TO ENSURE THAT THE ASSESSED INCOME IS NOT REDUCED TO AN AMOUNT BELOW THE INCOME ORIGINALLY ASSESSED AND THE ASSESSEE CANNOT GET A BENEFIT ON REASSESSMENT. IN OUR CONSIDERED OPINION, THE BUSINESS LOSS INCURRED BY THE ASSESSEE IN CONNECTION WITH UNDISCLOSED INCOME SHOULD BE ALLOWED BUT MAXIMUM TO THE EXTENT OF SUCH UNDISCLOSED INCOME. IN THE PRESENT CASE, UNDISCLOSED INCOME IS EXTRA DEPRECIATION OF RS. 725 LAKHS AND THE CLAIM OF BUSINESS LOSS IN THIS REGARD IS OF RS. 181.25 LAKHS AND IT IS NOT MORE THAN RS. 725 LACS. HENCE IT MAY BE ALLOWED IF IT IS FOUND THAT THE SAME IS ALLOWABLE AS PER THIS ACT. NOW THE QUESTION IS WHETHER THIS BUSINESS LOSS IS ALLOWABLE AS PER THIS ACT. WE DISCUSS AND DECIDE THIS ASPECT IN THE FOLLOWING PARA. 16. THIS IS BY NOW A SETTLED POSITION OF LAW THAT IF ANY BUSINESS LOSS IS INCURRED IN COURSE OF CARRYING ON OF A BUSINESS, THE SAME IS AN ALLOWABLE DEDUCTION. IN FIRST IT(SS)A NOS. 39 & 42/BANG/2008 PAGE 15 OF 18 PARA OF THE ASSESSMENT ORDER, THE AO HAS NOTED THAT IN ADDITION TO VARIOUS BUSINESSES SUCH AS MANUFACTURING OF VARIOUS APPLIANCES, IT IS VENTURING INTO DIVERSIFIED BUSINESSES SUCH AS TELECOM, POWER AND FINANCE ETC. LEARNED CIT (A) HAS DECIDED THIS ISSUE AS PER PARA 6.19 OF HIS ORDER AND FOR READY REFERENCE, THIS PARA OF HIS ORDER IS ALREADY REPRODUCED BY US IN PARA 12 ABOVE. 17. FROM THE SAID PARA REPRODUCED FROM THE ORDER OF CIT (A) IN PARA 12 ABOVE, IT IS SEEN THAT THE OBJECTIONS OF CIT (A) ARE ONLY TWO. HIS FIRST OBJECTION IS THIS THAT THERE IS NO PROVISION IN CHAPTER XIV B OF THE ACT FOR ADJUSTMENT OF LOSSES. WE HAVE ALREADY DISCUSSED AND DECIDED ABOUT THIS OBJECTION IN PARA 14 AND 15 ABOVE. HIS SECOND OBJECTION IS THIS THAT THERE IS NO MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HAS ACTUALLY INCURRED THIS LOSS IN THE SAID TRANSACTION. IN THIS REGARD, WE FIND THAT IN PARA 2.14 OF THE ASSESSMENT ORDER, IT IS NOTED BY THE AO THAT FROM THE EXAMINATION OF THE BANK ACCOUNT OF THE ASSESSEE WITH CITI BANK, CHENNAI, IT IS SEEN THAT AN AMOUNT OF RS. 725 LACS WAS DEBITED TO THE ASSESSEES ACCOUNT ON 08.12.1994 AND ON THE SAME DATE, AN AMOUNT OF RS. 558.25 LACS WAS DEPOSITED IN THE SAME BANK ACCOUNT ON ACCOUNT OF SECURITY DEPOSIT AND LEASE MANAGEMENT FEES AND THE DIFFERENCE IS RS. 181.25 LACS, WHICH IS BEING CLAIMED BY THE ASSESSEE AS BUSINESS LOSS. HENCE, IT IS SEEN THAT THE EVIDENCE ABOUT INCURRING OF ACTUAL LOSS ON ACCOUNT OF THIS TRANSACTION IS AVAILABLE ON RECORD. THESE FACTS ARE NOTED BY CIT 9A) ALSO IN THIS PARA NO. 6.19 