TMI Blog2014 (11) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... 014 - SHRI B R BASKARAN, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER Appellant by : Shri Nitesh Joshi Respondent by : Mrs Abha Kala Chanda O R D E R PER VIVEK VARMA, J.M.: Five appeals have been filed by the assessee against the consolidated order passed by CIT(A) X, Mumbai, dated 15.06.2009, covering assessment years 1993-94 to 1998-99. The assessee has filed the appeals for assessment years 1994-95 to 1998-99. Since there is a consolidated order by the CIT(A), we are also disposing off the appeals impugned before us through this common and consolidated order covering assessment years 1994-95 to 1998-99. 2. We find that on facts and merits, the issue is common in all the years before us. 3. In assessment year 1994-95, besides the common issue, running through all the five appeals, there is an issue on legality pertaining to reopening of the assessment under section 148. 4. Since the facts are identical, we are proceeding with assessment year 1994-95, being the lead year ITA No. 3991/Mum/2009 : Assessment Year : 1994-95 : Assessee s Appeal : 5. The following grounds are taken by the assessee: The Appellant objects to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be ignored. 8. We, therefore are left with Additional GOA, filed vide letter dated 03.04.2014,which is as follows: That the Assessing Officer erred in assuming jurisdiction u/s 148 of the Income Tax Act, 1961 without appreciating that the appellant had filed a rectification application dated 20/12/1996 withdrawing its claim of depreciation in respect of its transactions with M/s Kedia Distilleries Ltd . 9. The facts as per SOF filed before the CIT(A) are that the assessee is a NBFC and is governed under the Rules of RBI. It is in the business of lease finance, hire purchase and factoring, i.e. bill discounting and advancing of loans. 10. The legality and merits reached upto the ITAT on an earlier occasion in assessment year 1994. Both the issues were restored back to the file of the AO for de novo assessments. 11. In the second round, the assessment was framed ex parte because of certain reasons, which were sorted out in appeal before the CIT(A), wherein, the CIT(A) called for Remand Report from the AO, which included the reasons for non attendance and non compliances before the AO. The CIT(A) also sought analysis of merits in the remand proceedings. 12. The AO, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case which is material . 17. The CIT(A) noted that the assessee entered into two kinds of transactions. In the first kind, the assessee acquired the asset from manufacturer and supplier on behalf of the assessee, and leased the same to the assessee, and in the second kind the asset is acquired by the client itself, which are taken by the assessee and leased back to the client. In both the categories, the assessee was never in the actual possession of the asset. On this basic fact, the revenue authorities disallowed the claim of depreciation by the assessee. 18. In the proceedings before the ITAT, before us, the AR submitted that the basic fact itself is infirm and incomplete. The AR submitted that in the remand report, the AO mentioned that confirmations had been received by the department from the lessees that they have not claimed depreciation and also in some cases, assets had been repossessed and sold the same to third parties in the cases of lease. 19. The AR submitted that if these facts are taken into consideration, along with the factum of issue of claim of depreciation, would not have any hindrance. 20. The AR on the issue of sale of lease back transactions h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we have taken above, we deem it unnecessary to go into the said question as it is of no consequence to our final opinion on the main issue. From a perusal of the lease agreement and other related factors, as discussed above, we are satisfied of the assessee s ownership of the trucks in question. 29. Therefore, in the facts of the present case, we hold that the lessor i.e. the assessee is the owner of the vehicles. As the owner, it used the assets in the course of its business, satisfying both requirements of Section 32 of the Act and hence, is entitled to claim depreciation in respect of additions made to the trucks, which were leased out . 21. In the light of the above cited case laws, the AR submitted that the issue is fully covered and therefore the appeal must be allowed. 22. The DR relied on the orders of the revenue authorities. 23. We have heard the arguments at length and have also considered the case laws cited before us. The factum of repossession of equipment has not been disputed by the revenue authorities. This clearly means that lessee is not the owner and that the lessee has not claimed depreciation. This clearly shows that lessor is the owner and it is h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO in assessment year 1994-95 was bad in law. We therefore, hold the reassessment proceeding to be illegal and therefore, all the subsequent proceedings consequent to 148 are annulled. 33. As a result, the appeal as filed by the assessee is allowed. 34. Now, we shall deal with remaining four appeals, in assessee s own case, which are squarely covered by our own order decided hereinabove as a lead appeal in ITA No. 3991/Mum/2009 for AY 1994-95 on merits. ITA No. 3992/Mum/2009 : Assessment Year : 1995-96 : Assessee s Appeal : ITA No. 3993/Mum/2009 : Assessment Year : 1996-97 : Assessee s Appeal : ITA No. 3994/Mum/2009 : Assessment Year : 1997-98 : Assessee s Appeal : ITA No. 3995/Mum/2009 : Assessment Year : 1998-99 : Assessee s Appeal : 35. In the appeals pertaining to assessment years 1995-96 to 1998-98, on merits, the issue is identical to the issues in assessment year 1994-95, wherein we have allowed the claim of deprecation by the assessee, without prejudice to our decision on legal ground on reopening of assessment u/s 148. 36. Therefore, on merits, assessment years 1995-96, 1996-97, 1997-98 1998-99, the appeals stand allowed. To sum up: ..... X X X X Extracts X X X X X X X X Extracts X X X X
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