TMI Blog2011 (8) TMI 1137X X X X Extracts X X X X X X X X Extracts X X X X ..... ad of normal depreciation at the rate of 25% allowable to plant and machinery covered by Part III(1) of Appendix.? (B) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in allowing the interest paid in respect of capital borrowed for the projects? (C) Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in directing to enhance the income by ₹ 17 crore being 100% depreciation allowed on leased assets without opportunity to the Assessing Officer, though no such claim was made before the Assessing Officer during the assessment proceedings? 2. We may notice that question (A) and (C) are interconnected and it is not in dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce therefore, could be seen as one claiming only depreciation and for no other purpose. 5. On the other hand, counsel for the respondent drew our attention to detailed discussions of CIT(Appeals) and tribunal to contend that the Assessing Officer had proceeded on wrong footing that the meters were purchased in the same year under consideration; that decision in case of Unimed Tchnologies P. Ltd. covers the present case also. 6. Having heard learned counsel for the parties, we find that CIT(Appeals) as well as tribunal both on detailed examination of the terms of agreement between the parties came to the conclusion that agreement cannot be stated to be sham. In particular, CIT(Appeals) observed as under : 2.4 I have considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at sale and lease back transactions are financial transactions and normally no delivery takes place in such kind of transactions. 2.6 After considering the facts, arguments and above decisions quoted by the appellant's counsel, I am of the view that the Ld. assessing officer was not justified in disallowing the depreciation to the appellant. I, therefore, direct the assessing officer to allow the depreciation as claimed by the appellant. 7. In further appeal, tribunal also placing reliance on decision in case of Unimed Technologies Ltd. confirmed view of CIT(Appeals). It was additionally observed that lessee is Gujarat Electricity Company which is Corporation owned by the Government of Gujarat and it cannot be accepted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scussions of CIT(Appeals) as well as tribunal to contend that assessee was already in business of energy generation. New units being set up at Vadodara and Mangrol(Surat) were also for same purpose though using different technologies. He submitted that this issue is squarely covered not only by decision of Apex Court in case of Core Health Care Ltd.(supra) but also in case of Deputy Commissioner of Incometax v. Gujarat Alkalies and Chemicals Ltd. reported in (2008) 299 ITR 85(SC) as also in case of Gujarat State Fertilizer and Chemicals Ltd. v. Assistant Commissioner of Incometax reported in (2009) 313 ITR 244(Guj.). 11.Having thus heard learned counsel for the parties, it is undisputed position that assessee is in business of generation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer disallowed such commitment charges holding that payment was not in nature of interest. Tribunal allowed deduction under Section 37 of the Act. High Court confirmed view of the tribunal. Apex Court held that the commitment charges were admissible deduction under Section 37 and also be allowed under Section 36(1)(iii) of the Act. The Apex Court did not approve the department's contention that interest had been paid in relation to project of manufacturing phosphoric acid which had not commenced production during the assessment year, in view of the fact that assessee had established a phosphoric acid project as extension of its present business activities and for that purpose had obtained foreign currency loan. 14.In case of Gujarat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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