2004 (11) TMI 616 - HC - Income Tax

Summary

Issues involved:
- Disallowance of depreciation claimed due to alleged collusive transaction between holding company and subsidiary company.

Detailed Analysis:

1. Dispute over Disallowance of Depreciation:
The main issue in this case revolved around the disallowance of depreciation claimed by the assessed on the grounds of a collusive transaction between the holding company and the subsidiary company. The Commissioner (Appeals) had deleted a portion of the disallowance, which was challenged by the revenue. The Tribunal examined the evidence and circumstances before arriving at a conclusion.

2. Tribunal's Conclusion and Reasoning:
The Tribunal, after considering the material placed before it, concluded that the ownership of the machinery in question vested with the assessed, dismissing the assessing officer's suspicions as mere surmises and conjectures. The Tribunal emphasized that the allegation of collusion had not been proven by the revenue, and the onus of proof in this regard had not been discharged. Referring to the principle established by the Apex Court in Uma Charan Shaw v. CIT, the Tribunal highlighted that a conclusion based on suspicion cannot substitute for actual proof. Therefore, the Tribunal found no error in the Commissioner (Appeals) allowing the depreciation claimed by the assessed for the use of machinery.

3. Decision and Dismissal of Appeal:
In light of the Tribunal's findings, it was held that collusion was not proven, and the issue at hand was purely factual. As no substantial question of law was found to arise from the matter, the appeal was dismissed. The judgment emphasized the importance of concrete proof over mere suspicion in establishing allegations such as collusion, highlighting the need for the revenue to discharge the onus of proof in such cases.

In conclusion, the judgment by the Delhi High Court upheld the Tribunal's decision, emphasizing the need for concrete evidence to substantiate allegations of collusion and dismissing the revenue's challenge to the allowance of depreciation claimed by the assessed. The judgment serves as a reminder of the legal principle that conclusions based on suspicion alone are insufficient in the absence of concrete proof, as established by precedents set by higher courts.