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2007 (2) TMI 238 - AT - Income TaxLevy of interest u/s 234B - CIT(A) dismissed the ground by observing that the interest u/s 234B is mandatory and, therefore, the same is not appealable - HELD THAT:- We find that the assessee has not challenged the quantum of interest but has challenged chargeability of interest u/s 234B itself. The Supreme Court in the case of Central Provinces Manganese Ore Co. Ltd. v. CIT [1986 (5) TMI 3 - SUPREME COURT] has held that where charge ability of interest itself challenged then the same is appealable. As stated above, the assessee has challenged the chargeability of interest u/s 234B; therefore, the issue has to be decided on merit. Since no decision has been given by the CIT(A) on merit, therefore, we set aside this issue to the file of the ld. CIT(A) to decide the same afresh on merit after affording opportunity of being heard to the assessee and after taking into consideration the provisions of law as well as the decision of the Hon'ble Uttaranchal High Court in the case of Sedco Forex International Drilling Co. Ltd.[2003 (10) TMI 40 - UTTARANCHAL HIGH COURT]. We order accordingly. Disallowance of depreciation on sale and lease back of assets - HELD THAT:- We have also taken into consideration the decision of the CIT(A) and found that the ld. CIT(A) has gone on the basis of general presumption that the assets were leased out to the bank just to secure the amount given on loan otherwise there was no occasion to sale and lease back transaction with the bank. The CIT(A) has considered various aspects and confirmed the findings of the Assessing Officer that the transactions were non-genuine as they were colourable just to reduce the tax burden by claiming higher depreciation. The CIT(A) has not taken into consideration the aspect that the assessee is in regular leasing business and about 7000 transactions had been entered into by the assessee with various parties for sale and lease back. The assessee who is a banking corporation was maintaining all the records in regard to each and every item, proper Profit & Loss A/c is maintained. All the details were furnished and not a single was detected by the Assessing Officer that these are genuine or are only paper transactions. The lease rental is received regularly and has been shown in the Profit & Loss A/c. The other parties who are paying lease rentals to the assessee have shown lease rental paid to the assessee. The department has not brought a single case on record that the parties who had paid lease rental has not shown/claimed the deduction on account of lease rental but has claimed deduction of interest paid to assessee bank. Therefore, merely on suspicion or conjectures, doubting that the transactions are entered into for claiming higher depreciation, in our considered view were not justified either at the end of the Assessing Officer or at the end of ld. CIT(A), who enhanced the disallowance on the entire transactions entered into in the year under consideration. Thus, we set aside the orders of the authorities below and direct the Assessing Officer to allow the claim of depreciation on all items claimed by the assessee. We order accordingly. In the result, the appeals of the assessee and the department are allowed in part.
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