TMI Blog2006 (2) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... re that the Assessing Officer observed that the assessee-company had claimed depreciation on "Solid Waste Recycling and Recovery System" given on lease amounting to Rs. 25 lakhs. It was claimed that it was purchased from M/s. A-One Industries, Churchgate, Mumbai and given on lease to M/s. Vipla Organic Pvt. Ltd. (VOPL), Medak (A.P.). The assessee-company in support of its claim had produced before the Assessing Officer a proposal dated 15-9-1995 addressed to the assessee from Vipla Organic Pvt. Ltd. to obtain the particular asset on lease, proforma invoice dated 31-8-1995 and bill dated 22-9-1995 for purchase of this asset from M/s. A-One Industries in the name of assessee-company, along with delivery challan. Further, the certificate of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry System". He thus made an addition of Rs. 25 lakhs to the total income of the assessee-company. 4. The CIT(A) allowed the claim of assessee with following observations: "I have considered the facts of the case, assessment order and the submission made on behalf of the appellant. It is seen that the Assessing Officer has pointed out various defects in the lease rent deed and many mistakes such as agreement is not signed. The Assessing Officer has also pointed out various defects in the transport receipts also, and stated that no one appeared on behalf of A-One Industries and also that the lorry receipt is bogus. Therefore, the Assessing Officer was of the opinion that such machinery was never purchased by the appellant. Therefore, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter the assessment year 1998-99. In case, the Assessing Officer s version is considered as correct that machinery was not purchased, then no one will pay the lease rent year after year to the appellant. The Assessing Officer has not verified the fact that rental income was shown year after year and why it was shown. I am, therefore, of the opinion that machinery was actually purchased by the appellant otherwise no rental income could have been shown by the appellant year after year. Moreover, rental income shown from the machinery is much more than the depreciation claimed by the appellant. It is also seen that all rental income is received by cheque as reflected in the bank statement. Therefore, the action of the Assessing Officer is not j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ials that there was no asset in existence or given on lease to M/s. VOPL. M/s. A-One Industries and M/s. VOPL are actually associate/sister concerns of which director and shareholders are interacted in each other. The Assessing Officer for confirmation of the genuineness of this transaction bill, referred the matter to Income-tax Investigation Wing, Mumbai for enquiry. The CIT(A) has also noted that the Assessing Officer has failed to verify certain facts and evidences, whether the payment for machinery was in the books of account, whether any lease rent was shown as business income or not, whether any production was done by that machinery by M/s. Vipla Organics Pvt. Ltd. or not, whether physical possession of the machinery was with M/s. Vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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