TMI Blog2021 (8) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... ons made before the Hon ble Delhi High Court, it is noted that the assessee is no way related to M/s. BSL. It has no concern or connection with the erstwhile M/s. BSL Group and the shareholding of the assessee-company is owned by SREI Alternative Investment Trust. The assessee has not been named in any charge-sheet filed by the SFIO. Therefore, the question of furtherance of business of M/s. BSL, in our opinion, does not arise. As been demonstrated before the Hon ble High Court that the terms of the Lease Agreement are at arm s length. When the entire transaction was appraised by Seventeen [ 17 ] Banks led by State Bank of India and since most of the Banks are Government of India undertakings, therefore, making a serious allegation treating the transaction as sham and colourable in absence of any evidence before the Revenue Authorities, in our opinion, is not justified. So far as the allegation of the A.O. that the assessee-company has no finance worth since it has paidup capital of ₹ 1 lakh only and it has no assets and had no business activity prior to its decision to purchase the plant and machinery of M/s. BSL at the end of 2014-2015 is also has no basis esp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over the building in his own right uses the same for the purpose of his business or profession though a legal title has not been conveyed to him/her as per the requirement of Law such as the Transfer of Property Act and the Registration Act, but, nevertheless is entitled to hold the property to the exclusion of all others. Lower authorities have also ignored the fact that the assessee company was incorporated with the objective of entering into such leasing arrangements which is evident from the object clause of the Memorandum of Association. Therefore, when the assessee had realised that BSL was undergoing a financial crunch it capitalized on the business opportunity and purchased the assets from the latter by way of a loan [against hypothecation of the assets], raising compulsory convertible debentures etc. Since BSL was interested in utilising the assets involved, the same were leased back to the latter under an operative lease, in return for an assured and profitable rental income. Allegation of the Revenue that the Assessee does not have any infrastructure is concerned, we are of the considered opinion that leasing business does not require any such elaborate infrastruc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... main objects as per its Object Clause in the Memorandum of Association, is entitled to claim depreciation on the assets leased as per the provisions of Section 32 read with Explanation 4A of Section 43(1). In view of our above discussion in the preceding paragraphs, we are of the considered opinion that the assessee is entitled to claim depreciation on the assets leased. Therefore, the Order of the Ld. CIT(A) on this issue is set aside and the first issue raised in the grounds of appeal challenging the disallowance of depreciation is allowed. - Decided in favour of assessee. - ITA.No.8617/Del./2019 - - - Dated:- 3-8-2021 - Shri R.K. Panda, Accountant Member And Ms. Suchitra Kamble, Judicial Member For the Assessee : Shri S.K. Tulsiyan, Advocate, Ms. Bhoomija Verma, Advocate, Shri Lakshya Budhira, C.A., Ms. Ananya Rath, Advocate For the Revenue : Shri Satpal Gulati, CIT-DR ORDER PER R.K. PANDA, A.M. This appeal filed by the Assessee is directed against the Order Dated 13.09.2019 of the Ld. CIT(A)-2, New Delhi, relating to A.Y. 2015-2016. 2. Facts of the case, in brief, are that the assessee is a Company engaged in the business of Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 150 Crores fund by way of issuance of Compulsory Convertible Debentures to purchase certain Equipments of M/s. Bhushan Steel Limited, which formed Plant and Machinery of Oxygen Plants at a cost of ₹ 1000 crores. (E) It defies all sense of logic that the assessee company having its registered office in New Delhi and having no functional business activity, suddenly decided to purchase certain equipments of 4 Oxygen Plants of M/s. Bhushan Steel Limited located at Orissa and then immediately leased it back to M/s. Bhushan Steel Limited. (F) It is even more surprising that the assessee company instead of purchasing the complete, functional and operational Oxygen Plants, which would have included the land, building, civil work, and other necessary capital installations accompanying the said equipments, chose to purchase only certain equipments which formed part of these Oxygen Plants. Since these equipments required necessary accompaniments in the form of Building, civil work, and other installations for being made functional operational, such a piecemeal purchase made by the assessee, did not have any business sense. Further* this clearly showed that the assessee n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yet to be made operational, yet to undertake trial run. 1200 TPD -- Under trial run. 2.2.1. The A.O. noted that M/s. BSL vide reply Dated 22.12.2017 has claimed that the 340 TPD and 405 TPD plants were capitalized on 27.03.2011 and 1120 TPD and 1200 TPD plants were capitalized on 17.02.2015. He noted that even this claim of M/s. BSL is clearly contradictory to that submitted to the Bank. 2.2.3. He further noted that despite being asked by him, the assessee has not submitted the actual value of the said equipment along with WDV in the books of account of M/s. BSL as on 31.03.2014 on the date of supposed transfer. M/s. BSL has also not responded to the above query, despite being specifically asked vide summons issued by him. He, therefore, inferred that M/s. BSL and the Assessee have been wilfully evading the queries regarding original cost of the asset and, therefore, value on the date of the transfer. In view of the above, the A.O. held that the socalled purchase of equipment by the assessee from M/s. BSL was not a genuine business transaction. The modus operandi adopted by the assessee company i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese Plant Machinery, which in fact, proves the Revenue s contention that the assessee never intended to use these assets. 3. Thus, the assessee, as part of its modus operand!, purchased these Equipments ', through an 'Agreement to Sale dated 23.02.2015 between the assessee and M/s Bhushan Steel Limited, and immediately thereafter, leased it back to M/s Bhushan Steel Limited itself. The entire Plant . machinery continued to be installed in the business premises of M/s Bhushan Steel Limited and M/s Bhushan Steel Limited continued to utilize the said machines, which were installed in the building and civil structure owned by M/s Bhushan Steel Limited. It was merely on paper that the ownership of the said equipments was transferred to Assessee Company. The assessee company neither had any possession of the said assets, not did it have the necessary infrastructure to utilize these assets. 4. On the other hand, the assessee, despite having no real advantage, incurred a huge debt of ₹ 850 Crores by way of Loans taken from Banks to purchase the so called Plant Machinery of M/s Bhushan Steel Limited so that it could lease it back to M/s Bhushan Stee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt part of the modus operandi was that while M/s Bhushan Steel Limited had acquired these Plant machinery originally at a certain cost(copy of original bill of purchase of equipments not submitted to this office),on which it had already claimed depreciation for quite a few years, it had conveniently sought to transfer the same depreciated asset at an inflated book value to the assessee, ie, Equipments worth Rs,437 Crores were transferred at the value of ₹ 1000 Crores, in collusion with the assessee company. 2.4. The A.O. similarly disallowed the up-front fees of ₹ 1,10,82,175/- debited in the P L A/c on the ground that prima facie this expenditure incurred is in the nature of capital expenditure. The A.O. also disallowed interest expenditure of ₹ 1,62,10,881/- debited in the P L A/c on account of loan taken during the year for acquiring the Oxygen Plant on the ground that the assessee had no real business purpose and was merely acting as a conduit for transfer of ₹ 1000 crores fund free of debt to M/s. BSL when the assets transferred to the assessee were worth ₹ 437 crores only. Since the transaction held by him was not genuine, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim. In this situation, the payment of upfront fee does not qualify as business expenditure. This ground is ruled against the appellant. 