9911796707
TMI Blog2004 (1) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... April, 2001, for the block period from 1st April, 1989 to 9th March, 1999. During the course of search the statement of Shri Nitin Kohli was recorded, who has stated that some financial arrangements were entered into between the assessee-company and Mansarover Bottling Co. Ltd. From the assessment records the AO noted that return declaring an income of Rs. 93,590 was filed on 31st March, 1993. It was processed under s. 143(1)(a). Main business of the company comprised of sale and purchase of shares. Apart from this, the assessee had allegedly leased empty soft drinks (Limca) glass bottles and certain other plant and machinery to Mansarover Bottling Co. Ltd. and claimed depreciation at 100 per cent and 33.33 per cent respectively, as per de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the income of the assessee. However, the lease rent on bottles shown at Rs. 6,06,797 was reduced from the total income. For holding so, the AO observed in his order that "The assets leased out in this case were glass bottles to be used in soft drinks business. These glass bottles are used again and again after refilling the soft drink. On an average it can be presumed that the bottle is refilled once in every two weeks. This would mean that a bottle is recycled approximately 25 times in year. The bottles are required to be transported over long distances. The bottles are filled with soft drink at a high pressure. Under these circumstances, it is highly improbable that a bottle could last for a period of 5 years. Keeping in view the limite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was also stated that there is no relation of the assessee directly or indirectly either with the seller from whom the bottles were purchased or with Mansarover Bottling Co. Ltd., to whom the bottles were leased out. It was also stated that the AO has allowed the claim of the assessee on account of leasing out of machinery, but disallowing the claim of depreciation on account of leased out bottles, were unjustified on the part of lower authorities. On the other hand, the learned Departmental Representative strongly placed reliance on the orders of the authorities below. 5. We have heard rival submissions and considered them carefully. We have also perused the relevant material on which our attention were drawn. We have also considered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aced at p. 2 of the compilation. The detail of payment on account of lease rent received from Mansarover Paper Industries Ltd. is placed at p. 3 and the total amount of lease rent received by assessee on account of bottles and plant and machinery from financial year 1990-91 to 1996-97 was at Rs. 1,35,22,026. On examining these details it is noted that the assessee has offered for taxation much more income on account of lease rent of bottles, than the amount of depreciation in five years as the agreement of lease was for a period of 5 years. As the total lease rent received by assessee on account of leasing of bottles was at Rs. 48,53,377, against which the total depreciation claimed by assessee is at Rs. 34,24,604. In 6th year the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same AO has accepted the leased out machinery to the same party i.e., Mansarover Bottling Co., as depreciation claimed on machinery as well as lease rent shown by assessee has been held as genuine by the AO himself. In accepting the lease agreement in part, is also not justified on the part of the AO as the lease agreement in regard to machinery entered into with the same party was held as genuine, and lease agreement in regard to bottles was not held as genuine. We have also noted that on the basis of statement of one Shri Nitin Kohli, the AO drew an adverse inference against the assessee. It is worth noting here that Mr. Nitin Kohli neither was a director nor was authorised person of the assessee-company during asst. yr. 1991-92. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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