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TMI Blog2005 (4) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance of Rs. 19,99,440 out of depreciation claimed on leased out Air Jet Spindle Assembly and Positar Disc. ( a )Despite the fact that the assessee could not produce any evidence to prove the genuineness of such a transaction. ( b )Despite the fact that the Assessing Officer had clearly established such a transaction to be a sham transaction." 3. The assessee is engaged in the business of financing vehicles. The assessee had claimed 100 per cent depreciation in respect of assets purchased and given on lease. The details in this regard are as follows : ( a )Airjet spindle assembly and Positar Disc worth Rs. 19,99,440 purchased from M/s. Rajaji Electronics Pvt. Ltd. and leased out to M/s. Maruti Syntex (India) Ltd. ( b )LPG Gas Cylinders bearing logo "Indojan" worth Rs. 30 lakhs purchased from M/s. Aravalli Cylinders Pvt. Ltd. and leased out to M/s. Janta Gases Pvt. Ltd. 4. As far as depreciation claimed on LPG Gas cylinders are concerned, the facts were as follows. M/s. Aravalli Cylinders Pvt. Ltd. ( MACPL for short) is a manufacturer of gas cylinders bearing the logo "Indojan". One M/s. Janta Gases Pvt. Ltd. wanted to purchase the cylinders manufactured by M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Director one Shri M.P. Mahipal appeared for cross examination of the ground that Rattan was not well. The assessee however refused to cross examine M.P. Mahipal. The Assessing Officer thereafter gave his conclusions and disallowed the claim for depreciation on gas cylinders as follows : Thus to sum up : ( a )M/s. Aravalli Cylinders have denied having sold the cylinders to the assessee and stated that the assessee is only a financier. ( b )The assessee has sought to put stress in section 6( b ) of the Petroleum Order and produced an authorization letter written by M/s. Janta Gases to M/s. Aravalli Cylinders. However, M/s. Aravalli Cylinders denied having being so authorised. ( c )The assessee refused the opportunity of cross examination. Thus in view of what has been said above it is amply clear that the assessee was never the owner of the gas cylinders and that it has only financed the deal. The entire transaction is only an instrument claim bogus depreciation and to avoid tax payment. The Supreme Court in the case of MacDowell Co. had stated that - "Tax planning may be legitimate provided it is within the frame work of law colourable devices cannot be a part of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrest i.e. February, 1998 the assessee was very much in touch with M/s. Rajaji Electronics and deliberately had not produced the Director for examination of the Assessing Officer. The Assessing Officer also called for the Goods Inward Register and the mode of transport of the equipment that were leased to M/s. Maruti Syntex (India) Ltd. from them and they informed that such evidence were not available with them and that these equipments were transported in their own vehicle. On the aforesaid facts the Assessing Officer concluded as follows and disallowed the claim for depreciation. To sum up : ( a )The director of M/s. Rajaji Electronics absconding and is deliberately avoiding to produce its books of account to prove the sales of the air spindles to M/s. Ganapati Finance and to furnish evidence regarding its purchase and from whom it has been purchased. This is despite two summons served on him personally and arrest warrants served to the local police twice. The assessee was also requested to produce him but it failed to do so. ( b )M/s. Rajaji Electronics is not assessed to tax and is not filing its Income tax return. It has only obtained a PAN. On an enquiry from the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsumer. It is not in dispute that MJGPL a parallel marketeer within the meaning of the LPG Regulations. A letter dated 22-3-1995 had been written by MJGPL, MACPL. In this letter as parallel marketeer they have authorised the manufacturer to sell and raise the invoice in favour of the assessee for empty gas cylinders worth about Rs. 30 lakhs. They have also mentioned in this letter that they are entering into a lease agreement with the assessee for getting empty LPG gas cylinders. They have also confirmed the fact that the gas cylinders will be used by them as parallel marketeer. The Assessing Officer seems to have highlighted the fact that this letter of MJGPL had been denied by MACPL. This denial in our view is not very material in view of the documents viz., the invoice of MACPL as well as the copy of the ledger account of the assessee in the books of MACPL whereby they have recognized the fact that the purchaser of these cylinders is only the assessee. It is also further noticed that prior to entering into lease transactions MJGPL had duly passed a resolution authorizing the transaction. A lease agreement had also been entered into between the assessee and MJGPL. In respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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