5. So far as the addition of ₹ 1,62,10,881/- on account of disallowance of interest is concerned, the Ld. CIT(A) upheld the same by observing as under : 6.13. Ground no. 5:- This ground is directed against addition of ₹ 1,62,10,881/- on account of disallowance of interest. The interest has been claimed against the term loan for purchase of the equipments. As decided in Ground no. 4 above, the appellant has neither carried on any business activity nor utilised the equipments for business purposes. In this situation, the interest on loan taken for these equipments does not qualify as business expenditure. This ground is ruled against the appellant. 6. Aggrieved with such Order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds : 1. That the Ld. A.O. and the Ld. C.I.T.(A) have erred in disallowing the Appellant s legitimate claim for depreciation of ₹ 71,43,75,000/- by holding that the Sale cum Lease back arrangement (SCLB) entered into between the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the machinery for any business purpose, to be entitled for the claim in the first place. 8. That the Ld. A.O. has erred and the Ld.CIT(A) has wrongly sustained the impugned disallowance of the Appellant s claimed business expenditure on account of the payment interest of ₹ 1,62,10,881/- on the term loan taken by the Appellant for the purchase of the Oxygen Plants - on the erroneous basis that since the Appellant has neither carried out any such business activity, nor utilized any such equipment for business purposes, the said interest cannot qualify as a business expenditure. 9. That the Ld.CIT(A) has sustained the impugned additions/disallowances in an erroneous and illegal manner - where the Ld.CIT(A) has neither rebutted and/or questioned the genuineness/ authenticity of the documentation/evidences available on record, but has merely on the basis of borrowed satisfaction, arrived at the impugned findings purely on surmises, conjectures and some fundamentally incorrect factual assumptions. 10. That therefore, as the order of the Ld. CIT(A) on the above issues suffers from illegality, and infirmity, and is devoid of any merit, the impugned additions sus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tutions [ hereinafter referred to as Lenders ] . He submitted that in August 2014 the decisions taken at the meeting of the Lenders, required that as a part of the deleveraging exercise, the Oxygen Plants of 1120 and 1200 TPD with accessories and Oxygen Plant of 340 405 TPD with accessories, which are part of the integrated steel facility at Mermandali Orissa, ought to be subject to a Sale cum Lease Back arrangement. He submitted that the Lenders of [then] M/s. BSL thereafter issued an NOC on 21.02.2015 permitting it to execute such a Sale cum Lease Back Agreement with the Assessee on the condition that the interest over the lease for the 4 Oxygen Plants shall be charged for the benefit of the Lenders. In furtherance to the same, the Assesses and (then) M/s BSL entered into an Agreement to Transfer Certain Equipment executed on 23.02.2015 [ referred to as the Asset Purchase Agreement, copy of which is placed at Pages-184-195 of the Paper Book ] for the purchase of Plant and Machinery comprising of Oxygen Plants of 1120 1200 TPD with accessories and Oxygen Plants of 340 405 TPD with accessories [ Referred to Schedule-1 of the Asset Purchase Agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the concerned asset. In other words, the asset in question is first purchased by the buyer and almost simultaneously leased back to the seller, who thereafter holds and uses the same in its respective capacity. The erstwhile owner thus becomes the lessee after the lease. 7.4. He submitted that for the A.Y. 2015-2016. the Assessee, having entered into the aforesaid SCLB, originally claimed a depreciation of ₹ 71,43.75,000/- that was later revised to ₹ 68.84,30,676/- [ based on the Written Down Value of the Assets ] . The claim for depreciation was made u/s 32 of the I.T. Act, 1961 read with Explanation 4A of Sec.43(1) of the I.T. Act, 1961. 7.5. So far as the allegation of the A.O. that the so called purchase of the Assets from M/s BSL was not a genuine business transaction, and was in fact, a modus operandi adopted by the Assessee in collusion with M/s BSL to merely transfer the ownership of the second hand depreciated equipment that valued only ₹ 437 crores for an inflated value of (about) ₹ 1000 crores simply, so that a higher rate of depreciation could be claimed is concerned, he submitted that the A.O, has purely on suspicion, surm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Steel Facility to the petitioner. 7.6.1. He submitted that at Para-8 of the Decision, the Hon'ble Delhi High Court has reproduced certain paragraphs of the very same Lease Agreement dated 26.02.2015 entered into between the Assessee and (then) M/s BSL, the copy of which is attached herewith at Pages- 315-334 of the Paper Book. 7.6.2. He submitted that at Para-9 and Para-10 of the decision the Hon ble Delhi High Court further states certain facts vis-a-vis the Lease Agreement Dated 26.02.2015, to solidify the genuineness of the SCBI. Arrangement which reads as under : 9. It is stated by the petitioner that the Lease Agreement was structured to ensure that the interests of the Lenders are secured and the respondent has an unconditional obligation to pay the agreed rent amount without an option to excuse non-payment under Clause 5 thereof. The Oxygen Plants were leased out as mandated by the Lenders for a monthly consideration of ₹ 15 Crores, exclusive of taxes, for the period ending on March 31, 2020 and ₹ 18 Crores. exclusive of taxes, for the remaining term of the lease, thereafter, i.e., April 1, 2021 onwards 10. It is stated by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the factual basis of both the present appeal and Decision rendered by the Hon ble Delhi High Court are one and the same, since they originate from the very same Lease Agreement dt.26.02.2015. 7.6.6. Referring to Paras-38 and 39 of the Decision, he submitted that the issue of the Lease Agreement being the sole asset and only source of revenue of the Assessee/ Petitioner has been brought to the Court s knowledge, and the fact that the non-payment of rentals by the Respondent adversely affects the Assessee/Petitioner s capability to service its loans, thereby causing grave prejudice to the assets and credibility of the Assesssee-Petitioner has also been pointed to the Court. It was further brought to Court's knowledge that the SCBL arrangement is subject to GST on the Assesses/Petitioners part despite the default of the Respondent. 7.6.7. Referring to Para-47 of the decision of the Hon ble High Court, the Learned Counsel for the Assessee submitted that the Lease Agreement was not at Arms Length was taken before the Court by the respondents and for this purpose he drew the attention of the Bench to Para- 47 of the Order which reads as under : 47. On the merits, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Referring to following paragraphs of the Order, the Learned Counsel for the Assessee submitted that after giving due consideration to the arguments of both sides, the Hon ble Delhi High Court has held in favour of the Assesese-Petitioner, by observing as under : 68. Mr. Sibal is right in relying upon the Clauses 5.1 and 5.2 of the Lease Agreement to contend that there is an admitted obligation to pay lease rent on the part of the respondent. In fact I note, the respondent on taking over the management of the BSL for the period between May 18, 2018 to February 29, 2020, had paid the lease rent to the petitioner and also deposited the GST with the public authority. 