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TMI Blog2021 (2) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee - Company, a Public Limited Company and in the business of hire purchase financing, equipment leasing and allied activities, got merged with M/s.Sundaram Finance Limited (SFL). The Assessing Officer, while framing the assessment, asked the assessee to furnish the details in respect of the claim for depreciation on the flameless furnace and steel rolls. It is the case of the assessee - Company that the transaction was entered into with bonafide and in the normal course of the business with M/s.Prakash Industries Limited and that the payment was made directly to the supplier (i.e.) Sahib Engineering Works, that had obtained invoices evidencing supply of goods. However, the Assessing Officer raised a specific question whether the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same, the assessee filed an appeal before the Income Tax Appellate Tribunal. The Income Tax Appellate Tribunal, by its order dated 28.09.2007 allowed the appeal in I.T.A.No.864/Mds/2004 filed by the Department. Aggrieved over the order passed by the Income Tax Appellate Tribunal in I.T.A.No.864/ Mds/2004 for the assessment year 1996-97 , the assessee has filed the above appeal. The above appeal is admitted on the following substantial questions of law: "1)Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that lease transactions entered into by the appellant with M/s.Bellary Steels and Alloys Ltd., is not genuine and hence not entitled to depreciation? 2)Whether on the facts and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t this juncture, it would be worthwhile to take note of the following paragraphs of the decision of the High Court of Delhi in the case of Vasisth Chay Vyapar Ltd.: "18. ......................However, when we examine the issue involved therein minutely and deeply in the context in which that had arisen and certain observations of the Apex Court contained in that very judgment, we find that the proposition advanced by Mr. Sabharwal may not be entirely correct. In the case before the Supreme Court, the assessee a NBFC debited Rs. 81,68,516 as provision against NPA in the profit and loss account, which was claimed as deduction in terms ofSection 36 (1) (vii) of the Act. The assessing officer did not allow the deduction claimed as aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounting. In other words, profits have got to be computed after deducting Losses/ Expenses incurred for business, even though such losses/ expenses may not be admissible under Sections 30 to 43D of the IT Act, unless such Losses/ Expenses are expressly or by necessary implication disallowed by the Act. Therefore, even applying the theory of Real Income, a debit which is expressly disallowed by Explanation to Section 36(1)(vii), if claimed, has got to be added back to the total income of the assessee because the said Act seeks to tax the "real income" which is income computed according to ordinary commercial principles but subject to the provisions of the IT Act. Under Section 36(1)(vii) read with the Explanation, a "write off" is a ITA 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment of the Supreme Court in Southern Technology (supra) is read in manner we have read, ITA 139/2008,ITA 466/2008, ITA 537/2008,ITA 408/2003 it becomes easy to reconcile the ratio of Southern Technology with TRO Vs. Custodian, Special Court Act. 20. Thus viewed from any angle, the decision of the Tribunal appears to be correct in law. The question of law is thus decided against the Revenue and in favour of the assessee. As a result, all these appeals are dismissed." 8.The above decision was affirmed by the Hon'ble Supreme Court holding that the consideration of the question by the High Court of Delhi has been given a meaningful reasoning and affirmed the finding. Thus, by applying the above mentioned decision, the Substantial Qu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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