Sale-cum-lease back arrangements found genuine; lease rent deduction sustained and tax additions deleted.

Sale-cum-lease back transactions were held not to be sham or colourable devices where the machinery and electrical equipment were identified, consideration had been received, and symbolic delivery under the agreements was treated as valid delivery for movable goods. The Tribunal's finding that the arrangements were entered into at arm's length to raise funds at a lower rate, and that no lack of genuine consideration was shown, was not found perverse. In that factual setting, the Tribunal was justified in allowing the lease rent claim and deleting the Assessing Officer's additions. The discussion also referred to Explanation 4A to Section 43(1) as a provision aimed at curbing higher depreciation claims in sale and re-acquisition type arrangements.

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Issues: Whether the sale-cum-lease back transactions were sham or colourable devices, and whether the Tribunal was justified in allowing deduction of lease rent and deleting the additions made by the Assessing Officer.

Analysis: The Tribunal found that the machinery and electrical equipment were identified, consideration had been received, and symbolic delivery under the agreements amounted to valid delivery for movable goods. It held that the transactions were entered into at arm's length to raise funds at a lower rate, and that the facts did not show any sham arrangement or transaction lacking genuine consideration. The Court found that these factual findings were not perverse. It also noted the statutory context of Explanation 4A to Section 43(1), which was introduced to curb higher depreciation claims by lessors in sale and re-acquisition type arrangements.

Conclusion: The sale-cum-lease back transactions were not shown to be sham or non-genuine, and the Tribunal was justified in allowing the lease rent claim and deleting the additions.

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