REPRODUCED ABOVE AND THEREFORE, THIS IS NOT CORRECT TO SAY THAT THERE IS NO MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HAS ACTUALLY INCURRED THIS LOSS IN THE SAID TRANSACTION. THIS IS NOT THE CASE OF THE AO OR CIT (A) THAT THERE IS ANY MISTAKE IN THESE FIGURES OF PAYMENT RS. 725 LACS AND RECEIPT OF RS. 558.25 LACS. THIS IS ALSO NO BODYS CASE THAT ANY FURTHER AMOUNT WAS RECEIVED BY THE ASSESSEE IN ADDITION TO RS. 558.25 LACS AGAINST THIS PAYMENT OF RS. 725 LACS BECAUSE ALL OTHER AMOUNTS RECEIVED ARE OFFERED TO TAX AS LEASE RENT ETC. AND THE SAME IS NOT REPAYMENT AGAINST RS. 725 LACS. HENCE, THE ORDER OF CIT (A) ON THIS ISSUE IS WITHOUT CONSIDERING CORRECT FACTS AND HENCE, THE SAME IS NOT SUSTAINABLE. WE THEREFORE, DELETE THIS DISALLOWANCE. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 19. NOW, WE TAKE UP THE APPEAL OF THE REVENUE. IT WAS SUBMITTED BY THE LEARNED DR OF THE REVENUE THAT GROUND NO. 1 IS GENERAL. REGARDING GROUND NO. 2 TO 4, HE SUBMITTED THAT IN THESE GROUNDS, THE GRIEVANCE IS ABOUT DELETION OF THE EXCESS IT(SS)A NOS. 39 & 42/BANG/2008 PAGE 16 OF 18 DEPRECIATION CLAIMED BY THE ASSESSEE. HE SUPPORTED THE ASSESSMENT ORDER AND POINTED OUT THAT IN PARA 3.4 OF THE ASSESSMENT ORDER, IT IS NOTED BY THE A.O. THAT THE LICENSED SURVEYOR AND LOSS ASSESSOR, CHENNAI IN HIS REPORT OBTAINED BY THE ASSESSEE HAS CONSIDERED REPLACEMENT COST OF TWO BOILERS AT RS. 318,60,180/- AND TAKEN ORIGINAL PROCUREMENT COST OF TWO BOILERS AT RS. 190,77,920/- AS AGAINST ACTUAL COST OF RS. 145.54 LACS. HE ALSO SUBMITTED THAT OWNERSHIP WAS TRANSFERRED IN NOV./DEC. 1994. LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF CIT (A) ON THIS ISSUE, 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIND THAT THIS ISSUE WAS DECIDED BY CIT (A) AS PER PARA 6.28 OF HIS ORDER. FOR READY REFERENCE, THIS PARA IS REPRODUCED HEREINBELOW: - 6.28 THERE IS NOTHING ON RECORD TO SHOW THAT THE DISALLOWANCE MADE ON ACCOUNT OF DEPRECIATION IS BASED ON SEIZED MATERIAL. THE DISALLOWANCE MADE IS ON THE BASIS OF VALUATION DONE BY THE DEPTL. VALUER AND THE ASSET WAS DETERMINED AT R.82,22,301 AGAINST RS.1.26,04,000 AS CLAIMED BY THE APPELLANT. THE A.O. INVOKED PROVISION OF SECTION 43(1)(B), EXPLANATION 3 AND EXPLANATION 4A TO SECTION 43(1) OF THE ACT AND TOOK THE VIEW THAT WRITTEN DOWN VALUE(WDV). IT IS STATED THAT THE TRANSACTION IN QUESTION ACTUALLY TOOK PLACE IN NOV/DEC.1994 WHEN THE INITIAL PAYMENT OF HIRE CHARGES WERE PAID BY THE ASSESSEE. THE A.O. CONCLUDED THAT THE ASSETS WERE PURCHASED ON 