TaxTMI 
TaxTMI 
2012 (5) TMI 287
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....he lease transactions as genuine as far as the assessee was concerned? (iv) Whether on the facts and in the circumstances of the case, the Tribunal was right in permitting depreciation as claimed when the value of the asset could only be the written down value in the books of the seller as per explanation 3 to Section 43(1)? Assessment year 1995-96 relates to the reopening of assessment under Section 147 of the Income Tax Act and the assessment for other two assessment years are under Sections 143(1)(a) and 143(3) of the Income Tax Act respectively. 3. The facts leading to the grant of depreciation and subsequent withdrawal are as follows: The assessee herein purchased igni-fluid boiler from its sister concern M/s.Ponni Sugars Limited. It is seen from the minutes of the meeting of the Board of Directors of M/s.Ponni Sugars and Chemicals that the said company had gone for sale of the boilers to meet a portion of the cash loss and other financial commitments of the said company. It is seen from the facts herein that the total consideration for the sale of the said igni fluid boiler was Rs.250 lakhs. The date of sale was 10.3.1995. The assessee is said to have parted with ....
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....eased out property was given. The first appellate authority pointed out that in the course of the original assessment proceedings, details relating to the sale and lease back transactions were furnished and that there was nothing on record to indicate that the Assessing Officer had consciously applied his mind on the issue of allowability of depreciation and consciously took a decision to allow depreciation on the same. Thus the first appellate authority viewed that when there had been an appraisal of the facts by the Assessing Officer subsequent to assessment, it could not be considered as a change of opinion. Thus the first appellate authority rejected the claim of the assessee on the aspect of jurisdiction to reopen the assessment under Section 147 of the Income Tax Act. 6. On the question of the claim of depreciation on ignifluid boiler, the first appellate authority pointed out that the assessee is principally engaged in a high technology area of manufacture of sophisticated high voltage batteries used in missiles, air crafts, etc. The business of leasing was subsequently incorporated in the year 1990. As regards the transaction that had been put through, the first appellat....
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.... apart from others. The Tribunal pointed out that when the fact relating to the sale and the subsequent financial agreement, hire purchase agreement as well as leasing transaction had all been placed before the financial institutions for their clearance and when the assessee had obtained clearance from I.C.I.C.I. for the transaction, it was difficult to come to the conclusion that the transaction was only a sham transaction to benefit the assessee. Thus the Tribunal viewed that in the absence of any material, either direct or circumstantial, to show that the transactions were sham documents, it was difficult to accept the view of the Commissioner of Income Tax (Appeals) as well as the Revenue's contention. Thus on the ground that the Revenue had failed to prove that the transaction was a colourable one, the Tribunal allowed the appeals of the assessee. Aggrieved by the same, the Revenue is on appeal before this Court. 8. As far as the reopening of the assessment for the assessment year 1995-96 is concerned, the law on the scope of Section 147 is well laid down. In the recent decision reported in [2010] 320 ITR 561 (Commissioner of Income Tax (Appeals) Vs. Kelvinator of India Ltd....
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....nd its omission from section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression 'has reason to believe' in place of the words 'for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new section 147, however, remain the same." Keeping this declaration of law in the background, when we look at the original assessment made and the documents filed by the assessee, it is clear that the document on the hire purchase of the machinery entered into on 10th March 1995 and the subsequent lease agreement dated 13th of March 1995 were very much before the Assessing Authority while considering the claim of depreciation. When we look at the reassessment order dated 24.3.2000, in paragraph 4 of the order, the Assessing Authority pointed out as to the perusal of the details in the records as well as the assessee's letter dated 24.3.2000 in reply to the original assessment. As rightly pointed out by the learned counsel appearing for the assessee/respondent herein, the assessment order nowhere points....
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....t between the assessee and Wipro Finance Limited. As already pointed out, the total consideration of the purchase of the material was Rs.250 lakhs, for which the assessee had paid a sum of Rs.50 lakhs and the balance of Rs.200 lakhs was financed by M/s.Wipro Finance Limited. As far as this transaction is concerned, a perusal of the same shows that the records were available before the Assessing Authority at the earliest of the transactions which related to the assessment year 1995-96 and there is nothing on record to show that the transaction had not gone through between the assessee and M/s.Wipro Finance Limited. The only ground on which the Revenue seeks to question this agreement is the minutes of the meeting of the Board of Directors of M/s.Ponni Sugars and Chemicals Limited where there is a reference to the sale of the machinery to meet the financial needs of the said company. The monthly payment by the assessee to M/s.Wipro Finance Limited was to be met by the rental dues payable by M/s.Ponni Sugars and Chemicals Ltd. to M/s.Wipro Finance Limited, being made to meet the monthly payment of the assessee company to M/s.Wipro Finance Limited. The Revenue laid stress on this aspec....
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....McDowell case and Union of India Vs. Azadi Bachao Andolan reported in (2004) 10 SCC 1 or McDowell case and Mathuram Agarwal Vs. State of Madhya Pradesh reported in (1999) 8 SCC 667. The Apex Court pointed out that the task of the Revenue/Court is to ascertain the legal nature of the transaction and while doing so, it has to look at the entire transaction as a whole and not to adopt a dissecting approach. The Apex Court pointed out that "the Revenue cannot start with the question as to whether the impugned transaction is a tax deferment/saving device but that it should apply the "look at" test to ascertain its true legal nature (See Craven v. White (supra)) which further observed that genuine strategic tax planning has not been abandoned by any decision of the English courts till date." 12. Thus, affirming the view taken in McDowell case, the Apex Court pointed out that colourable devices cannot be a part of tax planning. The Apex Court pointed out that it cannot be said that all tax planning is illegal/ illegitimate/impermissible. Applying the rationale of this decision to the case on hand, in the absence of any material to pronounce on the genuineness of the transaction herein,....