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TMI Blog1981 (12) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... his ground in the assessee's appeal. It will not be out of place to mention that the facts and circumstances, submissions from both the parties in respect of this issue were same and identical as in the assessee's other case in ITA No. 869/Chandi/1979. 3. The second ground is in respect to disallowance of Rs. 805 out of general expenses in respect of 'Tilak and shagun'. This issue also came to be decided by us in ITA No. 869 in the assessee's own case. For the very same reasons and as per consistent view of the Bench on this issue, we accept the contention of the assessee. 4. The third and fourth grounds in the assessee's appeal are in respect of disallowance of Rs. 14,420 out of interest claim of Rs. 15,694 payable to M/s. Buckau Wol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the said accounting year under consideration and therefore, disallowed the balance. 5. While contesting this action of the CIT (Appeals), the ld. counsel for the assessee Sh. D.K. Gupta drew our attention to page 40 of the assessee's paperbook, which is a copy of letter dt 8th November, 1974 and according to the said letter as per submission of the ld. counsel, the liability was very much apparent. He also submitted, in the alternative, that he would not have any objection even if it was allowed in the next year, if according to the Revenue, the liability was apparent then and a direction be given to that effect. The ld. Deptl. Rep. Sh. R.S. Khichi, in short, submitted that during the year under consideration the liability was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirmed by the CIT (Appeals). In the alternative, the assessee also raised a plea that if depreciation and initial depreciation are not allowed the claim of rent paid by the assessee company @ Rs. 71 per month per quarter should have been allowed. The facts, in brief pertaining to the issue are that the assessee was allotted 27 EMS houses by the Haryana Housing Board constituted under the Haryana Housing Board Act, 1971 (Act No. 30 of 1971) vide Board letter No. 124 dt 30th September, 1971. The total cost of these 27 EWS houses was worked out at Rs. 2,85,855 in case payment for the same was to be made immediately. The assessee not making the payment right then, entered into a hire-purchase agreement with the Haryana Housing Board in pursuan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id property to the hirer (the assessee-company) by executing conveyance deed with him in the prescribed form provided that he had paid all the dues of the owner and of the public bodies. It further states that the hirer thereafter shall cease to be a tenant and become the owner of the property subject to he provisions of the said conveyance deed. Sec 32 (1) lays down clear conditions that depreciation can be allowed in respect of a building, machinery, plant or furniture if the same is owned only by the assessee and is used for the purpose of his business or profession. In view of the facts stated above, it is clear that the ownership of the houses does not vest with the assessee but with the Housing Board and the assessee is therefore, dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation and initial depreciation is not allowed, the assessee's claim in respect of rent should be admitted. The ld. Deptl. Rep., on the other hand, placed his reliance on the order of the CIT (Appeals). 10. After taking into consideration the rival submissions, we are unable to accept the first contention of the assessee regarding its claim of depreciation and initial depreciation but are admitting the alternative plea regarding deduction of rent payment. Beside the reasons given by the CIT (Appeals) in his order on the first limb of the assessee's contention pertaining to allowance of depreciation and initial depreciation, we find that the assessee's reliance on the case of U.P. State Agro Industrial Corporation Ltd. is misplaced and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum of Rs. 71 to be paid as monthly instalment per quarter does not really represent the rent of a quarter. On a proper analysis of the hire-purchase tenancy agreement, it is clear that what the appellant has to pay is the cost of the houses plus the interest to be paid in respect of the rent on outstanding price during the entire period of the currency of the hire purchase agreement. In view of the decision of Hon'ble Supreme Court in the case of Challapalli Sugars Ltd. vs. CIT 1974 CTR (SC) 309 : (1975) 98 ITR 167 (SC), the interest payment in respect of an asset goes to increase the cost of the asset and, therefore, the interest payments cannot be allowed as a revenue deduction. Therefore, in view of the decision in Challapalli Sugar Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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