31/12/94 AND PUT USE AFTER 01.09.94 AND THE ELIGIBLE DEPRECIATION IN THIS CASE WILL BE 50% AND NOT 100% AS CLAIMED. THE APPELLANT'S CASE IS COVERED BY THE CASE LAW IN 95 ITD 1(MUM) RELIED ON BY THE APPELLANT. IN VIEW OF THIS, THE A.O. IS NOT AUTHORIZED BY THE PROVISIONS OF CHAPTER XIV-B OF THE ACT. THEREFORE, THE DISALLOWANCES OF RS.45,05,821AND RS.35,92,358. ARE HEREBY DELETED. THE APPELLANT GETS RELIEF OF RS.80,98,179 ACCORDINGLY. 21. WE FIND THAT IN THIS PARA, LEARNED CIT (A) HAS FOLLOWED THE TRIBUNAL DECISION IN A THIRD MEMBER CASE BY MUMBAI BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF MORARJEE GOCULDAS SPG. % WVG. CO. LTD. VS. DCIT AS REPORTED IN 95 ITD 1 (TM). IN THIS CASE, THE TRIBUNAL HELD THAT UNDISCLOSED INCOME CAN BE ASSESSED IN A BLOCK ASSESSMENT UNDER CHAPTER XIV B ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH AND SUCH OTHER MATERIAL OR INFORMATION AS ARE AVAILABLE WITH THE AO AND RELATABLE TO SUCH EVIDENCE. IN THIS PARA, CATEGORICAL FINDING IS GIVEN BY CIT (A) THAT THERE IS NOTHING ON RECORD TO SHOW THAT THIS DISALLOWANCE WAS MADE ON THE BASIS OF ANY SEIZED MATERIAL. BEFORE US ALSO, NO MATERIAL WAS BROUGHT ON RECORD TO CONTROVERT THIS FINDING OF CIT (A). IN RESPECT OF THE JUDGMENT OF HONBLE RAJASTHAN HIGH COURT RENDERED IN THE CASE OF CIT VS. AJAY KUMAR SHARMA, 259 ITR 240, WE IT(SS)A NOS. 39 & 42/BANG/2008 PAGE 17 OF 18 WOULD LIKE TO OBSERVE THAT THIS JUDGMENT IS NOT APPLICABLE IN THE PRESENT CASE BECAUSE AS PER VARIOUS QUESTIONS RAISED BEFORE HONBLE RAJASTHAN HIGH COURT AS REPRODUCED BELOW, THIS WAS NOT A QUESTION RAISED AS TO WHETHER IN THE ABSENCE OF SEIZED MATERIAL, ANY INCOME CAN BE TAXED AS UNDISCLOSED INCOME IN BLOCK ASSESSMENT. THE QUESTIONS RAISED IN THAT CASE ARE AS UNDER:- 'WHETHER THE LEARNED TRIBUNAL WAS RIGHT IN ITS WISDOM TO HOLD THAT ENTRIES REFLECTING IN THE REGULAR BOOKS OF ACCOUNTS CANNOT BE CONSIDERED FOR THE BLOCK ASSESSMENT PERIOD?' 'WHETHER THE LEARNED TRIBUNAL WAS JUSTIFIED IN DELETING ADDITIONS BY HOLDING THAT THE ASSESSEE HAD DISCHARGED ITS ONUS BY PRODUCING THE CREDITORS?' 'WHETHER IT CAN BE SAID THAT THE MERE PRODUCTION OF CREDITORS IS SUFFICIENT TO DISCHARGE THE ONUS OF ASSESSEE AND THE CREDITWORTHINESS/PAYING CAPACITY IS OF NO RELEVANCY AT ALL?' 'WHETHER THE LEARNED TRIBUNAL WAS JUSTIFIED IN DELETING THE ADDITIONS WITHOUT REJECTING THE FINDINGS OF AO WITH REGARD TO THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS?' 