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TMI Blog2012 (9) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee will be under no obligation to refund the security deposit and there will be no restriction on the consumer also either to sell or mortgage the cylinder - direct the Assessing Officer to allow depreciation on the cylinders - in favour of assessee. - ITA Nos. 706-708/ Hyd/2010 - - - Dated:- 22-6-2012 - SHRI CHANDRA POOJARI, AND SHRI SAKTIJIT DEY, JJ. Appellant by: Shri S.S. Ravi and, Shri A.V. Raghuram Respondent by: Smt. Nivedita Biswas O R D E R PER SAKTIJIT DEY, JM: The appeals of the assessee are directed against the common order of the CIT(A)-III, Hyderabad dated 24.2.2010 in ITA No. 0216 to 218/CIT(A)-III/08-09 pertaining to assessment years 1993-94, 1996-97 and 1997-98. Since the issue involved in all these appeals is common and identical they are clubbed, heard and disposed of together in this combined order for the sake of convenience. 2. The assessee has raised the following common grounds for all the appeals. For the sake of convenience, the grounds raised in ITA No. 706/Hyd/2010 for A.Y. 1993-94 are extracted hereunder: 1. The order passed by the CIT(A) is erroneous in law and on facts of the case. 2. The CIT(A) erred in h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders were loaned but in effect it is nothing but sale of cylinders. Once the cylinders are transferred to the customers the assessee loses control over them. Hence he cannot be treated is owner of the cylinders for claiming depreciation. 5. The assessee being aggrieved, challenged the assessment order by filing an appeal before the CIT(A). In course of hearing of the appeal before the CIT(A), it was contended that the finding of the Assessing Officer that gas sold by the assessee is negligible is not correct. The observation of the Assessing Officer that cylinders need not come back to the assessee for filling of gas is also not correct. It was submitted that for filling of gas permission has to be taken from the Explosives Department and the cylinders loaned can be filled up only with the filling point which has been approved by the Explosives Department. The assessee contended that the terms and conditions of the agreement for loaning of cylinders clearly prove that the assessee is the owner of the cylinders and the cylinders have been given to customers only on loan basis against security deposit. The CIT(A) called for further details from the assessee with regard to agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved that for the A.Ys. 1994-95 and 1995-96 in ITA Nos. 169 170/Hyd/2000 dated 4.6.2002, the ITAT Hyderabad Bench in assessee s own case has held the transaction of purchase and loaning of cylinders as sham transaction and so long as the aforesaid orders of the ITAT stand it can be made applicable to the assessment year under dispute since there is no change in the facts and circumstances. On the basis of the aforesaid finding, the CIT(A) sustained the order of the assessment. 7. The learned AR assailing the finding of the Revenue authorities submitted that the ITAT while considering the assessee's earlier appeal for assessment year under dispute has categorically held that on the basis of the finding of the ITAT in A.Ys. 1994-95 and 1995-96 it cannot be said that purchasing and loaning of cylinders in the assessment year under dispute are also sham transactions when there is no material on record to hold that the assessee has not actually purchased the cylinder. The ITAT, therefore, directed the Assessing Officer to conduct necessary investigation and find out whether the assessee had actually purchased the cylinders. The learned AR submitted that while setting aside, the ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 572 and Raja Gopal (Dead) by L/R. Kishan Gopal Anr. (AIR 2003 SC 4319). The learned AR contended that the fact of purchase of cylinders having been proved on record for assessment year under dispute the Revenue authorities are not justified in relying upon the order of the ITAT passed in assessee s own case for A.Ys. 1994-95 and 1995-96. 9. The learned DR supporting the orders of the Revenue authorities contended that the assessee has failed to conclusively prove the fact of purchase of cylinders, depreciation cannot be allowed to the assessee. It was also contention of the learned DR that if the process of so called loaning of the cylinders will be examined then the only conclusion one will arrive at is that the assessee has no control over the cylinders once they have been given to other concerns or customers. 10. We have heard rival contentions and perused the material on record. At the outset, it is relevant to note what exactly is the direction of the ITAT while setting aside the assessment made for earlier assessment years under dispute. The same is extracted hereunder for the sake of convenience: "9. In the case before us, the Assessing Officer claims that the owner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hase is false or sham. For the asst. years under consideration, if the assessee is able to prove that he has in fact purchased cylinders and loaned the same to customers as claimed, then we cannot term the transaction as a sham transaction. In such a case, the assessee may be entitled for depreciation as held by the Special Bench of this Tribunal in the case of Detective Devices Pvt. Ltd. (supra). Therefore, in our opinion, a detailed investigation is required with regard to purchase and loaning of cylinders and found out whether in fact the assessee has purchased cylinders or not. Since such an enquiry was not done and proper materials were not brought on record, in our opinion, the AO shall re-examine the matter afresh after making proper enquiry." 11. As can be seen from the aforesaid order, the ITAT has directed the Assessing Officer to make necessary investigation to ascertain whether the assessee has actually purchased the cylinders. The ITAT further observed in the event the assessee is found to have purchased the cylinders he will be entitled for depreciation in view of the ITAT Special Bench decision in the case of Detective Devices Pvt. Ltd. (supra). Therefore, in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed purpose of finding out whether the assessee has purchased the cylinders or not. Therefore, it was not open for the Assessing Officer to again go into the issue of loaning of cylinders. Such contention of the learned AR is also supported by the decisions of the Hon ble Supreme Court which were cited before us. Even assuming for the argument sake, that it is not a limited remand by the ITAT and the entire issue of purchase and loaning of cylinders is open before the Assessing Officer, still then the Revenue has failed to establish the fact that the assessee has not given the cylinders on loan but had sold them. It has been the contention of the assessee throughout that the cylinders were given on loan either to the distributors or the customers against security deposit. The learned AR referring to the terms and conditions mentioned in the subscription vouchers which is at page 76 of the Paper Book was able to demonstrate that the ownership of the cylinders always remain with the assessee even after loaning of the cylinders against security deposit. Clause (3) of the terms and conditions mentioned in the subscription vouchers clearly brings out the fact that the consumers have no r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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