TaxTMI 
TaxTMI 
2021 (8) TMI 688
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.... 2015-2016 that the said asset was put to use on 24.02.2020. He, therefore, asked the assessee to substantiate its claim of depreciation by way of adequate documentary evidences. 2.1. The assessee, in response to the same, submitted that it had purchased the plant and machinery i.e., Oxygen Plant from M/s. Bhushan Steel Limited ["M/s. BSL" in short] at an amount of Rs. 952,50,00,000/- during the year under consideration. The assessee filed an "Agreement to Transfer Certain Equipments" executed by the assessee with M/s. BSL on 23.02.2015. From the said agreement, the A.O. noted that assessee intended to acquire certain equipments from M/s. BSL for Rs. 1000,12,50,000/-. He noted that the assessee immediately on "Transfer" of the asset on 23.02.2015 vide "Agreement to Sale", again leased back the said assets to its original owner i.e., M/s. BSL and in this process the assessee has claimed to have earned Rs. 2,13,10,000/- on account of lease of the said asset during the year. 2.2. The A.O, therefore, proceeded to examine the claim of depreciation on the said 'Plant and Machinery' and noted the following : (A) The assessee company has no financial worth since its paid-up ....
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....n of M/s Bhushan Steel Limited to part with the assets under question (G) Examination of assets hypothecation documents with the State Bank of India lead to the vital revelation that while the book value of said "Equipments" as on 31.10.2014 [as Certified by M/s. Bhushan Steel Limited to the SBI] was Rs. 437.47 Crores, the assessee had purchased the same at Rs. 1000 Crores from M/s. Bhushan Steel Limited as per the "Agreement of Sale" submitted by the assessee. He observed that while "Plant and machinery" of the oxygen Plants were of value Rs. 437 crores, the remaining land, Building, civil work and pre- operative capital expenses formed the remaining Rs. 563 crores, which were not transferred to the assessee. The Agreement to sale executed between the parties was meant only for certain equipments, and not the land, building and the ancillary infrastructure. (H) The asset hypothecation documents with the State Bank of India lead to another startling revelation that the assessee had incurred a debt over Rs. 850 crores to purchase equipments which were worth Rs. 437.47 crores, and these assets were not even transferred by way of registered sale deed. (I) Th....
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....its immediate lease back, was not genuine business transaction, but, rather an in genuine subterfuge on the part of the assessee and M/s. BSL to claim depreciation at higher value on recomputed asset, by recording the following conclusion : "4.10. Conclusions sought to be drawn : 1. It is abundantly clear from the above discussion that the assessee company was merely a paper entity, which had no real business, and no financial capacity of its own, It is very clear that the assessee company was acting in collusion with M/s Bhushan Steel Limited and, the real objective of the assessee company was to further the business interests of M/s Bhushan Steel Limited. Accordingly, a sequence of financial transactions between assessee and M/s Bhushan Steel Limited were ingeniously planned with the pre-designated objective of benefiting M/s Bhushan Steel Limited, it is in this background that the assessee company despite having no real worth, sought to purchase second hand Plant & Machinery of M/s Bhushan Steel Limited at an inflated cost of Rs. 1000 Crores, when the actual book value, of the said Plant & Machinery in the books of M/s Bhushan Steel Limited (as certified by M/s....
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.... In this process, the assessee also ended up incurring colossal debt and huge interest expenditure on the loan, while it had no business advantage as the entire so called lease rental receipts were to be taken up in repayment of loan. It is also essential to note that a future cost benefit analysis of the said business arrangement also shows that since assessee had incurred a debt of Rs. 1000 Crores to purchase these assets, it would take several years (15-20 years) to re-pay the loans, and in the meanwhile the already depreciated second hand equipments would lose their worth in financial market as they would not even have any re-sale value in market. Even, the effective life of these equipments was not more than 10-15 years. Further, for the repayment of loan, the assessee was totally dependent upon M/s Bhushan Steel Limited. The entire assets were mortgaged with the Banks, and in any eventual failure to re-pay the loan, the assets were to be confiscated by the Banks. Thus, in this deal, there was absolutely no advantage accruing to the assessee, and, no prudent businessman would have entered into a deal which was to its own disadvantage. 7. The assessee company ....
