TaxTMI 
TaxTMI 
2014 (11) TMI 1087
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....issue on legality pertaining to reopening of the assessment under section 148. 4. Since the facts are identical, we are proceeding with assessment year 1994-95, being the lead year ITA No. 3991/Mum/2009 : Assessment Year : 1994-95 : Assessee's Appeal : 5. The following grounds are taken by the assessee: "The Appellant objects to the impugned order dt. 15.06.2009 of the Commissioner of Income Tax (Appeals) (hereinafter referred to CIT(A) u/s 253 of the Income tax Act, 1961 on the following amongst other grounds, each of which is in the alternative and without prejudice on others: 1. The CIT(A) erred in disallowance of depreciation of Rs. 61,51,89,421/- in respect of leased assets. 2. The CIT(A) failed to appreciate that Assessing Officer in its Remand Report dated 27th April 2007 had after thorough examination of the facts of the present case, gave a finding that it had justified the tests laid down in the case of Special Bench Mid East Portfolio Management Ltd and ICICI Ltd and depreciation on the leased assets was allowed only after verifying the depreciation claim afresh. 3. The CIT(A) erred in relying on the other of assessment Year 1....
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....to the file of the AO for de novo assessments. 11. In the second round, the assessment was framed ex parte because of certain reasons, which were sorted out in appeal before the CIT(A), wherein, the CIT(A) called for Remand Report from the AO, which included the reasons for non attendance and non compliances before the AO. The CIT(A) also sought analysis of merits in the remand proceedings. 12. The AO, sent the remand report, giving details of facts involved in the years, which are impugned before us as well as on legality for reopening in assessment year 1994-95. 13. The primary and solitary issue as raised before us is whether the assessee is eligible for the claim of depreciation in case of assets put on lease, and, have entered sale and lease back agreement with its clients. 14. The main argument of the revenue authorities in both types of agreements had been that the assessee had merely financed its clients, and gave it a colour of lease. The assessee did not have any legal or beneficial right over those assets. 15. Since the issue could not be examined at the AO stage, because of non attendance of the assessee's representation, the CIT(A) called for the remand ....
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....tioned that confirmations had been received by the department from the lessees that they have not claimed depreciation and also in some cases, assets had been repossessed and sold the same to third parties in the cases of lease. 19. The AR submitted that if these facts are taken into consideration, along with the factum of issue of claim of depreciation, would not have any hindrance. 20. The AR on the issue of sale of lease back transactions has relied on the decision of CIT vs Cosmos Films Ltd., reported in 338 ITR 266, Mumbai ITAT orders in the case of DCB vs DCIT, in ITA No. 3000/Mum/2001, SICOM in ITA No. 7901/Mum/2003, L&T in ITA No. 2200/Mum/2001 and by the Hon'ble Supreme Court in the case ICDS Ltd. vs CIT, CA no. 3282 of 2008, wherein it has been observed at page 16 Para 19, "19. We may now advert to the first requirement i.e. the issue of ownership. No depreciation allowance is granted in respect of any capital expenditure which the assessee may be obliged to incur on the property of others. Therefore, the entire case hinges on the question of ownership; if the assessee is the owner of the vehicles, then he will be entitled to the claim on depreciation, othe....
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....d that the issue is fully covered and therefore the appeal must be allowed. 22. The DR relied on the orders of the revenue authorities. 23. We have heard the arguments at length and have also considered the case laws cited before us. The factum of repossession of equipment has not been disputed by the revenue authorities. This clearly means that lessee is not the owner and that the lessee has not claimed depreciation. This clearly shows that lessor is the owner and it is he who can make the legal claim for ownership and depreciation. 24. We, therefore are of the considered view that despite the fact that the complete facts were before the CIT(A), the CIT(A) either did not consider them or that he did not go into the facts, which were brought out by the AO in the remand report. We further hold that there was no question of sham transaction, because, the assessee was dealing with corporates as well as State Government agencies. In these circumstances, the claim of the assessee cannot be held to be sham and have to be taken to be genuine, and therefore allowable. 25. Since all the grounds of appeal are connected to these two issues, we allow all the grounds. 26. In the ....