TMI Blog2016 (2) TMI 1344X X X X Extracts X X X X X X X X Extracts X X X X ..... under such circumstances. One option is to allow the borrower to purchase the machinery and install it in his own land and pay the cost of the machinery on condition that the amount financed for the purchase of the machinery is repaid together with interest in equal monthly instalments.The second option available to a financier is to buy the plant and machinery in their own name and lease it out to the borrower. If the first option is exercised, the land owner gets title to the plant and machinery and the interest component of the equated monthly instalments is treated as revenue income for the financier. But the owner will claim depreciation on the machinery. If the second option is exercised, the financier claims depreciation, but tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AN For the Appellant : Mrs.Varthini Karthik for Mr.T.Ravikumar, Standing Counsel For the Respondent : Mr.R.Vijayaraghavan for M/s.Subbaraya Aiyar. COMMON JUDGMENT V.RAMASUBRAMANIAN, J These Tax Case Appeals filed by the Revenue, were admitted on 2.7.2008 on the following substantial question of law:- Whether in the facts and circumstances of the case, the Tribunal was right in allowing depreciation on a sale and lease back transaction relating to wind electric generators, where the assessee itself is not the owner of the land on which the generators have been installed, and hence cannot be treated as owner of the windmills? 2. We have heard Mrs.Varthini Karthik, learned counsel representing for Mr.T.Ravikuma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epreciation. The Commissioner of Income Tax (Appeals) also held that the ownership of the land is not a principal requisite for allowing depreciation. 7. The Revenue filed three appeals in ITA Nos. 1536, 1537 of 2004 and 441 of 2005 as against the order of the Appellate Commissioner. The Tribunal dismissed all the three appeals and restored the order of the Appellate Commissioner. Therefore, the Revenue is on appeal. 8. Admittedly, the assessee is in the business of hire purchase finance, leasing and allied activities and it is a non-banking finance company. The owner of the land on which the windmills were erected and installed wanted to set up a wind power generation unit. The owner approached the respondent/assessee for finance. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is not the case of the Department or the respondent herein that the respondent was in the business of generating power through windmills. There is no restriction by the Electricity Board that unless the applicant for the generation of wind power also owns the plant and machinery he would not be entitled to a license. 16. In other words, the Assessing Officer as well as the Tribunal misdirected themselves to the actual issue on hand, without realizing what is the income either from the land owner or from the financier depending each side of the table as per the terms of the financing agreement. The Revenue cannot claim revenue from both. Therefore, the question of law is answered against the Revenue and the appeals are dismissed. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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