69. The dispute has arisen thereafter. According to Dr. Singhvi and Mr. Nigam (Counsels) the entire transaction leading to the lease agreement is not at arm's length. It was while reviewing various contracts / transactions as per an Annual Report of the company it was realised by the respondent that ₹ 18 Crores per month leased rental is not in accordance with prevalent market standard, but is far excess of it. . 72. As stated above, there is a clear stipulation in the Lease Agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties seek adjudication of the disputes as per the contractual provisions. 87. So, it is directed that the respondent shall pay the arrears of lease rent (net of all taxes / TDS), after adjusting the amount already paid, to the lead Lender Bank with applicable interest within six weeks from today. 88. This payment shall be subject to the outcome of the prospective arbitration proceedings. The aforesaid is a tentative view. It is made clear; this Court has only adjudicated the issue which fell for determination in this petition in terms of the prayers made. 7.6.9. The Learned Counsel for the Assessee submitted that in view of the aforesaid Decision of the Hon ble Delhi High Court it becomes evident that the various allegations of the Department do not stand in the light of facts and findings of the Hon ble Delhi High Court that has clearly upheld the validity and veracity of the Lease Agreement Dated 26.02.2015 and the terms stipulated therein holding the same to be binding on both parties, where the rent stipulated therein is prima facie payable by the Respondent to the Assessee/Petitioner. 7.6.10. He submitted that the very reasoning adopted by the A.O. t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Book ] , he submitted that since the Assets involved herein are indeed owned by the assessee and since the assets are indeed utilized for the purpose of business of the Assessee [ since the Assessee Company is in the business of leasing assets, as visible from its MOA ] , therefore, the requirement of Section 32 stands satisfied, notwithstanding the non-usage of these Assets by the Assessee itself, as the Section only requires that the assessee must use the assets for the purposes of business and does not mandate usage of the asset by the assessee itself. For the above proposition, the Learned Counsel for the Assessee relied upon the following decisions : 1. Judgment of Hon ble Supreme Court in the case of CIT vs., Shaan Finance (P) Ltd., Bangalore vide Judgment Dated 20.03.1998 MANU/SC/2009/1998. 2. Mysore Minerals Limited vs., CIT vide Judgment Dated 01.09.1999 MANU/SC/0540/1999. 3. I.C.D.S. Ltd., vs., CIT, Mysore and Others vide Judgment Dated 14.01.2013 MANU/SC/0028/2013. 4. Judgment of Hon ble Delhi High Court in the case of CIT vs., Reetu Finlease (P) Ltd., vide Judgment Dated 09.01.2006 MANU/DE/8140/2006. 5. Judgment of Hon ble Andhra Prades ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 Oxygen Plant of 340 405 TPD with accessories ₹ 120,86,67,595 ₹ 68,66,02,504 27.03.2015 TOTAL ₹ 970,11,40,772 ₹ 917,90,75,681 7.6.14. He submitted that this reworked claim of depreciation of ₹ 68,84,30,676/- had been accounted for in AY 2018-2019. where the assessment and computation of the Assessee has been revised by taking the impact of depreciation claimed on the WDY of the Assets. The same is also evident and visible from the requisite extracts of the ITRs and Computation of Income for the AY 2015-2016 and AY 2018-2019 (respectively). Although the data is already available with the Department, the Learned Counsel for the Assessee referred to the following documents for the sake of brevity and convenience. Copy of the relevant extract of the complete ITR for the AY 2015-16, annexed at Pages 1and 2 to the written submission. Copy of the computation of the return for the AY 2015- 16 annexed at Page-3 to the written submission. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat SCBL arrangements are in fact a very common undertaking that is entered into in the leasing sector, where the typical advantages of such an SCLB transaction to the lessor, would be a higher return rate, benefit of residual value, predictable and secured return rate, greater ease in handling the seller default, and results in the avoidance of any such usury problems. 7.6.19. He submitted that the Revenue has erred in ignoring that the Assessee Co. had been incorporated with the objective of entering into such leasing arrangements. In line with its main objective, as soon as the Assessee found an attractive business opportunity, it purchased the Assets from (then) M/s BSL and then immediately leased the same back out. In other words, in the case at hand, when the Assessee had realised that (then) BSL was undergoing a financial crunch, it capitalised on the business opportunities and purchased the Assets from the latter by way of a loan (against hypothecation of the Assets), raising compulsory convertible debentures, etc. Since (then) M/s BSL was interested in utilising the Assets involved, the same was thus leased back to the latter under an operative lease, in return for an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e intention and the documentation/evidences at hand and which have gone unrefuted by the A.O. point towards the legitimate nature of the SCBL arrangement. The A.O. cannot merely on surmises and conjectures opine that the Assessee has acted in a collusive manner to avoid any form of genuine tax liability. 7.6.23. The Learned Counsel for the Assessee submitted that it is well within the rights of the Assessee to run its business activities in any such manner that it may deem fit and proper, and so the very allegation that the SCBL transaction is a paper and dubious transaction sans any such conclusive evidence brought on record by the A.O. to that effect, would show that the A.O. is exceeding his/her powers of stepping into the shoes of the business man, and going into the correctness, business prudence and commercial expediency of the decision making process. Thus any such attempt by the A.O. to disregard the intention of the parties, that is supported by the genuine documentation of record, cannot be merely based on individual perceptions. For the above proposition, he relied on the following decisions : 1. Judgment of Hon ble Supreme Court in the case of CIT, Kera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of probabilities - since the A.O. has not even rebutted/questioned the genuineness/ authenticity of the documentation/evidences brought on record by the Assessee, and when the A.O. has made some fundamentally incorrect factual assumptions as to the valuation of the Assets involved, and when the A.O. has completely overlooked the rationale and commercial viability of this SCBL arrangement (that was taken as a business decision by the Assessee as part of its leasing business), and when further, the A.O. has completely ignored the fact that the claimed depreciation, would result in a tax neutral situation had the same been claimed by the Assessee as part of this SBL arrangement or by (then) M/s BSL independently, by not entering into this SCBL arrangement. 7.6.25. He submitted that the very theory of preponderance of probability is only applied to weigh the evidences of either side and draw a conclusion in favour of a party which has more favourable factors in his side. The conclusions have to be drawn based on certain admitted facts and materials and not based on suspicion, surmise and conjectures. For the above proposition, he relied upon the decision of Coordinate Bench of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital borrowed for the purposes of business. 8.1. He submitted that interest as defined u/s 2(28A) of the I.T. Act, 1961. is interest payable in any manner in respect of any moneys borrowed or debt incurred [ including deposit, claim or other similar right or obligation ] and includes any service fee or other charge in respect of the money borrowed or debt incurred or in respect of any credit facility which has not been utilised. Accordingly, to qualify as an interest the costs should be incurred in connection with the borrowing of funds, and thus since the Assessee herein has made the payment of upfront fee vis-a-vis the Term Loan obtained, the said upfront fee does fall within the definition of interest and is allowable as a deduction under section 36(1)(iii) of the I.T. Act, 1961. 