Commissioner Of Income Tax vs The Investment Trust Of India Ltd. on 11 August, 2009

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH


                                       ITA No. 224 of 2009 (O&M)
                                       Date of decision: 11.8.2009


Commissioner of Income Tax, Chandigarh-II
                                                     ......Appellant
                                Vs.

The Investment Trust of India Ltd.,Chennai
[now M/s HFCL Infotel Ltd. Mohali]
                                                      ...Respondent


CORAM:- HON'BLE MR.JUSTICE ADARSH KUMAR GOEL
        HON'BLE MRS.JUSTICE DAYA CHAUDHARY


PRESENT: Ms.Urvashi Dhugga, Standing Counsel for Revenue.
                          ****


ADARSH KUMAR GOEL, J. (Oral)

1. The revenue has preferred this appeal under Section 260A of the

Income Tax Act, 1961 (for short, “the Act”) against the order of Income Tax

Appellate Tribunal, Chennai Bench-A in ITA No. 122 /Mds/99 dated

19.5.2006, for assessment year 1994-95, proposing to raise the following

substantial question of law:

” Whether the Hon’ble ITAT is

justified in law in allowing

depreciation on an asset which is

claimed to be purchased and leased

back to the seller whereas the

purchase and lease back transaction is

on papers only just to avoid tax by

adopting colourable device/dubious
ITA No. 224 of 2009 [2]

methods.”

2. The assessee claimed depreciation on Biogas Generating

System, which was leased out. The business of the assessee was to invest

in the machinery and to earn income by leasing out of the same. The

Assessing Officer rejected the claim on the ground that the machinery

which was claimed to have been leased out never existed. This finding was

reversed by the CIT(A) by holding that the delivery was proved to have

taken place and claim for depreciation was permissible in view of the

judgment of the Hon’ble Supreme Court in CIT v. Shann Finance Pvt.

Limited, 231 ITR 308. The Tribunal affirmed the finding of CIT(A).

3. Only contention raised by learned counsel for revenue is that

the assessee purchased and leased some machinery to the seller, which was

only a paper transaction to avoid tax by adopting colourable device.

4. In view of the findings concurrently recorded by the CIT(A) as

well as the Tribunal that the assets were delivered to the assessee and

thereafter the assessee leased out the same, we are unable to hold that the

question proposed can be held to be a substantial question of law.

5. The appeal is dismissed.

                                                (ADARSH KUMAR GOEL)
                                                        JUDGE




                                                   (DAYA CHAUDHARY)
August 11, 2009                                          JUDGE
raghav

Note: Whether this case is to be referred to the Reporter? ……..Yes/No
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ITA No. 224 of 2009 [4]