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TMI Blog2012 (9) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... n holding that the valuation of assets is leased in the case of M/s. Sanghi Textiles Ltd. M/s. Enterprising Enterprises and M/s. Patheja Forgings & Auto Parts Mfg. Ltd. are not justifiable?" 2. The assessee herein is a company engaged in leasing and financing. A reading of the order of the authorities below shows that there were two types of transactions; one is relating to sale and lease back transaction and other one is relating to lease transactions. As far as the sale and lease back transactions and direct lease are concerned, following are the details as found in the order of assessment as well as in the lower court authorities order.:- SALE AND LEASE BACK TRANSACTION (1) Sanghi Textiles Liited DIRECT LEASE TRANSACTION (1) MID-EAST INTEGRATED STEEL LIMITED (2) VICTORY GLASS AND INDUSTRIES LIMITED (3) H.K. DATAREX LIMITED (4) SITAPUR PLYWOOD LIMITED (5) GSL INDIA LIMITED 3. The lease transactions were entered into by the assessee with the lessees in respect of the machineries supplied by the third parties. The details of which are as follows:- ANNEXURE- A - SALE AND LEASE BACK SL. No. Name of the Party Amount Advanced Lease rentals offered Rate of depn. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) allowed the depreciation on certain assets in Schedule 'A' as lease transaction and disallowed the depreciation in Schedule 'B' transactions. As far as the present Tax Case (Appeal) is concerned, the Commissioner of Income Tax (Appeals) disallowed the claim of the assessee in respect of the all the following transactions:- SALE AND LEASE BACK TRANSACTION (1) Sanghi Textiles Liited DIRECT LEASE TRANSACTION (1) MID -EAST INTEGRATED STEEL LIMITED (2) VICTORY GLASS AND INDUSTRIES LIMITED (3) H.K. DATAREX LIMITED (4) SITAPUR PLYWOOD LIMITED (5) GSL INDIA LIMITED 5. The Tribunal confirmed the order of the Commissioner of Income Tax (Appeals) hence, the present appeal by the assessee. The transactions mentioned above are under consideration before us. 6. As far as the claim of the assessee in respect of these cases are concerned, we may point out herein that the issues raised are purely factual. Considering the scope of an appeal before this Court under Section 260A of the Income Tax Act, the interference with the order of the Tribunal giving factual finding is almost nil, unless the assessee is in a position to show perversity in the reasoning of the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to a report received from the Officer having jurisdiction over the seller / lessee, the assets leased for a financial consideration of Rs. 5 crores were valued at Rs. 1,54,00,000/- by the Departmental valuer as on 31.12.1992. The valuation report obtained by the assessee on 27th March 1996 showed the value of the assets at Rs. 5,19,40,000/-. The first Appellate Authority viewed that there was no proper description, hence the same had to be rejected as self serving document. Pointing out to the vast difference between the purchase value and the lease back value, the Commissioner of Income Tax (Appeals) held that the transactions was purely one of a financial one. Thus, he rejected the case of the assessee. Aggrieved by this, the assessee went on appeal before the Tribunal. 8. In paragraph 17 of the order of the Tribunal, the claim of the assessee was considered. The Tribunal pointed out that the assets which were the subject matter of sale and lease were 15 years old and the assets could not be removed and delivered to the assessee. There was no document to show that the impugned equipment were delivered to the assessee and thereafter redelivered to the lessee. Referring to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cond transaction is relating to Mid East Integrated Steels Limited. It is a case of sale and lease back transaction. A reading of the order of the Assessing Officer in this regard shows that the assessee claimed depreciation of Rs. 4,04,00,000 on assets, turbines for turbo generators, stated to have been acquired from M/s.Kirloskar Oil Engines Limited and leased out by the assessee to Mid East Integrated Steels Limited. The assessee filed copies of the invoices said to have been issued by Kirloskar Oil Engines Limited and valuation report from a Chartered Engineer. It is stated that there was a search in the premises of the lessee on 26.2.1997. The seized documents revealed that the lessee had obtained a loan of Rs. 4,04,00,000 from First Leasing Company of India Limited. Subsequent enquiries with the supplier of assets revealed that no invoices were issued in the name of the assessee company. The supplier further confirmed that the goods were sold to Mideast Integrated Steels Limited and only on their request, duplicate invoices were issued. Kirloskar Oil Engines Limited further admitted to have issue duplicate invoices for turbo blowers in the name of Lloyds Finance Limited at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed before this Court in C.S.No. 876 of 1999 for mandatory injunction directing the defendant, lessee herein to forthwith procure an invoice from Kirloskar Oil Engines Limited for the sale of two wind turbines in favour of the assessee, wherein this Court by judgment dated 26.8.2002 decreed the suit in favour of the assessee, only to substantiate its contention that the assessee had infact leased out the machineries to the lessee. 