8.2. He submitted that it is now a settled law, that upfront fees' can be claimed as revenue expenditure. Referring to the decision of Hon ble Madras High Court in the case of CIT vs., Meenakshi Mills Ltd., [2007] 290 ITR 107 (Madras), he submitted that the Hon ble High Court of Madras has opined that, where the assessee (therein) had paid 4.4 lakhs towards 1 per cent u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contention(s)/ allegation(s) raised by the Department with reference to the SCBL transaction, then, the issue of claiming the interest expenses as a deductible business expenditure is corollary/ contingent claim that ought to be allowed for the same reasons. He accordingly submitted that the grounds raised by the assessee should be allowed. 10. The Ld. D.R, on the other hand, while heavily relying on the Orders of the A.O. and Ld. CIT(A) filed the following written synopsis which reads as under : May it please your honours Brief facts of the case:- 1. The assessee and BSL (Bhushan Steel Limited) have entered into Agreement to transfer certain equipments dated 23/02/2015 as per which BSL claimed to have sold certain specific equipments to the assessee and then the assessee entered into loan agreement with the bank on 26/02/2015 by mortgaging such equipments/assets and thereafter on the same date, such equipment was claimed to be leased back to BSL for lease rent. ` Issue Involved:- 2. The issue involved is that whether the assessee was entitled to claim depreciation on such assets or not ? Points relevant to decide on the issue of depr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rowing on the security of the assets, the assessee would not be entitled to depreciation, that it is nothing more than a mere finance transaction - and that the entire documentation is a smoke screen to create an illusion as if it is a lease. The real question would be whether the consideration moving from RSEB to the assessee represents compensation for the use of the monies (as in a finance lease) or represents compensation for the use of the assets (as in an operational lease) The judgment of the Supreme Court in Shaan Finance Pvt. Ltd. (231 ITR 308)(SC) relied on by the assessee is not applicable to the facts of the present case since that decision related to the claim of investment allowance and the business of the assessee was that of leasing only. The other decisions, particularly orders of the Tribunal relied on by the assessee were not applicable to the present case. In Mcdowell case, His Lordship Justice Ranganath Misra held as under :- (page 171 of the report) Tax planning may be legitimate provided it is within the framework of law. Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustive. Any other fact or circumstance which one considers relevant for reaching the soul of the matter must necessarily be taken into account. Ultimately, it is the inference to be drawn on a cumulative consideration of all the facts and circumstances of the case which is material. We have therefore perused the various orders of the Tribunal placed before us only in this perspective viz., whether any guidelines or principles of general application could be called from them which could be usefully applied to the cases before us for the purpose of ascertaining the genuineness of the SLB transaction. We have eschewed the temptation to match the colour of one with the other and draw our inferences or superficial similarities. assessments are not made merely on arithmetical calculations; they are to be made on legal principles. The view to be taken with regard to a particular transaction cannot differ, depending on whether the parties have made a profit or have incurred a loss in the same. The assessments cannot be made solely on the basis of the figures or arithmetical calculations. In the cases before us, in fairness to the income-tax authorities, they have reali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uipments or delivery of equipments. Clause-2.2 clearly mentions that it is only an agreement to transfer the equipments and does not convey or transfer the equipments to the purchaser. The relevant clauses are reproduced as under :- A.2 Thus, it flows from the above that the agreement did not deal with actual transfer of equipments and the assessee did not produce any evidence to showcase that there was handing over of the equipments from seller to purchaser. A.3. Further, the agreement to sell does specify the specific equipments which are to be transferred. A part of the list as sample is as under :- A.4. Keeping in mind that all such equipments are part of the oxygen plant which is in operations for number of years by BSL. All these equipments are interconnected and form part of integrated plant. The question arises as to how such equipments could be handed over to the purchaser after dismantling each one out of the integrated oxygen plant along with supporting civil structures? Whether dismantled equipments would have any value left in it? The simple answer is that it is not a feasible option to dismantle the equipments for sale of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys remained with BSL and the arrangement of sale and lease back was to offload the loan from the balance sheet of the lessee. C. Is it a case of inflated value of equipments claimed to be transferred for sale and lease back? C.1. At page 6 of the AO order, cost break up of oxygen plant and building is there which shows that plant and machinery costed ₹ 437.47 Cr, civil structures costed ₹ 252.93 Cr, duties and taxes of ₹ 10.11 Cr and Pre-operative cost of ₹ 273.17 Cr. The total cost comes to ₹ 941 Cr. C.2. Agreement to transfer Equipments nowhere talks of transfer of civil and structures (building). It only talks of equipmentsas per schedule I of the agreement which constitute plant and machinery. Civil structure is not included in the list as per schedule-I of the agreement. Thus, the AO rightly concluded that the sale consideration has been inflated because where civil structure has not been transferred, the cost for the same can not form part of list of specific equipemnts claimed to have been sold. Accordingly, the equipments have been transacted at ₹ 1000 crore as against its actual worth/cost of ₹ 437 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plants. In substance, it was their plea that the respondent has incurred expenses to the tune of ₹ 41,79,48,852/- for the upkeep of the plants. 75. On the other hand, Mr. Sibal has contested the submission made by Dr.Singhvi and Mr. Nigam by stating that the respondent has been in effective possession, control and commercial usage of the oxygen plants and is responsible for the routine and operation costs of the Oxygen Plants and the Lenders in the appraisal memo have clearly noted that the routine maintenance and operation and maintenance charges are on the responden t. D.4. Para 73 of the aforesaid decision (as reproduced above) clearly mentions that Tata BSL incurred maintenance expenditure on its own and the lessor did not provide maintenance services. The plea taken by the respondent that the petitioner (the assessee) did not comply to the obligation cast on it as per clause 6.1 (vii) of the lease agreement and clause 6.1.7 of common loan agreement. This particular clause deals with fact of responsibility to maintain the equipments in good working condition and shall undertake routine maintenance of equipments. The relevant extracts of the lease agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leveraging and the scheme was at the behest of lenders of BSL(lessee). Thus, effectively, the assessee merely played a role to act as a medium to offload the loan from balance sheet of BSL(Lessee) through sale and lease back and this scheme was the brain child of lenders of BSL to safeguard its financial interests. E.6. This fact has also been highlighted by TATA BSL before Hon ble Delhi High Court at para 66 of the decision which reads as under :- On merits, it is stated that: 7.1. The entire transaction was clearly not an arm s length but rather a friendly transaction which has led to payments of exaggerated amounts as lease rentals that were artificially fixed to meet the requirement of INR 1000 Crore (sale price), making it further into nature of a financial lease ; E.7. So, it was in the nature of finance lease as against operational lease. F. Whether the assessee (lessor) and lessee are group concerns? F.1. In this regard, it may be relevant to take note of para 47 of Hon ble Delhi High Court decision in respect of dispute between the assessee and Tata BSL group wherein it is mentioned that erstwhile promoters of BSL group did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do throw light on the issue of responsibility of providing maintenance services and the issue of operational lease vis-a-vis financial lease. 