TaxTMI 
TaxTMI 
2012 (9) TMI 221
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....ces on record. The Assessing Officer has not given such finding. 3. The CIT(A) erred in not allowing depreciation claimed of Rs. 17,89,382/- on the LPG Cylinders ignoring the fact that the cylinders were under use for the purpose of business of the appellant. 3. Brief facts are that the assessee was carrying on the business of LPG. While computing the profit the assessee claimed 100% depreciation on cylinders used for filling LPG. The Assessing Officer initially processed the return u/s. 143(1) of the Act. Subsequently, however, assessment was reopened u/s. 147. The Assessing Officer ultimately completed the assessment disallowing depreciation claimed by the assessee on the cylinders on the finding that the ownership of the cylinders has been transferred from the assessee. The Assessing Officer by following the CIT(A) order for the A.Ys. 1994-95 and 1995-96 came to a conclusion that the entire transaction is a sham one created for avoidance of tax. The assessee challenged the assessment in appeal before the CIT(A). Having failed to get relief before the CIT(A), the assessee agitated its claim by filing appeal before the ITAT. The ITAT Hyderabad Bench in its order dated 28.12.200....
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....shall be given on loan, the rate of security deposit per cylinder, purchase details of the cylinder, etc. In response to the queries made by the CIT(A) the assessee furnished the details. The assessee also contended that when a customer wants gas he brings the empty cylinder to the assessee and the assessee fills gas in the cylinder on payment of charges for the gas. The assessee submitted that the cylinders are either in possession of the concerns to whom it was given against security deposit or with the customers. The CIT(A) after considering the contentions of the assessee observed that gas cylinders were purchased from M/s. Ideal Engineers Hyderabad Pvt. Ltd. in the name of M/s. Kabson Controls. The CIT(A) found from the purchase invoices that nothing has been mentioned against column "documents RR/LR/through". Similarly nothing has been mentioned against packing and delivery charges. No mention has also been made regarding transportation of the cylinders. On the basis of the aforesaid facts the CIT(A) concluded that the assessee has merely procured the cylinders from a related concern and has also procured the invoices. The CIT(A) refused to accept the fact that the assessee h....
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....ually purchased the cylinders, then depreciation has to be allowed to the assessee in view of the ITAT Special Bench decision in the case of Detective Devices Pvt. Ltd. reported in 22 ITD 9. The learned AR referring to pages 11 to 46 of the Paper Book contended that the purchase invoices clearly establish the fact that the assessee had purchased the cylinders. Referring to the delivery challan and gate pass which are at pages 87 to 131, the learned AR contended that they prove purchase of cylinders by the assessee. Referring to the subscription vouchers, the learned AR contended that the cylinder always remains the property of the assessee which is given on loan against security deposit and security deposit has to be refunded on surrender of cylinder along with subscription vouchers. The learned AR submitted that though the Assessing Officer on the basis of evidences produced before him has apparently accepted the fact that the assessee has purchased the cylinders, he nevertheless disallowed depreciation on them on an incorrect finding of fact that the assessee has transferred ownership of the cylinders to the other concerns or the customers. The learned AR contended that when the ....
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....cision of the CAT(A) for asst. years 1994~95 and 1995-96, the AO came to the conclusion that the entire transaction was a pre-designed scheme which served no business purpose apart from avoidance of tax. From the orders of the AO and the CIT(A), it is clear that no investigation or enquiry was made with regard to the claim of the assessee towards purchase of cylinders for the asst. years under consideration. No doubt, for asst. years 1994-95 and 1995-96, after detailed enquiry with regard to purchase of cylinders, the lower authorities found that the entire transaction was a sham one for avoidance of tax. This Tribunal also found that the entire transaction was sham and, therefore, the, assessee is not entitled for deprecation. It is well settled principle of law that each assessment year is separate and distinct. Therefore, when the assessee specifically claims that he purchased cylinders for the asst. years under consideration, the AO is bound to examine and find out whether the assessee in fact purchased cylinders and supplied the same to the customers as claimed. Instead of making such enquiry, the AO simply applied the conclusion drawn by the CIT(A) for asst. years 1994-95 an....
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....lished the fact of purchase of cylinders. The Assessing Officer in the assessment order has observed that M/s. Kabson Controls is a proprietary concern of the assessee. Purchase invoices at pages 11 to 46 of the Paper Book indicate that cylinders have been purchased by M/s. Kabson Controls from the manufacturing concerns. Delivery challan along with gate pass placed at pages 87 to 131 show that the cylinders were consigned to M/s. Kabson Controls. The purchase of cylinders has also been reflected in the books of the assessee which is evident from the ledger extract at pages 47 to 51 of the Paper Book. After thoroughly examining all these evidences produced before him the Assessing Officer accepted the fact that the assessee has purchased the cylinders. Even on the face of such evidences produced by the assessee, the CIT(A) on the basis of some irrelevant considerations like certain columns in the invoices kept blank, came to a conclusion that the assessee had not purchased the cylinders but has procured the invoices from the sellers which the CIT(A) alleges to be a sister concern of the assessee. In our view such a finding of the CIT(A) is merely on doubt and suspicion without bein....