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....roportionately high price for the assets having much lesser market value in order to claim depreciation and reduce its income. Further, its financials do not justify such huge investments. 6.7. Apart from these findings, it is also observed that the equipments have not been put to use for appellant's own business purposes. The appellant has neither a business premises nor an employee nor it has purchased the entire oxygen plant which could be used for business purposes. It has purchased only equipments forming part of the oxygen plant which cannot be utilised in isolation by the appellant without a premises and installation. 6.8. Further, leasing out equipments is neither the business objective of the appellant nor is coincidental to its business. The only source of income shown by the appellant*" is rental from leased assets. As the appellant has not utilised these equipments for business purposes, it is not entitled for claim of depreciation on the equipments which have been used for earning rentals. 6.9. On the basis of factual matrix, observations and the decisions on sham transactions as quoted above, the addition is confirmed. These grounds are rule....
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....I.T.(A) have erred in holding that the SCLB arrangement entered into between the Appellant and BSL Ltd. is in-genuine in nature due to the absence of a registered Sale Deed. 4. That the Ld. A.O. and the Ld. C.I.T.(A) have erred in holding that the SCLB arrangement entered into between the Appellant and BSL Ltd. is in-genuine in nature on the alleged basis that since the Appellant has no financial worth, no prior experience, no infrastructure or employees, etc., - it thereby renders the same to be in the nature of a mere paper transaction. 5. That the Ld. A.O. and the Ld. C.I.T.(A) have erred in disallowing depreciation on the factually incorrect assumption that the Appellant has only purchased certain equipments forming part of the oxygen plant, that allegedly cannot be used on their own without a business premises and installation. 6. That the Ld. A.O. has made and the Ld.CIT(A) has sustained the impugned disallowance of depreciation on the factually incorrect basis that the total value of the oxygen plants stands at Rs. 437 Crs as per the valuation certificate but the said Assets were purchased from BSL for an allegedly inflated value of Rs. 1000 Crs. ....
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....ion of the Bench to Clause-4 of the Memorandum of Association which reads as under : "4. To carry on the business of purchasing, selling, running and letting on lease or hire in any part of India or abroad all kinds of plants, machinery, tools, Oxygen plants and related Auxiliaries, cockovan plant, cockovan batteries, its bye product plants along with all its auxiliaries, jigs and fixtures, agricultural machinery, ships, trawlers, vessels, barges, automobiles and vehicles of every kind of description, air conditioning plants, aircrafts and electronic equipment of all kinds and descriptions and for this purpose to buy, take on lease or otherwise acquire and hold for improvement, investment, development or trade and sell, lease or otherwise dispose of, all or any of the aforesaid things and to render leasing, consultancy and advisory services to clients in the field of plant and equipment and leasing. Carrying -out operations and maintenance of equipment/ oxygen plants etc., and Carrying out sale of oxygen, other gasses, services." 7.1. He submitted that M/s Bushan Steel Ltd. [hereinafter referred to as "M/s BSL"] underwent Corporate Insolvency Resolution Process under th....
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....tive Investment Trust - Bharat Nirman Fund to the tune of Rs. 149 crores. Further, equity of Rs. 1 crore was invested into the Assessee Company by Bharat Nirman Fund. 7.2. He submitted that SREI Alternative Investment Trust Bharat Nirman Fund [belonging to the SREI Infrastructure Group] is the holding company of the Assessee. Being one of India's largest and leading "Asset Finance and Leasing" institutions, the SREI Infrastructure Group, enter into a multitude of such "Sale cum Lease Back" transactions and/or other similar [Finance and/or Leasing] transactions in the infrastructural sector. Referring to paper book pages 315 to 334, he submitted that a simultaneous Lease Agreement Dated 26.02.2015 was entered into between the Assesses and (then) M/s BSL wherein the Assets, comprising of the 4 Oxygen Plants along with the allied accessories as found in Schedule-I of the Lease Agreement were leased-out by the Assessee to (then) M/s BSL, for a period of 10 years [along with the option of renewal available to the lessee for a further period of 5 years] at the agreed monthly lease rental specified in Schedule-2 of the Lease Agreement. 7.3. He submitted that a "Sale -cum- Lease Back....
