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The Commissioner of Income Tax 9, Mumbai Versus M/s Apollo Finvest India Ltd.

2016 (2) TMI 523 - BOMBAY HIGH COURT

Depreciation on assets of the Haryana State Electricity Board - whether Tribunal was correct in holding that the respondent company would be entitled to depreciation on assets of the Haryana State Electricity Board, with whom the respondent company had a sale and lease back transaction that was both in form and content a financial lease? - Held that:- The Apex Court in ICDS (2013 (1) TMI 344 - SUPREME COURT ) has held that for claim of depreciation to be allowed, the condition precedent are owne .....

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his Appeal under Section 260A of the Income Tax Act, 1961 (the Act) challenges the order dated 29th April, 2013 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order is in respect of Assessment Year 1996-97. 2. Mr. Pinto, the learned Counsel for the Revenue urges only the following question of law for our consideration : Whether on the facts and in the circumstances of the case, the Tribunal was correct in holding that the respondent company would be entitled to deprecia .....

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eld that the Lease Agreement styled as purchase and lease back transaction was infact and in substance a finance lease agreement. The Assessing Officer in his order dated 21st March, 2002 placed reliance upon Circular No.2 of 2001 issued by the CBDT, which states that "where assets are factually nonexistent created by havala transaction, the question of allowing depreciation does not arise". On the aforesaid ground, the Assessing Officer disallowed the depreciation amounting to ₹ .....

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nce. Thus, the claim on depreciation is allowable. In fact the CIT(A) placed reliance upon the decision of the Tribunal in the case of West Coast Paper Mills Ltd. Vs. Joint Commissioner of Income Tax, rendered for the Assessment Years 1996-97 and 1997-98, in identical fact situation to that of the respondent assessee's case consequently he held himself bound by the decision of the Tribunal and followed the same to allow the claim of the respondent assessee to depreciation. 5. Being aggrieved .....

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that the claim of depreciation on the sale and lease back of assets is allowable. 6. Mr. Pinto, learned Counsel for the Revenue in support of the appeal submits that the decision of the Apex Court in ICDS Ltd. (Supra) would not apply to the facts of the present case as it proceeded on the ground that it was a hire purchase agreement unlike in this case. Further, the decision of the Tribunal in West Coast Paper Mills Ltd. (Supra), which came to be upheld by this Court in Income Tax Appeal 389 of .....

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. We find that the decision of the Apex Court in ICDS (Supra) would apply to the present facts. The distinction drawn by Mr. Pinto is that the case ICDS (Supra) was a case of hire purchase and not so in this case, is no distinction for the reason that the Supreme Court in ICDS (Supra) held that the Assessee was in the business of leasing of vehicles and not hire purchase. The Apex Court in ICDS (Supra) has held that for claim of depreciation to be allowed, the condition precedent are ownership o .....

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