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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 ..... ng to Rs. 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 Rs. 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 alternative claim that if the claim for depreciation were to be disallowed for the reasons stated hereinbefore then the corresponding lease rent received by the Appellant ought to be excluded. 5. The CIT(A), in view of the facts and documents or record, erred in holding that the lease transaction are not genuine and hence disallowing depreciation following the decision in the case of Mideast portfolio Management Services (87 ITD 537) and decision of Supreme Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 to the same firm which has been mentioned in the Assessment Order and the claim of the assessee was declined by the Assessing Officer and the said order was confirmed by the CIT(A), therefore, the assessee has filed the present appeal before us and raised the grounds as mentioned above. ISSUE NO.1 & 2:- 5. According to these issues the assessee has raised the issue of disallowance of depreciation on assets leased to GEB and Prakash Industries to the tune of Rs. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 the finding of the above said order passed by the Hon'ble ITAT Ahemedabad Bench (Supra), we set aside the finding of the CIT(A) on this issue and restore the issue to the Assessing Officer to decide the said issue in view of the observations made by the Hon'ble ITAT Ahemadabad Bench (Supra) in accordance with law by giving an opportunity of being heard to the assessee. Accordingly, these issues are decided in favour of the assessee against the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 goods. (Lies at page 33 of the paper book). 2. Certificate from Bank of Baroda for issuing cheque in favour of Sriram Sales and Services. (Lies at page 35 of the paper book). 3. Lessess's confirmation dated 21.02.1997 regarding assets leased from Anagram. (Lies at page 34 of the paper book). 4. Company's confirmations regarding assets leased by virtue of letter dated 27th February 1997 to ACIT, Ahd. giving declara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 October 1993 including excise and CST. (Lies at page 42 of the paper book). 2. Company's confirmations regarding assets leased letter dated 17th February 1997 to ACIT, Ahd submitting invoices enidencing purchase of assets.(Lies at page 6 & 7 of the paper book). 3. Letter dated February 27th, 1997 to ACIT, Ahd enclosing copy of demand draft given to Jaipur Metals & Electricals. Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee has challenged the disallowance of depreciation on the transaction with GEB. So far as the disallowance on depreciation on the transaction with GEB is concerned, the same is declined by the Assessing Officer on the ground of that the supplier sold the goods to the GEB and the GEB has not transfer the ownership to Anagram and the machinery was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 issues the assessee challenged the disallowance of depreciation in sale and lease back transaction of Rs. 25,01,250/-. At the time of assessment, it was found that Jai Prakash Ind. sold the asset to Anagram Finance Ltd. which was then leased back to Jai Prakash Ind. The assessee purchased the said machinery fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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