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TMI Blog2017 (1) TMI 1725X X X X Extracts X X X X X X X X Extracts X X X X ..... CICI Bank Ltd. - Decided against revenue. Disallowance of the depreciation on leased assets with Usha India Ltd., Sayaji Hotels and Shaan Packaging - letters were issued to the supplier which were returned unserved therefore the supplier were not in existence - HELD THAT:- The claim of the assessee was declined on the ground of that the letters were written to the supplier which were returned unserved and the supplier denied the supply or plant was not in existence. On appraisal of the above said evidence produced before us the finding of the AO as well CIT(A) does not seem reasonable. The evidence adduced by the assessee nowhere examined and discussed by the AO as well as CIT(A). Since the matter of controversy has not been decided by discussing the evidence adduced by the assessee, therefore finding of the CIT(A) is not liable to be sustainable in the eyes of law. We set aside the finding of the CIT(A) on this issue and direct the Assessing Officer to examine the issue afresh in the light of the evidence adduced by the assessee and decide the issue in accordance with law after giving an opportunity of being heard to the assessee. Accordingly, this issue is decided in favour of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant appeals from the order dated February 10, 2005 passed by the Commissioner of Income Tax (Appeals) XXVII Mumbai (CIT(A) under section 250 of the Income Tax Act, 1961 (the Act) for the Assessment Year 1994-95 and received by the appellant on March 17, 2005 on the following amongst other grounds which are without prejudice to each other. (A) Re: Disallowance of depreciation on assets leased to GEB and Prakash Industries ₹ 1,02,47,527 (Para 3 page 2 of the order) 2. The CIT(A) erred in disallowing depreciation amounting to ₹ 1,02,47,527/- on assets leased to Gujarat Electricity Board and Prakash Industries following order passed for the assessment year 1993-94 (B) Re: Disallowance of depreciation on leased assets (Para no.5-8, page nos. 5-14 of the Assessment order) 3. The Assessing Officer erred in law and on facts in disallowing the depreciation on various assets amounting to ₹ 86,67,685 on the under mentioned grounds:- Rs. a) Supplier not in existence 8,07,325/- b) Supplier denied supply of assets 28,60,360 c) Assets not in existence 50,00,000 86,67,685 4. Without prejudice the Assessing Officer grossly erred in law and on facts in rejecting the Appellant s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income at Rs.Nil. The revised return was filed on account of certain changes made by the assessee as a consequence of revision of depreciation claim made during the course of proceedings of A.Y.1993-94. The effect of the said depreciation claim was also modified for A.Y.1994-95 accordingly. Notice u/s.143(2) of the Act was issued and duly served upon the assessee. 4. The assessee is a public limited company, the shares of the company are quoted in the Stock Exchange. The company is carrying on business of industrial leasing, hire and purchase. Recently the company has diversified into retail financing i.e. basically dealing in hire and purchase of cars and their equipments for personal use. For the purpose of carrying the business of hire and purchase financing, the company has obtained loans from financial institutions and banks and also obtained deposits and inter corporate loans apart from having share holders funds and its disposal. The business of lease and hire purchase financing was being carried out by the assessee from Ahmedabad being its corporate office as well as their branches situated all over the country. The assessee raised the claim of depreciation on assets leased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking order as well as in the interest of substantial justice, we restore the issue relating to the nature of transactions with GEB and M/s.Prakash Industries Ltd. as well as levy of interest u/s.234-B and 234-C of the Act, back to the file of Assessing Officer with the directions that the same be decided afresh in accordance with law and the decisions to be relied upon by the Assessee. Further, in case the transactions are found to be in the nature Lease transactions, claim of depreciation be allowed and if the transactions are found to be simply of financing then only interest part embedded in the receipts claimed to have been received as Lease rentals be taxed. The Assessee will be provided a proper opportunity of being heard. The orders of CIT(Appeals) and of the Assessing Officer on these issues are, therefore, set aside. 8.3 We, further direct the Assessing Officer to decide the nature of transactions keeping in view of the fact that during the previous year relevant to Assessment Year 1993-94, M/s.Angaram Finance Ltd. was independent Limited Company and was carrying on independent business and without being influenced by any order in the case of ICICI Bank Ltd. 7. In view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (Lies at page 14 of the paper book). 