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.... corners of the Law by the Hon'ble Jurisdictional Delhi High Court where the facts of the case pertain to this exact SCBL transaction that was entered into by the Assessee and (then) M/s. BSL in the year 2015, which the A.O. and the Ld. CIT(A) has claimed to be a "sham transaction". The Learned Counsel for the Assessee drew the attention of the Bench to Para Nos.3 and 4 of the said decision which reads as under: "3. The respondent prior to undergoing insolvency and resolution process had availed financial assistance in the form of secured term loan, secured working capital loans and other secured fund and non fund based facilities front various Banks / Financial Institutions t 'Lenders for shorn Subsequently as part of deleveraging exercise and decisions taken at the meeting of Lenders of the respondent held on August 18. 2014, the respondent was required to monetize four oxygen plants having capacity of 120(1,1120:405 and 340 tom per day (TPD) ('Oxygen Plants for short), which are part of integrated steel facility at Menmuuhdi. Odisha ('Integrated Steel Facility for short) through Sale and Lease Back Arrangement. 4. The Lenders of the respondent ....
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....ention that has led to the present Petition before the Hon'ble Delhi High Court. The Learned Counsel for the Assessee draw the attention of the Bench to the same para which reads as under : "15. It is stated by the petitioner that since December, 2019 the respondent started raising certain non-maintainable and illegal issues with the petitioner and subsequently from March. 2020 stopped complying with its legal and contractual obligations of timely rental payments, thereby committing fundamental breach of the Lease Agreement and crippling the petitioner from timely servicing its loans. It is also stated that the respondent has forced the petitioner to opt for moratorium on its bank dues, thereby increasing its liability. ..... ..... ..... ...... 17. As per the petitioner, the respondent for the first time demanded, for a payment of Rs. 41.79.48.852/- towards repair and maintenance of the leased equipment vide letter dated June 23, 2020; (ii) a payment of Rs. 10,19,91,600/- towards alleged outstanding for a period prior to CIRP vide its letter dated July 5, 2020 That apart, it is stated by the petitioner that it is on the basis of these assertions ....
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....fied one of their controlled entities, i.e., Brace Iron and Steel Private Limited (current petitioner). It is submitted that the four Oxygen Plants were purchased by 'SREI Infrastructure Limited' through the Petitioner at a consideration amount of INR 1000 Crore and given back on lease to erstwhile Bhushan Steel Limited (current Respondent) against the payment of monthly lease rent. Lease Agreement under Clause 5.1 read with Schedule 2 provides for a monthly lease rental of INR 15 Crones till March 31, 2020 and subsequently INR 18 Crores excluding the applicable taxes. The transaction, when entered into by the erstwhile Bhushan Steel Limited, was not as per the market value of leased equipment and that it was primarily entered into for the reason that an amount of INR 1000 Crore was needed, lest erstwhile Bhushan Steel Limited would have turned into a Non-Performing Asset. It is submitted that keeping these considerations in mind, rentals were pegged to the loan amount / finance cost, and hence do not represent the true and correct lease rental amount as per the prevailing market standard ' 7.6.8. The Learned Counsel for the Assessee drew the attention of the Be....
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....se rent payable by the respondent. The same has to be decided; not by this Court but by the Ld. Arbitrator, as decision on such dispute shall amount to a final determination. The Counsels have relied upon the judgments of this Court to contend that no prima facie case has been made out by the petitioner for grant of the reliefs as prayed for. I have perused the said judgments carefully viz., Goodwill Non-Woven Pvt. Ltd. (supra), Avantha Holdings Ltd. (supra) and Nirbhay Pratap Singh (supra). Suffice to state that this Court in the facts and circumstance of those cases refused to exercise its power under Section 9 of the Act. 80. On the other hand, Mr. Sibal is justified in relying upon the judgment of this Court in Supertrack Hotels Pvt. Ltd. (supra), wherein the Division Bench upheld the judgment of the Single Bench, directing the appellant therein to pay a sum of Rs. 1,30,44,960/- which was the outstanding amount of agreed rent as per the lease deed from November 2015 till April 2016...... 85. On this aspect of adjustment of Rs. 10,19,91,600 against the lease rent, it is noted that the said amount is disputed by the petitioner. Mr. Sibal is right in stating that....