'WHETHER THE LEARNED TRIBUNAL WAS JUSTIFIED IN NOT APPLYING THE RATIO IN THE CASE OF SHANKER INDUSTRIES VS. CIT (1978) 114 ITR 689 (CAL) : TC 42R.1196 AS DECIDED BY THE HONBLE COURT TO THE PRESENT MATTER?' HENCE, RESPECTFULLY FOLLOWING THIS TRIBUNAL ORDER, WE DECLINE TO INTERFERE IN THE ORDER OF CIT (A) ON THIS ISSUE. ACCORDINGLY, THESE GROUNDS ARE REJECTED. 22. REGARDING GROUND NOS. 5 &6, LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER AND LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF CIT (A). 23. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIND THAT THIS ISSUE WAS DECIDED BY CIT (A) AS PER PARA 7.4 TO 7.6 OF HIS ORDER. FOR READY REFERENCE, THESE PARAS ARE REPRODUCED HEREINBELOW: - 7.4 THE TRANSACTION IS FOUND TO BE GENUINE AS CONCEDED IN THE ORDER. THE ASSETS WERE ALL PURCHASED PRIOR 30 DAY OF SEPTEMBER OF THE RELEVANT YEAR. THE APPELLANT RELIES ON THE FOLLOWING DECISIONS : K.L JOHAR & CO V DY .CTO, 16 STC 213 (SC) CIT V DILIP SINGH SARDARSINGH BAGGA, 201 ITR 995(BOM) CIT V SALKIA TRANSPORT ASSOCIATES ,143 ITR 39. 7.5 THE COURTS HAVE HELD THAT FOR THE PURPOSE OF CLAIMING DEPRECIATION UNDER THE INCOME TAX ACT, WHAT IS REQUIRED IS THE OWNERSHIP OF THE ASSET AND NOT REGISTERED OWNERSHIP UNDER THE MOTOR VEHICLES ACT. 7.6 REGISTRATION IS NOT AN ESSENTIAL PREREQUISITE FOR ACQUISITION OF OWNERSHIP OF A MOTOR VEHICLE BUT IS AN OBLIGATION CAST UPON THE OWNER. IT(SS)A NOS. 39 & 42/BANG/2008 PAGE 18 OF 18 HENCE THE DEPRECIATION DISALLOWED BY THE ASSESSING' OFFICER AMOUNTING TO RS.6,34,480 IS HEREBY DELETED. THE APPELLANT GETS RELIEF TO THAT EXTENT ACCORDINGLY. 24. AS PER PAGE 26 & 27 OF THE ASSESSMENT ORDER, THE OBJECTION OF THE A. O. IS THIS THAT AS PER THE R. C. BOOKS, SOME VEHICLES ARE REGISTERED AFTER 30.09.1994 AND HENCE ONLY50% OF ELIGIBLE DEPRECIATION IS ALLOWABLE. THIS DISALLOWANCE OF 50% OF DEPRECIATION IS DELETED BY CIT (A) AS PER ABOVE PARAS OF HIS ORDER ON THIS BASIS THAT FOR DEPRECIATION, OWNERSHIP IS ESSENTIAL BUT NOT THE REGISTERED OWNERSHIP UNDER MOTOR VEHICLES ACT. IN PARA 7.4 AS REPRODUCED ABOVE, A CATEGORICAL FINDING IS GIVEN BY CIT (A) THAT THE ASSETS WERE PURCHASED PRIOR TO 30.09.1994 AND THIS FINDING IS NOT CONTROVERTED. HENCE, ON THIS ISSUE ALSO, WE DECLINE TO INTERFERE IN THE ORDER OF CIT (A). ACCORDINGLY, THESE GROUNDS ARE ALSO REJECTED. 25. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 26. IN THE COMBINED RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (PAVAN KUMAR GADALE) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 25 TH OCTOBER, 2019. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.