9. So far as the asset was in existence and was leased with the Sayaji Hotels is concerned the assessee has relied upon the following documents:- 1. Invoice from A-one Traders dated February 27th, 1994. (Lies at page 30 of the paper book). 2. Invoice from Freeze Cool Refrigeration and Air conditioners. (Lies at page 31 of the paper book). 3. Leased confirmation from Sayaji Hotels Limited by virtue of dated February 14, 1997 confirming assets taken by the assessee. (Lies at page 32 of the paper book). 4. Letters from Sayaji Hotels Limited dated 1st March, 1997 confirming to the Assessing relating assets taken on leased. (Lies at page 102 of the assessment order). 5. Companies confirmation letter dated 17.02.1997 to ACIT, Ahd. (Lies at pages 4 5 of the paper book). 6. Copy of letter dated 25.03.1997 to ACIT, Ahd in view with the declaration given by the lessee asset is in existence. (Lies at pages 19 20 of the paper book). 10. So far as the existence of assets and leased with the Shaan Packaging is concerned, the assessee has also relied upon the following documents:- 1. Invoice from Shriram Sales Services dated 23rd March 1994 for supply of goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 7th November 1997 from supplier. (Lies at page 39 of the paper book). 3. Confirmation to Anagram Finance dated 10th November 1997 from supplier. (Lies at page 40 of the paper book). 4. On termination of lease agreement asset sold to lessee and consideration duly relected in Anagram s accounts. (Lies at page 51 of CIT(A) grounds). 5. Company s confirmations regarding assets leased letter dated 17th February 1997 to ACIT, Ahd confirming lease with Khatau Junker, receipt of payment received by supplier and lease rentals accounted for in the year ended 31st March, 1994.(Lies at page 2 and 3 of the paper book). 6. Letter dated 27 February 1997 to ACIT, Ahd informing of letter written o lessees to get confirmation of supply of asset from suppliers. (Lies at page 14 of the paper book). 7. Letter dated 11th March 1997 to ACIT, Ahd stating that in view of invoice as well as rentals received from lessee the existence of the asset is established.(Lies at page 17 of the paper book). 13. So far as the existence of asset and leased in the matter of GEB is concerned, the assessee has relied upon the following documents:- 1. Invoice from Jaipur Metals and Electricals Limited dated 30th Octob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets and that no depreciation was claimed by them. (Lies at page 22 to 23 of the paper book). 15. The claim of the assessee was declined on the ground of that the letters were written to the supplier which were returned unserved and the supplier denied the supply or plant was not in existence. On appraisal of the above said evidence produced before us the finding of the Assessing Officer as well CIT(A) does not seem reasonable. The evidence adduced by the assessee nowhere examined and discussed by the Assessing Officer as well as CIT(A). Since the matter of controversy has not been decided by discussing the evidence adduced by the assessee, therefore in the said circumstances, we are of the view that the finding of the CIT(A) is not liable to be sustainable in the eyes of law. Therefore, we set aside the finding of the CIT(A) on this issue and direct the Assessing Officer to examine the issue afresh in the light of the evidence adduced by the assessee and decide the issue in accordance with law after giving an opportunity of being heard to the assessee. Accordingly, this issue is decided in favour of the assessee against the revenue. ISSUE NO.6 7:- 16. Under these issues the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the paper book). 18. Letter dated March 25, 1997 to ACIT, Ahd submitting that evidence of disbursement, installation and put to use certificate ownership has been established. (Lies at page 20 of the paper book. 17. The Assessing Officer as well as CIT(A) has declined the claim of the assessee on account of this facts that the supplier sold the goods to the GEB and the GEB did not transfer the ownership to Anagram and the machinery was not supplied because parts were supplied. The evidence adduced by the assessee nowhere examined and discussed by the Assessing Officer as well CIT(A). Since the matter of controversy has not been decided by discussing the evidence adduced by the assessee, therefore in the said circumstances, we are of the view that the finding of the CIT(A) is not liable to be sustainable in the eyes of law. Therefore, we set aside the finding of the CIT(A) on these issues and direct the Assessing Officer to examine the issues afresh in the light of the evidence adduced by the assessee by giving an opportunity of being heard to the assessee. Accordingly, these issues are decided in favour of the assessee against the revenue. ISSUE NO.8 TO 10 18. Under these issue ..... 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