13. As far as the judgment passed in C.S.No. 876 of 1999 is concerned, a reading of the same shows that in the said suit for mandatory injunction directing the defendant, lessee herein to forthwith procure an invoice from Kirloskar Oil Engines Limited for the sale of two wind turbines described in the schedule to the plaint in favour of the assessee, the defendant, the lessee herein, remand ex parte. Based on the evidence of P.W.1 and Exhibits P1 to P16, the suit was decreed. We do not think that this judgment would be of any assistance to the assessee. As evident from the reading of the judgment, the prayer was only for mandatory injunction to direct the defendant to get invoices from Kirloskar Oil Engines Limited for sale of two turbines. Whether thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The Assessing Officer pointed out that there was no confirmation letter or correspondence on the installation certificate, evidence for transportation of the machinery from the supplier to the lessee filed in support of the contention. When the assessee merely filed copies of invoices and lease agreements, the same would not be sufficient to allow the claim of depreciation. In the circumstances, the Assessing Officer rejected the assessee's case. On appeal, the Commissioner of Income Tax (Appeals) pointed out that enquiries made by the Assessing Officer revealed that both the name of the supplier and address were unidentifiable. The letter addressed to the supplier to verify the transaction were returned unserved and it was indicated to the assessee on 15.12.1998. The Sales Tax Authorities confirmed that the numbers quoted in the invoice was not allotted by their department. From the above details, it was evident that Victory Glass and Industries Limited had taken possession of the assets from Makali Fabricators & Engineers, Howrah on 10.1.1996 and the assessee had paid supplier by means of a draft dated 9.2.1996. But even prior to the date of payment, equipment was purporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's premises, date of installation of the machinery, copy of the accounts of assessee company in the book of accounts for the period 1.4.95 to 31.3.96 and PAN and jurisdiction / Designation of Assessing Officer under the Income Tax Act. The letter addressed to the supplier Silicon Specialities was returned unserved by postal authorities. Departmental enquiries revealed that no such company ever existed in the vicinity in the recent past. In the circumstances, the claim of the assessee was rejected. The reasoning given by the Officer was similar to that of what had been given in respect of previous case Victory Glass and Industries Limited. On appeal, the first Appellate Authority pointed out that the assessee could not file any evidence as to the existence of the supplier or existence of the assets. The fact that the assesse had lodged a claim before the liquidation proceedings per se could not be taken as a sufficient proof as regards the subject matter of the alleged lease. In the absence of any material, the Commissioner of Income Tax (Appeals) rejected the claim of the assessee. On appeal before the Tribunal, in paragraph 21 of its order the Tribunal considered the case of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / Designation of Assessing Officer under the Income Tax Act. The letter addressed to the Assam Solvex was returned unserved by postal authorities. Though the invoice was dated 19.11.1994, the assets are insured on 14.4.95. The factory was no longer in existence at the end of 1996. The Officer pointed out that the supplier was engaged in the business of extracting vegetable oils and manufacture of plywood products like packaging materials and never engaged in the business of manufacture of items mentioned in the invoice and that there was no document available to verify the genuineness of the transaction. In the circumstances, the Assessing Officer rejected the claim of the appeal. On appeal before the Commissioner of Income Tax (Appeals), once again the finding of fact given by the Assessing Officer was confirmed. Further appeal before the Tribunal also ended in same fate. Hence, the present appeal. 19. As far as this aspect is concerned, as in the case of earlier instances, when the supplier is not there at all to identify the sale of machinery to the assessee herein, rightly the Tribunal rejected the case of the assessee. As such, we have no hesitation in confirming the order of ..... 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