TaxTMI 
TaxTMI 
2014 (8) TMI 799
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....preciation amounting to Rs. 18 Lakhs on Solar Generating System." 3. We have heard rival submissions and gone through facts and circumstances of the case. We find that the assessee company acquired Solar Cookers, Solar Water Heater and ancillary equipments from LG Auto Engineering Ltd. on the basis of hire purchase agreement dated 10.06.1995 and leased out the same to United Industries as per lease agreement dated 10.06.1995. Vide this tripartite agreement, it was agreed that the lease hire charges payable by the lessee to the assessee shall be directly paid to LG Auto Engineering Ltd. on account of settlement of customers by the assessee. This fact is not disputed and act was done by both LG Auto Engineering Ltd. and United Industries. The assessee claimed 100% depreciation on those assets as per prescribed depreciation rate as per I. T. Rule, 1962. The AO in the original round disallowed the claim of depreciation of the assessee and CIT(A) allowed the claim of assessee and deleted the disallowance on depreciation on the basis of clause 3 of Circular 9 of the CBDT. The matter went to ITAT and revenue's appeal was allowed vide ITA No. 2494/Kol/2003 dated 04.10.2004. Subseque....
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.... submissions of the assessee deleted the disallowance by observing in para 5.1 as under: "5.1. Ground No. 1 & 2: These grounds of appeal of the appellant are directed agaìnst the action of the AO in disallowing the assessee's claim of deprecìation amounting to Rs. 18 lacs on solar generating system by not following direction given by the Hon'ble ITAT in its order dated vide his order dated 28.12.06, passed for giving effect to the ITAT's order dated 28.02.2006." 4. We have considered the facts on record and the submissions put forth on behalf of the appellant. The ITAT vide order dated 28.02.2006 has set asíde the assessment and restored the matter back to the file of the A.O. for deciding the issue keep in mind the provisions of section 32 and the relevant rules, cìrculars and instructions on the point and the decisìoins of the Hon'ble Supreme Court in the case of McDowell and Azadi Bacho Andolan. The grìevance of the appellant is that while giving effect to the Tribunal's order, the Assessing Officer has not followed the directions of the Tribunal. Therefore, now, to begin with, the provisions of section 32 of th....
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....iation should be allowed to the lessor on the entire purchase price as per the agreement. Where the terms of the agreement provide that the equipment shall eventually become the property of the hirer or confer on the hirer an option to purchase the equipment, the transaction should be regarded as one of hire purchase. In such cases, the periodical payments made by the hirer should for tax purposes be regarded as made up of: Consideration of hire, to be allowed as a deduction in the assessment, and Payment on account of purchase to be treated as capital outlay, depreciation being allowed to the lessee on the initial value (i.e. the amount for which the hired subject would have been sold for cash at the date of agreement). The allowance to be made in respect of hire should be the difference between the aggregate amount of the periodical payments under the agreement and the initial value, the amount of this allowance being spread evenly over the term of the agreement." A commercial asset capable of being exploited by more than one person will remain a commercial asset even if it is temporarily put out of use or hired out -- CIT v. Hindusthan Alluminium Corporaton Ltd. [198....
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.... did not hold the field because of the changing scenario. In Union of lndia & Another vs Axadi Bachao Andolan & Another [2003] 184 CTR 450 (SC)/(2003) 263 ITR 706 (SC) (Judgment dated 7/10/2003), the conclusion reached by the Hon'ble Supreme Court is as under: "An Act is otherwise valid in law cannot be treated as non est merely on the basis of some underlying motive supposedly resulting in some economic detrìment or prejudice to the national interests; not only is the principle in Duke of Westminister alive and kicking ìn England, but it also seems to have acquired judicial benediction of the constitutional Bench in India notwithstanding the temporary turbulence created in the wake of McDowell." On the facts and in the circumstances of the case, and the emerging legal position, I hold that the Assessing Officer was not justified in rejecting the assessee's claim of depreciation amounting to Rs. 18 lacs on solar generating system vide his order dated 28.12.06, passed for giving effect to the ITAT's order dated 28.02.2006. The Assessing Officer is directed to allow the same in accordance with the provisions of sec. 32 and corresponding Rule under s....