10.2. Subsequently, the Ld. D.R. filed the following written synopsis which are as under : May it please your honours : 1. With reference to the rejoinder filed by the appellant in response to the written submission dated 17.05.2021 filed by the Department, it is noted that the appellant has rebutted on factual as well as legal points. 2. As regards factual points, the appellant has summarily rejected the written submission dated 17/05/2021 without any basis. It is prayed that the Hon ble Bench may duly consider written submission dated 17/05/2021 in addition to the AO order and CIT(A) order. 3. As regards legal points, it is to highlight that certain decisions relied upon by the appellant are not relevant to the facts of the case. The same are discussed as under :- 3.1. Decision in the case of Consortium Finance Ltd. vs. Joint Commissioner of Income Tax (30.04.2002 - ITAT Delhi) : MANU/ID/0285/ 2002. Submission :- 3.1.1 It is relevant to take note of the facts of the cited case. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction rather than the form of the same. If there are reasons to believe that the form of the transaction and its real substance are not mutually corroborative, the Court must not be swayed by the form of the transaction nor by the nomenclature that the parties have given to it. 3.2.4. Hon ble Delhi High Court in the case of Instalment Supply Limited (ITA NO. 442/2007) held that the real issue and question involved in the present case is whether or not the agreement in question was a finance agreement or an operating lease and the question cannot be decided by merely looking at the title of the agreement or the nomenclature given to the said agreement. The terms and conditions mentioned in the agreement may be relevant but the surrounding circumstances type and nature of the asset have also to be considered. 4. Decision in the case of Poddar Cement:- 4.1 It is argued by the appellant that the CIT-DR has erroneously quoted the passages extracted by the Hon ble S.C. in Poddar Cement (supra) of a decision belonging to the Hon ble Patna H.C. (See Para 30 of the decision) to then erroneously call the same as the finding of the Hon ble S.C. 4.2. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conclusion will be the same. The Hon ble Special Bench thereby held that no common and/or exhaustive rules of universal application can be arrived at towards finding out the genuineness of an SCBL transaction and that each case has to be decided on its own merits, upon a cumulative considerations of all the material facts and circumstances of the case. He submitted that various decisions relied upon by the Ld. D.R. are distinguishable and not applicable to the facts of the present case. The Learned Counsel for the Assessee also distinguished the various decisions relied on by the Ld. D.R. by filing the following written synopsis : AVERMENTS OF THE CIT(DR) IN THE COUNTER COMMENTS DATED 30.05.2021 OUR RESPONSE Decision in the case of Consortium Finance Ltd. vs. Joint Commissioner of Income Tax (30.04.2002 - ITAT Delhi): MANU/ID/0285/2002 Submission :- 3.1.1. It is relevant to take note of the facts of the cited case. In this regard, it is noted that the assessee in the cited case took a plea that there was no basis or justification to treat the transaction to be collusive in nature since M/s. K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re a part and parcel of business deals have been viewed with suspicion by the Revenue, and that it must be emphasised that every transaction has to be considered on its own facts. See Para 25. 3 .Thus factual dissimilarities like one party being a Govt party in the case of Consortium Finance (supra) is of little or of no relevance, especially when the allegations of the Department in the said case are hugely similar to the line of argument taken by the CIT(DR) herein. This similarity is iterated below: a. Consortium Finance is a limited NBFC, that is engaged in the business of hire-purchase, leasing and trading of shares ( See Para 3 ). b. As per the Department the nature of the transaction is a financial transaction, where the ingredients of Sec.32 have not been fulfilled since the assets had not come into physical possession of the assessee cause the same were affixed to the ground and thus incapable of being transferred ( See Para 6 , Para 9 and Para 20 ). c. Intention of M/s KPCL (the Govt. party/lessee) was to get finance from the assessee since it was in the red and badly needed resources to run its business. The SCBL was entere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3.2.2. Interestingly, vide written submission dated 17/05/2021, inherent contradictions in the agreement to transfer equipments vis- -vis lease agreement have been highlighted at various paras (A.7 A.8) of written submission dated 17/05/2021. In such a scenario of conflict in the documentation relied upon by the appellant, the applicability of aforesaid decision of Delhi High Court does not have any relevance. b. Sec.19 of the Sale of Goods Act, 1930 was applied, where Sec.19(2) specifies that for the purpose of ascertaining the intention of the parties, regard shall be made to the terms of the contract, the conduct of the parties and circumstances of the case. See Para 11 . c. The decision of McDowell and Co. had been watered down by the Hon ble S.C. in the case of Azadi Bachao Andolan 2003 (263) ITR 706 (SC) that clearly opined that tax planning may be legitimate if it is within the 4 corners of the law. See Para 16, 17. d. Reliance was placed on the decision of Industrial Development Corporation of Orissa Ltd., 268 ITR 130 (Ori) to hold that the Revenue could only discard a transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lessee. Merely because in the perception of the Assessing Officer, certain clauses of the lease agreements were unreasonable or even incongruous, it could not be concluded that the assessee had not entered into these agreements as a lessor-owner of the assets in the ordinary course of its business of leasing. It is well-settled position in law that Court cannot rewrite an agreement for the parties. Further, an agreement is to be read and construed as a whole, effect being given to all the parts thereof, and no part of it should be ignored unless it is so inconsistent with the rest of it that no meaning can be given to it . See Para 17 of the decision. 3.2.4. Hon ble Delhi High Court in the case of Intsalment Supply Limited (ITA NO. 442/2007) held that the real issue and question involved in the present case is whether or not the agreement in question was a finance agreement or an operating lease and the question cannot be decided by merely looking at the title of the agreement or the nomenclature given to the said agreement. The terms and conditions mentioned in the agreement may be relevant but the surrounding circumstances type an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision dt.14.12.2018. Thus the concept of preponderance of probability, surrounding circumstances etc. does not come into the picture. 7. There is no material that has been brought on record by the A.O. to rebut / refute the terms of the Lease Agreement that has clearly recorded the transaction to be in the nature of an operating lease, where even the obligation to provide maintenance (as argued by the Respondent before the H.C.) has been admitted to lie with the Assessee herein. 