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2014 (8) TMI 1217 - HC - Income TaxValidity of Revision order u/s 263 - 100% depreciation on the purchase and lease back arrangement - as per tribunal Section 263 is not applicable to the facts of the present case - Whether the Tribunals view relating to Explanation 3 to Section 43(1) and Explanation 4-A to the said Section is correct? - HELD THAT:- Question of genuineness of the transaction was examined by the Assessing Officer and it was highlighted that the transaction was between two unrelated parties and the assessee had to purchase the assets by payment of a substantial amount. Therefore, it was pleaded, there was no question of over valuation of the assets and it was highlighted that the seller company would have suffered or paid tax as the capital gains on the sale of assets, on which, depreciation had been claimed by the purchaser assessee. Even the claim of 100% depreciation did not result in reduction of tax liability as over a duration of lease, ₹ 174.69 lakhs was to accrue as income by way of these rentals as against claim of depreciation of ₹ 150 lakhs. It is therefore clear that the Assessing Officer, when he raised the said queries had in mind Explanation 3 to Section 43(1) of the Act and whether or not, the same should be applied in the facts of the present case. Tribunal, in the impugned order, has rightly observed that in view of the correspondence and reply given by the assessee, the Assessing Officer had required the assessee to file details with regard to the claim of the depreciation and justify the same. The assessee had supplied with said information and justified the claim for said depreciation. Apparently, the Assessing Officer was fully satisfied with the said explanation offered by the assessee including why Explanation 3 to Section 43(1) of the Act should not be invoked. In these circumstances, we do not think, the finding of the Tribunal by relying up the judgment of the Supreme Court in Malabar Industrial Co. Ltd [2000 (2) TMI 10 - SUPREME COURT] can be faulted. The present case is not one of no enquiry, but at best the revenue can plead and claim that it was a case of insufficient or inadequate enquiry as alleged. This aspect was examined by the Delhi High Court in CIT Vs. Sunbeam Auto Ltd.[2009 (9) TMI 633 - DELHI HIGH COURT] and on the aspect whether power under Section 263 can be exercised for further detailed or full verification It is an acceptable position that explanation 4A to Section 43(1) would not apply to the year in question, as it was inserted by the Finance (No. 2) Act, 1996 w.e.f. 1.10.1996 - the questions of law are answered in favour of the respondent-assessee
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