2018 (10) TMI 130 - AT - Income Tax

CIT-A power to set aside the issue - CIT(A) directing the AO to verify the claim of depreciation in regard to lease assets - Held that - This issue has already been adjudicated by the Tribunal in AY 1996-97 2018 (5) TMI 39 - ITAT MUMBAI wherein Tribunal after considering the issue in detail has allowed the claim of the assessee dismissing the Revenue s appeal and confirm the order of the Ld. CIT(A) in holding that assessee is eligible to claim depreciation from sale and lease back assets in respect of the transactions other than Nath Pulp & Paper Mills Ltd. To put an end to the litigation in this case as the matter is very old and relates to the A.Ys. 1996-97 we sustain the order of the CIT(A) partly as indicated above and the claim of the assessee is directed to be allowed as per the observations of the Ld.CIT(A) without any further verification by the Assessing Officer. - Decided in favour of assessee.

Summary

Issues:
1. Validity of CIT(A) directing AO to verify claim of depreciation for lease assets.
2. CIT(A) setting aside assessment under section 251 of the Act.
3. Acceptance of lease transactions without fresh material.
4. Eligibility of claiming depreciation on leased assets.
5. Verification of supplier and lessee relationship.

Issue 1: The Revenue appealed against the CIT(A) directing the AO to verify the claim of depreciation for lease assets. The Revenue argued that the CIT(A) lacked the power to set aside the issue under section 251 of the Act and contested the issue on merits. The Revenue raised specific grounds questioning the CIT(A)'s direction to verify each claim of the assessee to ensure the supplier and lessee were not the same entity. The Revenue also challenged the acceptance of lease transactions without fresh material.

Issue 2: The judgment highlighted that the CIT(A) had set aside the assessment under section 251 of the Act, which the Revenue contested. The Revenue argued that the CIT(A) did not have the authority to set aside the issue to the AO and should have adjudicated based on the evidence on record. The Revenue's grounds emphasized the procedural aspect of the CIT(A)'s decision-making process.

Issue 3: The judgment detailed the facts where the assessee provided details of assets purchased and leased to various parties, along with invoices and confirmations. The CIT(A) accepted lease transactions except for one case, Nath Pulp & Paper Mills Ltd., where the supplier and lessee were the same entity. The judgment referenced a previous Tribunal decision supporting the assessee's claim for depreciation on leased assets, except for the specific case mentioned.

Issue 4: The judgment extensively discussed the eligibility of the assessee to claim depreciation on leased assets, citing legal precedents and the supplier-lessee relationship. The CIT(A) allowed depreciation on assets purchased from third parties and entered into sale and lease back agreements with different parties. The AO was directed to verify each claim to ensure the supplier and lessee were not the same entity, ultimately partially allowing the appeal on this ground.

Issue 5: The judgment concluded by affirming the order of the CIT(A) based on the Tribunal's decision in the assessee's own case, dismissing the Revenue's appeal. The CO filed by the assessee was deemed infructuous and dismissed. The judgment emphasized the need to put an end to the long-standing litigation related to the assessment year, ultimately sustaining the CIT(A)'s order partially and directing the allowance of the assessee's claim without further verification by the AO.