8. The decision of the ITAT Mumbai in Sharyans Resources Ltd., (supra) is of relevance here since IAS 17 was cited therein to determine if the lease was an finance or an operational lease. The Hon ble ITAT held that the ingredients of a finance lease are not met in that case since the revenue has also not brought even an iota of material on record to suggest that the leaseterm was for the major part of the useful life of the assets and that on the expiry of the lease period, the assets were rendered to be of nominal value only. As long as these important aspects remained unproved, we do not see justification for denial of depreciation allowance to the assessee. See Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference:- 30. The Patna High Court has cited this Court's judgment in R.B. Jodha Mal Kuthiala's case (supra) and also number of other judgments of the different High Courts. The High Court had also gone into the concept of 'ownership' and referred to passages from G.W. Paton on Jurisprudence, Dias on Jurisprudence, Stroud's Judicial Dictionary and Pollock on Jurisprudence . We may usefully extract certain passages from the judgment of the Patna High Court. 2. In this context it is pertinent to note that the CIT(DR) has erred in understanding the ratio decidendi of the decision of Podar Cement (supra ) that is in favor of the Assessee , since the decision holds that the term owner must be interpreted and assigned a wider under the Income Tax Act. Attention in this regard is directed to the relevant excerpts of Mysore Minerals Limited (supra) that has held recorded the issues before the Hon ble S.C. in Podar Cement (supra) as well as its finding in the following manner: 10. In CIT v. Podar Cement Pvt. Ltd., (supra) the question which came up for consideration before this Court was whether the rental in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his own right and is using the same for the purposes of his business or profession. Assigning any different meaning would not subserve the legislative intent. To take the case at hand it is the appellant-assessee who having paid part of the price, has been placed in possession of the houses as an owner and is using the buildings for the purpose of its business in its own right. Still the assessee has been denied the benefit of Section 32. On the other hand, the Housing Board would be denied the benefit of Section 32 because inspite of its being the legal owner it was not using the building for its business or profession. We do not think such a benefit-to-none situation could have been intended by the Legislature 4. The decision of Mysore Minerals (supra) has been followed in umpteen other decisions, a fact that the CIT(DR) cannot deny. The entire argument of the CIT(DR) implies the premise that the interpretation of the term owner for the purpose of Sec.32 of the Act by the Hon ble S.C. in Mysore Minerals (supra) is erroneous, without a single decision of a Larger Bench in support of the same. 5. Now coming back to Podar Cements (supra) , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen gone on to give the following finding: 30 Thus, the juristic principle from the view point of each one is to determine the true connotation of the term 'owner' within the meaning of section 22 of the Act in its practical sense, leaving the husk of the legal title beyond the domain of ownership for the purpose of this statutory provision. The reason is obvious. After all, who is to be taxed or assessed to be taxed more accurately - a person in receipt of money having actual control over the property with no person having better right to defeat his claim of possession or a person in legal parlance who may remain a remainder man, say, at the end or extinction of the period of occupation after, again say, a thousand years? The answer to this question in favour of the assessee would not merely be doing palpable injustice but would cause absurd inconvenience and would make the Legislature to be dubbed as being a party to a non-sensical legislation. One cannot reasonably and logically visualise as to when a person in actual physical control of the property realising the entire income and usufructs the property for his own use and not for the use of any other per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subject. (p. 361) e. The Hon ble S.C. affirmed the finding of the Patna H.C. at Para 35 39 by holding as follows: 34. The contrary view taken by the other High Courts was mainly based on the facts that unless there is a registered deed conveying the property, the person in possession/enjoyment of the property cannot be considered as legal owner and, therefore, he cannot be called upon to pay the tax under section 22. 35. The law laid down by this Court in R.B. Jodha Mal Kuthiala's case (supra), according to us, has been rightly understood by the High Courts of Punjab and Haryana, Patna, Rajasthan, etc. The requirement of registration of the sale deed in the context of section 22 is not warranted. 39. Accordingly, we hold that the views taken by the High Courts of Allahabad, Patna, Rajasthan, Punjab and Haryana are the correct views. The contrary view taken by the Delhi High Court is not correct. 6. Thus the reliance by the CIT(DR) on the decision of Podar Cements (supra) in grossly misplaced, more so because he has erred in ignoring the holding of the Hon ble S.C. at Para 53 which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) The Assessee has only purchased plant and machinery' devoid the building, civil work and other accompaniments that are vital to the operation of the same. The same therefore, proves the Revenue s contention that the Assessee never intended to us the assets. 5) The Assessee has thus acted in collusion with M/s. BSL, by entering into the SCBL arrangement as part of its modus operandi in order to further the business interests of the latter (since 1000 Crores was infused into the books of M/s BSL) as well as falsely inflate the value of the Assets in the books of the Assessee Co. in order to claim a huge depreciation. 6) The entire transfer is merely on paper, where the Assessee neither had the possession of the Assets or the infrastructure to utilise them. And thus, in the process, the Assessee Co. has incurred a colossal debt and huge interest expenditure, at no business advantage. 12.1. We find the Ld. CIT(A) confirmed the disallowance made by the A.O. on the ground that the assessee has arranged the transaction in a manner to avoid taxes by paying disproportionately high price for the assets having much lesser market value in order to claim depreciat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ured fund and non-fund based facilities from various Banks/Financial Institutions. Subsequently, as part of deleveraging exercise and decisions taken at the meeting of Lenders of BSL held on August 18, 2014, BSL was required to monetize four oxygen plants having capacity of 1200,1120,405 and 340 tons per day (TPD), which are part of Integrated Steel Facility at Mermandali, Odisha through 'Sale and Lease Back Arrangement'. The Lenders of BSL thereafter issued an NOC on February 21, 2015 permitting BSL to execute a Sale and Lease Back Agreement with the Assessee on the condition that interest over the lease for the Oxygen Plants shall be charged for the benefit of the Lenders. In pursuance thereof, BSL sold the Oxygen Plants situated at the Integrated Steel Facility to the Assessee viz., M/s. Brace Iron Steel Pvt. Ltd. We find, the assessee on February 26, 2015 entered into separate agreement with the Lenders to raise ₹ 850 Crores in debt to finance the acquisition of the Oxygen Plants and additionally ₹ 149 Crores were invested by SREI Infrastructure Finance Ltd. in the form of compulsory convertible debentures. In the form of equity, ₹ 1 Crore was invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being granted, the Lessee shall pay to the Lessor a monthly rent (not of all taxes and tax deduction at source), details of which are set out in Schedule 2 hereof, in arrears on or before 2 (two) business days prior to the last date of each month (Rent) . . . . Further, the Parties acknowledge that the above Rent is based on, among others, a benchmark rate (based on the cost of financing the purchase of the equipments by the Lessor) that has been agreed between the Parties prior to the date of execution of this Lease Agreement. .. 