Fresh lease agreements after genuine ownership change cannot be denied tax approval merely for resembling earlier contracts.

Approval under Section 10(15A) could not be refused merely because new lease terms resembled earlier agreements where the aircraft ownership had genuinely changed and the earlier arrangements had been terminated for commercial necessity. The rejection order was found to lack a cogent legal basis and was set aside, resulting in approval of the fresh lease agreements. On refund, the petitioners were required to make the appropriate application, and the authority was directed to process it expeditiously. The prior refusal did not bar reconsideration and grant of the substantive relief once the rejection was quashed.

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Issues: (i) Whether the rejection of the application for approval under Section 10(15A) of the Income-tax Act, 1961 was sustainable; (ii) whether the petitioners were entitled to approval of the lease agreements dated 18.10.1999 and consequential refund relief.

Issue (i): Whether the rejection of the application for approval under Section 10(15A) of the Income-tax Act, 1961 was sustainable.

Analysis: The fresh lease agreements were executed after a genuine change in ownership of the aircrafts. The earlier arrangements had been terminated and the new leases were entered into between the new owner and the lessee for commercial necessity. The mere similarity of terms with the prior lease agreements did not justify treating the later agreements as a device to obtain unintended tax benefit. The reasons recorded in the impugned order were held to be unsustainable and lacking proper basis.

Conclusion: The rejection was not sustainable and was set aside in favour of the assessee.

Issue (ii): Whether the petitioners were entitled to approval of the lease agreements dated 18.10.1999 and consequential refund relief.

Analysis: Once the rejection order was set aside, there remained no valid ground to refuse approval under Section 10(15A) of the Income-tax Act, 1961. The earlier refusal of relief in the prior round did not bar grant of the substantive relief after reconsideration. As to refund, the Court directed the petitioners to make the appropriate application and required expeditious processing by the authority.

Conclusion: Approval was directed to be granted, and refund relief was left to be processed on application before the appropriate authority.

Final Conclusion: The impugned rejection could not stand, the petitioners were held entitled to approval under Section 10(15A), and the writ petition was disposed of with consequential directions regarding refund processing.

Ratio Decidendi: Where a fresh lease is genuinely necessitated by a change in ownership, approval under a tax exemption provision cannot be denied merely because the new agreement resembles the earlier one; rejection must rest on cogent and legally sustainable reasons.

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