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2013 (11) TMI 658 - HC - Income TaxDepreciation on non-existing assets - Allowability of depreciation on MS Rolls - Assessee claimed 100% depreciation of Rs.1,67,23,582/- on the plant and machinery leased to BSAL – Held that:- In the survey conducted under Section 133A of the Act in the premises of the BSAL, Bellary, it was found that M.S.Rolls said to have been leased by the assessee were not in existence. The M.S.Rolls was obtained by the assessee under hire purchase from KMFL and the assessee is not the real owner of the goods. The entry tax is payable on the goods entering into a local area for consumption or for sale. The assessee has neither consumed nor used the Rolls. No document has been produced with regard to payment of tax and also with regard to transportation of the goods from Mumbai to Bellary. While surveying, authorities noticed that no documents were found to support the lease, no stock register was found. The photocopies of the delivery challans do not bear the seal of sales-tax check post either in the State of Maharashtra or in the State of Karnataka. There is no evidence for payment of entry tax. The transporter has denied the transportation of Rolls from Mumbai to Bellary. The Supplier of M.S.Rolls also denied the supply of M.S.Rolls either to the Transporter or to BSAL. The Managing Director of BSAL admitted that it is only a paper transaction. Assessing Officer on the basis of the survey conducted in the premises of BSAL found that lease has been created on the basis of the non-existing assets. Accordingly, notice has been issued. All the above facts go to prove that hire purchase and lease transaction between the assessee and KMFL on one hand and the assessee and BSAL on the other hand were only paper transactions and there was no genuine purchase of lease of assets. By entering into paper transaction, the assessee has benefitted by availing depreciation at the rate of 100% of the value of the assets in question - Substantial question of law framed is required to be answered in favour of the Revenue and against the assessee
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