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....not to finance the lessee, but to enable the lessee to operate the asset and earn profits, and where the assessee-lessor would be entitled to depreciation on the asset leased out since his business would be that of leasing and not mere money-lending. As against this arrangement, is the concept of a finance lease, where the lessee is entitled to depreciation in respect of asset leased out. The fact that the present Lease Arrangement is treated as an "operating lease" is also visible from Clauses-9.1, 9.2, and 9.3. of the Lease Agreement wherefrom it is clear that the Assesses is the qualified and unequivocal owner of the Assets. Furthermore, (then) M/s BSL in its Annual Report of the Financial Year ending 31.03.2015 [Pages 80-183 of the Paper Book] has at Note No.51 [At Page-141 of the Paper Book] categorically outlined the sold equipment [being 4 Oxygen Plants with accessories] as being taken over by (then) M/s BSL under an "operating lease" for a period of 10 years from 26.02.2015. Thus, the assessee, in his capacity as the lessor-owner is entitled to claim depreciation under section 32 of the I.T. Act, 1961 which allows for depreciation on specified tangible assets and intangi....
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....ly by tax evasion. Tax planning means avoidance (not evasion) of tax by planning the affairs within four corners of the law. Therefore the Assessee has rightly revised the original depreciation claimed of Rs. 71,43,75,000/-(in the A.Y. 2015-2016) to Rs. 68,8430,676/- reflected in the AY 2018-2019) on the WDV of the Assets for the A.Y. 2015-2016. 7.6.13. He submitted that the original depreciation of Rs. 71,43,75,000/-that was claimed for the AY 2015-2016 (and which was disallowed by the Ld. A.O.) was on the book value of the Assets. Referring to Page-12 of the Schedule 'Business Profession' of the Income Tax Return and Computation of Income for the A.Y. 2015-2016 and Page-56 of the Original Income Tax Return for A.Y. 2018-2019, Pg.56 of the revised Income Tax Return and the revised Computation of Income for A.Y. 2018-2019, annexed to the submission, the Learned Counsel for the Assessee drew the attention of the Bench to the table below and submitted that the claim of depreciation was later on reworked by the Assessee to be a sum of Rs. 68,84,30,676/- on the basis of WDV of the assets. Assets Original Cost Written Down Value Date put to use Oxyg....
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....d and/or the intention of the parties to the said SCLB arrangement. He submitted that unless specific evidence is brought on record to controvert the validity and correctness of the documentary evidences produced, the same cannot be rejected by the Revenue. 7.6.17. For the above proposition, the Learned Counsel for the Assessee relied on the following decisions : 1. Judgment of Hon'ble Supreme Court in the case of Omar Salay Mohammed Salt vs., CIT reported in [1959] 37 ITR 151 [SC] 2. Judgment of Hon'ble Supreme Court in the case of CIT vs., Daulat Ram Rawatmull [1973] 87 ITR 349 [SC] 3. Judgment of Hon'ble Supreme Court in the case of Umacharan Shaw & Bros. vs., CIT reported in [1959] 37 ITR 271 [SC] 4. Judgment of Hon'ble Calcutta High Court in the case of CIT vs., Lakshmangarh Estate & Trading Co. Limited in ITA.No.270 of 1999 vide Judgment Dated 07.10.2013. 7.6.18. The Learned Counsel for the Assessee submitted that the A.0. has arrived at this conclusion, without considering that SCBL arrangements are in fact a very common undertaking that is entered into in the leasing sector, where the typical advantages of such an SCLB transactio....