5.2. Notwithstanding anything contained in this Lease Agreement, the Lessee shall be liable to pay the Rent to the Lessor in accordance with the terms hereof with effect from the Han dover Date (Rent Commencement Date), and the Rent and other amounts payable by the Lessee in accordance with terms hereof shall always be paid in/ to the credit of the Lessor's Designated Bank Account. 6.3. Use and enjoyment (a) The Lessee shall, subject to making timely payments and compliance with the terms and conditions of the Lease Agreement, have quiet, peaceful use, enjoyment and possession of the Equipments without any interference from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial usage of the leased equipment worth over ₹ 1000 crores, without paying rent; 3.3. Owing to the non-payment respondent is unjustly enriching itself whereas the petitioner is suffering financially; 3.4. The respondent has security in form of possession of the Leased Equipment, the petitioner has no such security for ensuring payments of lease rentals; 4. On irreparable injury, it is stated that: 4.1. The non-payment has resulted in forced liquidity crunch for the petitioner; 4.2. This might lead to petitioner facing legal proceedings and damaged credit ratings; 4.3. In addition to the penal interest on account of moratorium opted due to non-payment by the respondent. 5. Relief sought is not final in nature and falls within the scope of Section 9 of the Act. Reliance is placed on Value Source Merchantile (supra), Friends Motels Pvt. Ltd. (supra), Supertrack Hotels Pvt. Ltd. (supra) and Sona Corporation India Pvt. Ltd. (supra). 6. Lease Rentals have been paid at the documented rate till February 2020. If the relief sought is not allowed, it would lead to an anomalous situation where a party would default in making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o threat of frittering away of the properties either before during the pendency of the Arbitration proceedings. 7. On merits, it is stated that: 7.1. The entire transaction was clearly not an arm's length but rather a friendly transaction which has led to payments of exaggerated amounts as lease rentals that were artificially fixed to meet the requirement of INR 1000 Crore (sale price), making it further into nature of a financial lease; 7.2. The same is mentioned in a SFIO Complaint and Investigation Report; 7.3. The fact that the Lease Agreement and Common Loan Agreement records existence of four Oxygen Plants and the admitted stand that the 340 TPD plant was always non-functional is further indicative that the transaction was not at arm's length; 7.4. It was while reviewing various contracts /transactions as per the Annual Reports of the Company after reviving the respondent that it was realized by the respondent that ₹ 18 Crore per month lease rental was not in accordance with the prevalent market standards but far in excess of it and negotiations were going on between the parties; 7.5. Clause 5.2, which imposes an uncondi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod ending March 31, 2020 and ₹ 18 Crores (net of all taxes and TDS) w.e.f. April 01, 2020, as per Clause 5.1 read with Schedule 2 of the Lease Agreement. Therefore, I find it apposite to reproduce Clauses 5.1, 5.2 and Schedule 2 of the Lease Agreement herein under: 5. RENT 5.1 In consideration of the Lease being granted, the Lessee shall pay to the Lessor a monthly rent (net of all taxes and tax deduction at source), details of which are set out at Schedule 2 hereof, in arrears on or before 2 (two) business days prior to the last date of each month (Rent). The Lessor and the Lessee may mutually decide to increase or decrease the prevalent Rent (and/or other payables) at any time during the subsistence of this Lease Deed. Further, the Parties acknowledge that the above Rent is based on, among others, a benchmark rate (based on the cost of financing the purchase of the Equipments by the Lessor) that has been agreed between the Parties prior to the date of execution of this Lease Agreement. In the event the benchmark rate changes or the Parties agree to change the benchmark rate/apply some other benchmark, the Rent payable may increase or decrease accordingly. Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent. In fact I note, the respondent on taking over the management of the BSL for the period between May 18, 2018 to February 29, 2020, had paid the lease rent to the petitioner and also deposited the GST with the public authority. 69. The dispute has arisen thereafter. According to Dr. Singhvi and Mr. Nigam (Counsels) the entire transaction leading to the lease agreement is not at arm's length. It was while reviewing various contracts / transactions as per an Annual Report of the company it was realised by the respondent that ₹ 18 Crores per month leased rental is not in accordance with prevalent market standard, but is far excess of it. 70. The submission of the Counsels was that Clause 5.2 of the Lease agreement read with clause 5.1 imposes an obligation on the parties to decide increase or decrease, the prevalent rent at any time during the subsistence of the Lease Agreement. In other words, they stated that the lease rent being at a higher side is required to be reduced. In fact, during their submissions, the Counsels had indicated that the respondent is ready to pay a lower amount including the GST to the authorities. 71. The plea of Mr. Sib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 41,79,48,852/- for the upkeep of the plants. 75. On the other hand, Mr. Sibal has contested the submission made by Dr. Singhvi and Mr. Nigam by stating that the respondent has been in effective possession, control and commercial usage of the oxygen plants and is responsible for the routine and operation costs of the Oxygen Plants and the Lenders in the appraisal memo have clearly noted that the routine maintenance and operation and maintenance charges are on the respondent. 76. Further, according to Mr. Sibal the entire bogey of alleged maintenance cost has been created as an afterthought pursuant to the joint inspection report dated November 20, 2019 conducted by the Lenders and the parties herein. The joint inspection report records that the respondent has admittedly not faced any issue regarding the usage of the Oxygen Plants as generation of oxygen was as per the requirements. That apart, the respondent has been deliberately causing obstacles for the petitioner to inspect the Oxygen Plants by providing information belatedly and that too operating the oxygen plants in deviation from the standard operation procedures. 77. And also, the plants are duly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said judgment has stated as under: 19. We are therefore of the opinion that while exercising the powers under Section 9 of the Act, the Court can certainly be guided by the principles of Order XV-A and Order XXXIX Rule 10 of CPC. The same view was expressed by another Division Bench of this Court in the case of Value Source Mercantile Ltd. (supra) . The relevant portion of the said judgment reads: 13. Section 9 of the Arbitration Act uses the expression interim measure of protection as distinct from the expression temporary injunction used in Order XXXIX Rules 1 2 of the CPC. Rather, interim injunction in Section 9 (ii) (d) is only one of the matters prescribed in Section 9 (ii) (a) to (e) qua which a party to an Arbitration Agreement is entitled to apply for interim measure of protection . Section 9(ii) (e) is a residuary power empowering the Court to issue/direct other interim measures of protection as may appear to the Court to be just convenient. Section 9 further clarifies that the Court, when its jurisdiction is invoked thereunder shall have the same power for making orders as it has for the purpose of and in relation to, any proceedings before it . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vague plea of equity. Similarly, in Sona Corporation India Pvt. Ltd. (supra) a coordinate Bench of this Court, guided by the Division Bench judgment in Supertrack Hotels Pvt. Ltd. (supra), has in paragraph 14 directed the respondents therein to pay the quarterly lease rent to the petitioner for the period commencing from March 01, 2018 till the date of occupation of the leased premises and the arears of rent within three weeks from the date of order. 