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TMI Blog2021 (8) TMI 1050X X X X Extracts X X X X X X X X Extracts X X X X ..... ously used have to be interpreted in the case on hand - the correct way to interpret the words previously used would mean actual physical use of the asset. There was nothing brought on record by the Assessing Officer that the asset was put to actual physical use for any purpose before the lease transaction and the inference drawn by the Assessing Officer is solely based upon the claim for depreciation made by the lessor. This, in our considered view, cannot be the correct way of interpretation of a beneficial provision, which provides for deduction in certain cases, where conditions are fulfilled and the object of granting such deduction was to promote industrial growth. Therefore, the CIT(A) is right in its observation that a lease transaction would not amount to a transfer and merely because the lessor had claimed 100% depreciation on the said asset cannot make the asset as 'previously used' to disqualify the asset from claiming deduction - we find that the Tribunal committed an error in reversing the order passed by the CIT(A). - Decided in favour of assessee. - T.C.A.Nos.1202 to 1207 of 2008 And T.C.A.Nos.357 & 358 of 2009 - - - Dated:- 16-8-2021 - Honourable Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounts to transfer and the windmills, which were leased out, were previously used by the lessor-company, who had claimed 100% depreciation and therefore, the windmills having been previously used for any purpose, the assessee does not fulfil the conditions stipulated in sub-section (3) of Section 80-IA of the Act. Aggrieved by such order, the assessee preferred appeal before the Commissioner of Income Tax (Appeals)-V, Chennai (for brevity the CIT(A) ). The CIT(A), by order dated 30.01.2006, allowed the appeals filed by the assessee. Aggrieved by the same, the Revenue preferred appeals before the Tribunal, which were allowed and this is how the assessee is before us by way of the present tax case appeals. 6.The short question, which falls for consideration in this batch of cases is whether the assessee fulfils the conditions stipulated under Section 80-IA(3) of the Act. The said provision reads as follows:- Section 80-IA(3):- This section applies to an undertaking referred to in clause (iv) of sub-section (4) which fulfils all the following conditions, namely : (i) it is not formed by splitting up, or the reconstruction, of a business already in existe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as fulfilled Condition No.1 as mentioned above. The second condition is that the undertaking is not formed by the transfer to a new business of machinery or plant previously used for any purpose. It is not in dispute that the windmills have been leased out by the assessee-company. 8.The question would be whether entering into a lease transaction would amount to transfer. This issue is no longer res integra and has been decided by the Hon'ble Supreme Court in the case of Bajaj Tempo Ltd., vs. CIT reported in (1992) 3 SCC 78 (SC), wherein the Hon'ble Supreme Court held as follows:- 10.Reverting to the Bombay decision on which the High Court relied for answering the question against the assessee we would assume for purposes of this case that lease of the building amounted to transfer. Yet what is significant is that the High Court did not examine the impact of word `formed'. It proceeded on basis that once lease amounted to transfer the assessee became ineligible from claiming any exemption. The Court further repelled the contention advanced on behalf of assessee on strength of Caluctta decision in Commissioner of Income Tax, West Bengal-II v. Sainthi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case on hand. 10.The argument of Mr.J.Narayanaswamy, learned Senior Standing Counsel is that the Tribunal is right in concluding that the lessor having claimed 100% depreciation on the said asset, the asset is an used asset for the purpose of generation of electricity and the assessee's claim is clearly barred. 11.On a plain reading of the above statutory provision would clearly show that the words previously used would mean actual physical use of the asset and not deemed to have been previously used. The benefit claimed by the assessee in the case on hand is a deduction under Section 80-IA, which is a deduction, which was brought to encourage industrial growth. Therefore, the correct way to interpret the words previously used would mean actual physical use of the asset. There was nothing brought on record by the Assessing Officer that the asset was put to actual physical use for any purpose before the lease transaction and the inference drawn by the Assessing Officer is solely based upon the claim for depreciation made by the lessor. This, in our considered view, cannot be the correct way of interpretation of a beneficial provision, which provides for dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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