Dy C I T Asstt vs Paramount Pollution Control Ltd Opponents

Revenue is in appeal against judgement of the Tribunal dated 6.10.99. At the time of admission of the appeal, this Court framed following substantial questions of law : "Whether, on the facts and in the circumstances of the case, the ITAT was justified, on a finding that the transaction was genuine, in not invoking the ratio of McDowell's case (154 ITR 148) in respect of purchase of 59,097 electric meters by the assessee from Rajasthan State Electricity Board for a sum of Rs. 3,20,15,905/- and leasing them back to the Board on hire purchase basis, and whether on such facts depreciation could have been allowed to the assessee?"

1. It is not necessary to discuss the facts in detail in view of the fact that the issue is covered against the Revenue by virtue of decision of this Court dated 4.3.2009 in Tax Appeal No.365/1999. We say so because in the impugned judgement the Tribunal had placed reliance in case of Unimed Technologies P. Limited which decision of the Tribunal was the subject matter of challenge at the hands of Revenue in Tax Appeal No.365/1999. Such appeal came to be dismissed by the Division Bench o this Court in the following manner :

“(1) At the time of admission on 22.11.1999 following three questions were formulated by the High Court as substantial questions of law:

1. Whether the Tribunal has erred in holding that the principle laid down in Mcdowel's case will not apply?

2. Whether the Appellate Tribunal is right in law and on facts in not appreciating that the transaction between the assessee­RSEB and ITC Bhadrachalam were sham transactions?

3. Whether the Appellate Tribunal is right in law and on facts in holding that the assessee being a hire purchaser is entitled to depreciation?

(2) The Assessment Year in question is 1995­96. In the assessment framed under Section 143(3) of the Income­tax Act, 1961 the Assessing Officer disallowed the claim of depreciation @ 100% claimed by the assessee on the ground that the transactions between Rajasthan State Electricity Board, ITC, Bhadrachalam Finance and Investment Limited and the assessee were not genuine transactions. The matter was carried in appeal by the assessee where Commissioner (Appeals) confirmed the findings of the Assessing Officer. In Second Appeal the Tribunal, vide its order dated 16.04.1999, held that the transactions were genuine and the assessee was entitled to depreciation as claimed.

(3) It is not necessary to set out the detailed reasons recorded by the Tribunal as it is common ground between the parties that the issue now stands concluded by order dated 10.09.2008 rendered in Tax Appeal No.444 of 2008 in the case of The Commissioner of Income Tax­Ahmedabad­II Vs. Gujarat Gas Co. Ltd., wherein identical issue was involved and the Tribunal's order has been upheld by the High Court. During course of hearing the learned counsel for the appellant­revenue submitted that the Assessing Officer having not processed the claim of depreciation on merits, the Assessing Officer must be directed to grant depreciation on written down value of the assets in question.

(4) In light of the aforesaid order dated 10.09.2008 it is held that the transactions were genuine transactions and the Tribunal has not committed any error in allowing claim of depreciation. All the three questions stand answered accordingly. The Assessing Officer shall now process the claim of depreciation in accordance with law. The appeal stands dismissed accordingly with no order as to costs.”

2. In the result, this Tax Appeal also deserves to be and hereby dismissed.

(Akil Kureshi,J.) (Harsha Devani,J.) (raghu)