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TMI Blog2011 (12) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... ase before the end of the financial year, as then it could be said that the assessee for the purpose of business had "used" the leased equipment. The assessee was entitled to depreciation". and COMMISSIONER OF INCOME-TAX .vs. REETU FINLEASE P.LTD (2006 - TMI - 9924 - DELHI High Court) "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 they had been utilised, even assuming that such actual user was a condition precedent for the lessee to claim depreciation. The assessee was entitled to the depreciation" - Held That:- We are unable to appreciate the contentions made by the Revenue that actual date on which the asset was put to use alone has to be taken into consideration. Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... evant portion from the said notice reads as follows: "This Office Inspectors have visited the factory premises of M/s.Thiru Arooran Sugars Ltd., at Kollumangudi Village on 11.03.2000, to make on the spot enquiries with regard to the boiler. The enquiries revealed that the said boiler is part of the 110KV/18/MW Co-generation Power Plant. As per letter No.16/BC/96-97 dated 26.03.1997 issued by the Deputy Chief Inspector of Boilers, permission was granted to put to use the boiler for a period of 6 months from 26.03.1997. As already stated, the said boiler is part of the co-generation power plant and the Co-generation Plant was actually commissioned and the Power Plant was synchronised with the Tamil Nadu Electricity Board Grid at 10.35 hours on 06.05.1997. Thus, the production of the Co-generation Plant commenced only on 06.05.1997. This is supported by the letter from the Chief Engineer (Distribution), Tamil Nadu Electricity Board, Trichirappalli. From the above, it may be seen that the boiler could be put to use only on 06.05.1997, on which date, the power plant actually started producing the energy. The boiler could not have been put to use otherwise also before 06.05.1997 as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 69(E) dated 25.01.1996 issued under section 145(2) of the Income Tax Act". 7. The sum and substance of the contention of the revenue is that as per the agreement entered into between the assessee and TASL on 29.03.1997, the boiler was given on lease i.e.just two days prior to the end of assessment year 1996-97. Therefore, the lessee TASL could not have put the asset in use before 31.03.1997. When that being so, the depreciation claimed by the assessee is liable to be withdrawn, at the best, the depreciation can be considered only in the subsequent year, whereas it is the case of the assessee that the boiler has been installed in the factory of TASL, Kollumangudi, Nannilam by the supplier of M/s.Bharat Heavy Electricals Limited (BHEL). The boiler has been capitalised net of Modvat credit for Rs.7,70,77,000/- in the books on 29.03.1997, the date of the agreement of lease with TASL. As the boiler (Lignite-cum-Bagasee) is specialised in nature having thermal efficiency above 75%, it is eligible for 100% depreciation as per item III(3)(iii)A(d) of Appendix-1 to the Income-Tax Rules, 1962. The conditions for claiming depreciation under section 32 of the Act has been satisfied in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion that has to be decided in this appeal. In fact, the judgments relied upon by the learned counsel for the respondent/assessee would give a fitting answer to this issue and the relevant paragraphs in the decisions are extracted hereunder: In COMMISSIONER OF INCOME TAX .vs. KOTAK MAHINDRA FINANCE LTD., ((2009) 317 ITR 236 (Bom), a Division Bench dismissed the appeal filed by the Revenue, holding that, "The assessee, admittedly had supplied the machinery before the end of the financial year and the assessee had received the lease rentals for the same. Whether the lessee had put to use the leased equipment would be irrelevant as long as the machinery in fact had been given on lease before the end of the financial year, as then it could be said that the assessee for the purpose of business had "used" the leased equipment. The assessee was entitled to depreciation". 12. In COMMISSIONER OF INCOME-TAX .vs. REETU FINLEASE P.LTD., ((2006) 286 ITR 652 (Delhi), it has been held as follows: "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 they had been utilised, even assuming that such actual user w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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