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M/s Cholamandalam Investment And Finance Company Ltd. Versus The Assistant Commissioner of Income Tax

2016 (1) TMI 402 - ITAT CHENNAI

Depreciation on the boilers and windmill leased out by the assessee disallowed to the extent of 50% - Held that:- In the case before us, it is not in dispute that the boiler and windmill are not available in the market as such. It is an admitted fact that the assessee has to purchase various components and accessories of boiler and windmill and it has to be assembled and installed to make it as an asset, namely, boiler and windmill so as to enable the same to lease out to the lessee. Therefore, .....

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been delivered to the lessee only in the month of January, 1997 and the windmill in the month of March, 1997. In other words, unless various components and accessories of the boiler and windmill are assembled and constituted to fullfledged boiler and windmill, this Tribunal is of the considered opinion that there cannot be any delivery of the asset, namely, boiler and windmill. Therefore, full-fledged asset, namely, boiler and windmill came into existence only on 21.03.1997 and 31.03.1997 respec .....

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-I, Chennai, dated 20.01.2014 and pertains to assessment year 1997-98. 2. The only issue arises for consideration is with regard to depreciation on the boilers and windmill leased out by the assessee. 3. Shri Milind S. Kothari, the Ld. representative for the assessee, submitted that the assessee is engaged itself in the business of finance and leasing. In the course of its business activity, the assessee leased out boilers to M/s Kothari Sugars and Chemicals Limited. The assessee also leased out .....

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as delivered to the lessee and thereafter determine the depreciation allowable to the assessee. Inspite of this direction of the Tribunal, the Assessing Officer as well as the CIT(Appeals) proceeded on the presumption that the asset was not put to use. According to the Ld. representative, the assessee is engaged itself in the business of leasing of asset, therefore, the moment it hands over to the lessee, it would amount to put to use of the asset for the purpose of assessee's business. Acco .....

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the lessee, according to the Ld. representative, the assessee was entitled for depreciation at the rate of 100%. 4. On the contrary, Dr. Milind Madhukar Bhusari, the Ld. Departmental Representative, submitted that no doubt, the assessee is engaged in the business of leasing, therefore, when the asset was delivered to the lessee, it would amount to put to use the machinery/asset. In the case before us, what was leased out is the brand new boiler and brand new windmill. It is a common knowledge th .....

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the various parts of the boiler and windmill are not assembled to constitute boiler and windmill, it cannot be construed as boiler and windmill at all. Therefore, mere delivery of various components of boiler and windmill cannot be construed as delivery of the asset. Since the assessee claims that what was leased out is boiler and windmill, the assessee has to necessarily prove before the authorities below that various components, which constitute boiler and windmill, were purchased and assembl .....

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can be construed to have been delivered on 9.10.1996 on which the various components were assembled and the asset was brought into existence. According to the Ld. D.R., unless the asset, namely, boiler and windmill, was brought into existence, the same cannot be delivered to lessee. Therefore, on the basis of the invoices for purchase of various components, the assessee cannot claim any depreciation. 5. We have considered the rival submissions on either side and perused the relevant material on .....

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reciation allowable has to be determined. The Assessing Officer on the basis of the direction of this Tribunal, found that the assessee leased out the boiler said to be acquired from M/s Thermax Ltd. The lessee admitted before the Assessing Officer by letters dated 31.01.2000 and 13.03.2000 that the installation of boilers was completed in the premises on 09.10.1996. The Assessing Officer also found that the components and accessories of the boiler were delivered in the premises on 21.03.1997. I .....

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