2006 (1) TMI 107 - HC - Income Tax

Business of leasing equipment - depreciation on cyclonic scubber equipment and electro static precipitator - whether the said machines were utilised by the assessee for its business so as to entitle it to claim depreciation in terms of section 32 - Tribunal have concurrently come to the conclusion that the machines in question had actually been installed at the plywood manufacturing unit of the lessee. The actual user of the machine was in the light of the said installation presumed and in our view rightly so. In the absence of any evidence to the contrary once the machines were installed at the place of the lessee it could be presumed that the same had been utilised, even assuming that such actual user was a condition precedent for the lessee to claim depreciation. - In the light of the findings of fact recorded by the Tribunal no question of law much less a substantial question of law arises for our consideration in this revenue s appeal, which fails and is hereby dismissed.

Summary

Issues:
Claim of depreciation on purchased machinery for assessment year 1996-97.

Analysis:
For the assessment year 1996-97, the assessee claimed depreciation on cyclonic scrubber equipment and electrostatic precipitator purchased from M/s. Assam Solvex P. Ltd. The Assessing Officer initially rejected the claim, stating that the assessee failed to prove the purchase of the machinery. However, the Commissioner of Income-tax (Appeals) overturned this decision, confirming the purchase of the machinery and its use by the lessee. The Tribunal also upheld these findings, stating that there was ample evidence to establish the purchase and use of the machinery. The Tribunal emphasized that the discrepancies pointed out by the Assessing Officer were not sufficient to doubt the genuineness of the transactions, supporting the assessee's claim for depreciation.

The Tribunal relied on previous court decisions to establish that once the machinery was leased to the lessee, it should be deemed to have been used for the assessee's business, especially since the assessee was engaged in leasing. The Tribunal also noted that the installation of the machinery at the lessee's premises confirmed its use. The Tribunal further clarified that the date of lease agreement was crucial, and since the machinery was delivered to the lessee before a specified date, the assessee was entitled to claim depreciation. The Tribunal's decision was based on the premise that the machines were being used for pollution control in the lessee's plywood manufacturing unit, and the installation at the lessee's site established their utilization.

The High Court, after considering the Tribunal's findings, concluded that there was no error in the decision regarding the utilization of the machinery by the assessee. The Court agreed with the Tribunal's interpretation of relevant legal precedents and the factual evidence presented. The High Court emphasized that once the machines were installed at the lessee's premises, their use could be presumed, especially in the absence of contrary evidence. As a result, the Court dismissed the appeal, stating that no substantial question of law arose for consideration based on the factual findings of the Tribunal. The judgment upheld the assessee's entitlement to claim depreciation on the machinery in question.