TMI Blog2009 (2) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the appellant (assessee) is not entitled to claim depreciation under Section 32(1)(ii) of the Income-tax Act, 1961 ("1961 Act" for short) in respect of two separate transactions dated 15.2.1991 and 15.3.1991. The impugned judgment has been rendered in respect of Assessment Year 1991-92 (corresponding to the previous year ending 31.3.1991). (A) Facts Regarding Lease dated 15.2.1991 (Transaction No. I): 3. Before coming to the facts, the following is the relationship between the parties: - M/s Glass Ceramic Decorators was the manufacturer of soft drink bottles. - Assessee was the `lessor'. - M/s Coolade Beverages Pvt. Ltd. was the `lessee'. 4. During the relevant assessment year, the assessee carrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only a financial arrangement and not a Lease, hence, ITAT dis-allowed the depreciation claim of the assessee which finding stood confirmed by the impugned judgment, hence this Civil Appeal. 5. At this stage, it may be noted that out of the total claim for depreciation of Rs. 1,80,30,489/- (in respect of both the transactions), as claimed by the assessee, the AO disallowed depreciation of Rs. 18,04,572/- in respect of the First Transaction and depreciation of Rs. 30,17,122 under the Second Transaction. In all, she disallowed depreciation of Rs. 48,21,694/- in the first round. In other words, the AO allowed depreciation in respect of both the transactions amounting to Rs. 1,32,08,795 as against the claim of Rs. 1,80,30,489/-. Findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s case the CIT(A) had remitted the matter to the AO who on remand came to the conclusion that all 5,46,000 bottles stood sold before 31.3.1991. This finding of fact has become final. It has not been challenged. Hence, the Department has erred in disallowing depreciation of Rs. 18,04,572/-. (B) Facts Regarding Lease dated 15.3.1991 (Transaction No. II): 8. Before coming to the facts, the relationship of the parties, namely, stated: - Assessee was the `lessor' - M/s Aravali Leasing Ltd. was the `lessee' - M/s Unikol Bottlers Ltd. was the `sub-lessee' - M/s Arizona Printers Packers was the `manufacturer' of the bottles 9. On 15.3.1991, lease was executed between the assessee as l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ock-out/closure in its factory at the relevant time. According to the assessee, the evidence of the manufacturer, M/s Arizona Printers, clearly shows that bottles were manufactured before 31.3.1991 and they were delivered to M/s Unikol Bottlers directly by them. According to the said evidence of the manufacturer, the transport bills were supposed to be with M/s Unikol Bottlers, who were responsible for payment thereof. Learned counsel appearing for the assessee relied upon the evidence of M/s Arizona Printers at pp. 105-106 of the SLP paper book to show that, according to M/s Arizona Printers, the bottles were delivered directly to the sub-lessee, M/s Unikol Bottlers. Reliance was also placed on the "use certificate" furnished by M/s Uniko ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase precedes the lease dated 15.3.1991 between the assessee (lessor) and M/s Aravali Leasing (lessee). As rightly questioned by the AO as to how M/s Aravali Leasing (lessee) could have entered into a sub-lease in favour of M/s Unikol bottlers on 8.3.1991 when it had not acquired leasehold rights till 15.3.1991 from the assessee as the lessor. Moreover, there is nothing in the alleged lease deed dated 15.3.1991 indicating commencement of the lease from a prior date. There is nothing in the so-called lease dated 15.3.1991 as to the arrangement between the parties prior to 15.3.1991. There is nothing in the so-called lease dated 15.3.1991 indicating any prior practice as submitted on behalf of assessee. On the contrary, the so-called le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the transaction had not been proved by the assessee. In the circumstances, there is no question of the matter being remitted, as prayed for. Consequently, the AO was right in coming to the conclusion that transaction dated 15.3.1991 was not proved and that the assessee was not entitled to claim depreciation of Rs. 30,17,122/- in respect of the second transaction. 13. In conclusion, we delete the disallowance of depreciation of Rs. 18,04,572/- under the First Transaction but we disallow the depreciation of Rs. 30,17,122/- under the Second Transaction. 14. Accordingly, the civil appeal filed by the assessee is partly allowed with no order as to costs. .........................J. (S. H. K ..... X X X X Extracts X X X X X X X X Extracts X X X X
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