Bogus lease transaction cannot support business loss deduction after final factual finding that no genuine transaction occurred.

A business loss deduction cannot be claimed on the basis of a transaction that has already been finally found to be bogus. The earlier concurrent finding that the alleged purchase and lease arrangement never took place, and that the depreciation claim rested on a fictitious transaction, had attained finality because the assessee did not pursue that challenge. Later reliance on settlement papers, alleged payment, or rental adjustments could not reopen the same sham transaction or create a legally sustainable loss. The additional documents did not prove a genuine lease or any actual business loss, and the Tribunal's acceptance of the claim was held to be unsupported by the record.

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Issues: Whether the assessee was entitled to claim deduction of business loss arising from the alleged lease transaction, when the earlier finding that the purchase and lease arrangement were bogus had become final.

Analysis: The earlier authorities had concurrently found, on the evidence, that the alleged purchase of equipment and lease arrangement never took place and that the claim for depreciation was based on a fictitious transaction. The assessee did not pursue the challenge to that finding before the Tribunal, so the finding attained finality. In that situation, the assessee could not reopen the same transaction by relying on a later claim of settlement, alleged payment, or rental adjustments to manufacture a business loss. The additional documents produced did not establish any genuine transaction or any legally sustainable loss, and the Tribunal's acceptance of the claim was held to be unsupported by the record and therefore perverse.

Conclusion: The assessee was not entitled to deduction of business loss on the alleged lease transaction, and the Revenue succeeded on the substantive question.

Ratio Decidendi: A deduction for business loss cannot be allowed on the basis of a transaction which has been finally found to be bogus and never proved to have occurred.

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