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of <h1>Court rules in favor of assessee on depreciation in sale and lease back; dismisses appeal citing lack of substantial legal question.</h1> <h3>COMMISSIONER OF INCOME TAX Versus SANDESH LTD</h3> The Court held in favor of the assessee regarding the allowability of depreciation on Plant and Machinery in a sale and lease back transaction, citing ... Depreciation on Plant and Machinery - sale and lease back transaction - Deprecation on motor buses leased out to Ahmedabad Municipal Transport Services @ 40% as against @ 20% - Held that:- whether the transaction of leasing out electrical equipments to Rajasthan Electricity Board is genuine or not is based on appreciation of evidence on record as found by the Tribunal by referring to the various documents like invoice etc. In absence of any evidence to show anything to the contrary no legal infirmity exists in the impugned order of the Tribunal so as to give rise to any question of law - Decided against the revenue. Issues:1. Allowability of depreciation on Plant and Machinery in a sale and lease back transaction.2. Allowability of depreciation on motor buses leased out to Ahmedabad Municipal Transport Services.Analysis:1. The first issue revolves around the allowability of depreciation on Plant and Machinery in a sale and lease back transaction. The Tribunal had allowed the depreciation, considering the transaction as merely a financing arrangement. The Court referred to previous judgments where similar issues were decided in favor of the assessee. The Court cited cases such as CIT vs. Gujarat Gas Company Limited and Commissioner of Income Tax vs. Sandesh Limited to support its decision. The Court emphasized that the transaction was genuine based on the evidence on record, and no legal infirmity existed in the Tribunal's order. Consequently, the Court held this issue in favor of the assessee, dismissing the appeal and stating that no substantial question of law arose.2. The second issue pertains to the allowability of depreciation on motor buses leased to Ahmedabad Municipal Transport Services. The Assessing Officer had allowed depreciation at 20%, while the Appellate Tribunal allowed it at 40%, deleting the disallowance of depreciation amounting to Rs.11,553/-. However, due to the insignificance of the amount involved, the Court did not delve into this issue in detail. Since no substantial question of law arose from this matter, the Court dismissed the Tax Appeal without providing separate reasons for this issue.
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