82. Likewise, in Value Source Mercantile Ltd. (supra) as well a Division Bench of this Court, in paragraph 13 and 14 has held as under: 13. Section 9 of the Arbitration Act uses the expression interim measure of protection as distinct from the expression temporary injunction used in Order XXXIX Rules 1 2 of the CPC. Rather, interim injunction in Section 9(ii)(d) is only one of the matters prescribed in Section 9(ii) (a) to (e) qua which a party to an Arbitration Agreement is entitled to apply for interim measure of protection . Section 9(ii)(e) is a residuary power empowering the Court to issue/direct other interim measures of protection as may appear to the Court to be just convenient. Section 9 further clarifies th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale and Lease Back' transaction by relying upon an e-mail dated July 19, 2020 of the Vice-President of Accounts and Operation at SREI Equipment Finance Limited sent to the Manager, Finance Account of the respondent Company and also on the stand alone finance statement of the petitioner for the financial year 2017- 18 wherein at page 73 note 23 shows balance convertible is of INR 21.94 Crores and payable in INR 10.19 Crores from Bhushan Steel Limited subject to confirmation . 84. On the other hand, Mr.Sibal had contested the plea of the Counsels by stating that the statement on which reliance has been placed is neither unequivocal nor clear or categorical for it to be an admission. Rather, it is qualified by two factors 'balance convertible of ₹ 21,94,96,885/-' and 'subject to confirmation'. Further, the alleged claim of ₹ 10,19,91,600/- does not arise under the Lease Agreement and as such is not covered under the ambit of the present arbitral procedure. Even otherwise, it was his submission that the claim of ₹ 10,19,91,600/- is barred by limitation as it pertains to sale agreement 2015. 85. On this aspect of adjustment of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear that ₹ 18 crores being the contractual amount w.e.f April 01, 2020, the said amount is prima facie payable by the respondent atleast till such time the parties seek adjudication of the disputes as per the contractual provisions. 87. So, it is directed that the respondent shall pay the arrears of lease rent (net of all taxes / TDS), after adjusting the amount already paid, to the lead Lender Bank with applicable interest within six weeks from today. 88. This payment shall be subject to the outcome of the prospective arbitration proceedings. The aforesaid is a tentative view. It is made clear; this Court has only adjudicated the issue which fell for determination in this petition in terms of the prayers made. 89. The petition is allowed to the aforesaid extent. No costs. 12.4. From the above, it is clear that the various allegations of the A.O. as well as the arguments of the Ld. D.R. has been answered by the Hon ble Jurisdictional Delhi High Court treating the Lease Agreement as genuine and thereby directing the respondent i.e., Tata Steel BSL Ltd., who has acquired M/s. BSL to make the payment as per the terms of the very same Lease Agreement w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear ending 31.03.2015 that at Note-51 [ Page-141 of the paper book ] it has been categorically outlined the sold equipments [ being 04 oxygen plants with accessories ] as being taken-over by M/s. BSL under an Operating Lease for a period of 10 years from 26.02.2015. We, therefore, find merit in the arguments of the Learned Counsel for the Assessee that the assessee, in his capacity as the lessor-owner is entitled to claim depreciation under section 32 of the Income Tax Act,1961 which allows for depreciation on specified tangible assets and intangible assets, when such assets are owned, wholly or partly, by the assessee and are used for the purpose of its business or profession. 12.5.1. A perusal of the object clause of the Memorandum of Association of the Company shows that the assessee is in the business of leasing of assets. Since in the instant case the assessee owned the asset as per the Purchase Agreement Dated 23.02.2015 and has utilised such assets for the purpose of its business, therefore, the requirement of Section 32 stands satisfied notwithstanding the non-usage of these assets by the assessee itself as the section only requires that the assessee must use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ans uses for the purpose of business during the accounting year. The machine and plant must be such as were used atleast for a part of the accounting year. 12.5.8. We further find as per Explanation-4A of Section 43(1) of the I.T. Act, 1961, in the case of such SCBL transaction, the lessor [ New Owner ] is entitled to claim depreciation at the WDV of the assets in the hands of previous owner at the time of the sale. The Finance (No.2) Act of 1996 introduced Explanation (4A) to Section 43(1) of the I.T. Act to specifically address the issue of sale and lease back arrangement/transaction. We are of the considered opinion that the very mention of SCLB transaction in Explanation 4A is a recognition of the position that all sale and lease back transaction cannot be held to be motivated only for the tax evasion. In our opinion, tax planning means avoidance and not evasion of tax by planning the affairs within the four corners of the Law. In the instant case, we are of the considered opinion that the assessee has satisfied the ingredients of Section 32 read with Explanation 4A of Section 43(1) in order to qualify for claim of depreciation as per Law. We, therefore, are of the consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the A.O. that the assessee herein has purchased only oxygen plant devoid of building, civil work and other accompaniments is concerned, the same is also factually incorrect since the assessee in the instant case has purchased both oxygen plants and other related equipments and also other ancillary installation equipments which is clearly evident from Schedule-1 of the Asset Purchase Agreement Dated 23.02.2015 [ Paper Book 192 to 194 ] as well as from Schedule-1 of the Lease Agreement Dated 26.02.2015 [ Paper Book 331 to 337 ] . Therefore, the allegation of the Revenue on this count also fails. 12.5.12. We further find the A.O. has also failed to consider the fact that depreciation claimed either by BSL or the assessee under the SCLB transaction would amount to the same, showing that the situation is tax neutral. Therefore the assessee company cannot in any manner be accused of entering into the SCLB transaction with BSL as a tax evasion mechanism. 12.5.13. We, therefore, are of the considered opinion that the SCLB transaction in the instant case can in no manner be called as a device to avoid the payment of legitimate tax when both the intention and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r question rather than the nature of the claim. He, therefore, held that the payment of up-front fee does not qualify as business expenditure. In the preceding paragraphs while adjudicating the ground of disallowance of depreciation, we have already held the transaction being genuine and not a sham or paper transaction in the light of the decision of the Hon ble Jurisdictional Delhi High Court in the case of assessee s dispute with Tata Steel BSL Ltd., who acquired M/s. BSL. Therefore, the up-front fee of ₹ 1,10,82,175/- debited in the P L A/c on account of term loan taken by the assessee during the relevant year for acquiring the fixed asset as Plant is an allowable business expenditure. Accordingly, the Order of the Ld. CIT(A) on this issue is set aside and the Ground of Appeal No.7 raised by the assessee is allowed. 15. Ground No.8 of appeal relates to disallowance of interest expenditure of ₹ 1,62,10,881/-. 16. After hearing both the sides, we find the claim of interest expenditure of ₹ 1,62,10,881/- debited in the Profit Loss A/c was disallowed by the A.O. on the ground that assessee had not undertaken any business activity during the yea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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