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.... has only purchased the oxygen plants, devoid of the building, civil work, and other accompaniments, is factually incorrect since the Assessee herein has purchased both Oxygen Plants and other related equipment and also other ancillary installation equipment. The same is clearly evident from Schedule-I of the Asset Purchase Agreement Dated 23.02.2015, [See Pages 192-194 of the Paper Book], as well as from Schedule-1 of the Lease Agreement Dated 26.02.2015, [See Pages 331-333 of the Paper Book]. c. The A.O, has further failed to consider the fact depreciation claimed either by (then) M/s BSL or the Assessee under the SCLB transaction would amount to the same, showing that the situation is tax neutral in nature, thus the Assessee Co. cannot in any manner be accused of entering into the SCLB transaction with BSL as a tax evasion mechanism. 7.6.22. He accordingly submitted that this particular SCBL transaction can in no manner be called as a device to avoid the payment of legitimate taxes, when both the intention and the documentation/evidences at hand and which have gone unrefuted by the A.O. point towards the legitimate nature of the SCBL arrangement. The A.O. cannot mere....
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....ess their case, relied on several decisions to show that the A.O. is well within the Law on penetrating the corporate veil to determine the real nature of the transaction as a sham or illusion on the basis of surrounding circumstances and human probabilities to opine that the Assessee and (then) BSL had pre-arranged its affairs with reference to the SCBL transaction, in such a way that the Assessee could claim depreciation at a higher value on revalued assets. He submitted that the ratio of the various decisions of the Hon'ble Supreme Court and the Hon'ble High Court extracted by the A.O, in the Assessment Order, and which have been followed by the Ld. CIT(A) in the Impugned Order, is settled Law which is not being contested/disputed by the Assessee herein. However, the applicability of the said decisions to the case of the Assessee, is erroneous, since as detailed for the facts above, there does not arise any such necessity to lift the corporate veil or consider the surrounding circumstances, or apply the principle of preponderance of probabilities - since the A.O. has not even rebutted/questioned the genuineness/ authenticity of the documentation/evidences brought on record by th....
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....as erred in disallowing the 'upfront fee' of Rs. 1,10,82,175/- claimed as a business/revenue expenditure on account of the payment of the onetime nonrefundable fee for the processing of the loan, prior to the execution of the Term Loan taken by the Assessee from the Lenders via the Common Loan Agreement Dated 26.02.2015. The A.O. has disallowed the same on the erroneous basis that the upfront fee is an expenditure that is capital in nature and thus cannot be allowable as a revenue expenditure. He submitted that the A.O. has not disputed the veracity/genuineness of the Term Loan undertaken between the Assessee and the Lender Banks. All that the A.O. is disputing is whether the said upfront fee [as per Para 2.6. of the Common Loan Agreement, Page-222 of the Paper Book] can be treated as a capital expenditure as against the Assessee's treatment of the same as a Revenue Expenditure. He submitted that the Assessee relies upon Section 36(1)(iii) of the I.T. Act, 1961 - that provides a deduction of the amount of interest in respect of capital borrowed for the purposes of business. 8.1. He submitted that interest as defined u/s 2(28A) of the I.T. Act, 1961. is interest payable i....
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....e payment of interest of Rs. 1,62,10,881/- [for the A.Y. 2015- 2016] on the Term Loan of Rs. 850 crores taken from the Lenders via the Common Loan Agreement Dated 26.02.2015. He submitted that the lower authorities have erroneously disallowed the interest on the Term Loan on the sole basis that since the SCBL transaction between the Assessee and (then) M/s BSL was dubious and of the nature of a sham transaction, that was entered into for the benefit of the latter, then as a logical corollary, the Assessee cannot claim interest expenses on the Term Loan since the same was in the real sense availed by M/s BSL. He submitted that the interest expenses has been disallowed by the A.O. only on the basis of the illegal and erroneous finding that when the entire SCBL transaction is a colourable and/or dubious device and/or a paper transaction, then the issue of interest expenses incurred with reference to the same also should not be allowed to the Assesses. However, when the Assesses has effectively rebutted the contention(s)/ allegation(s) raised by the Department with reference to the SCBL transaction, then, the issue of claiming the interest expenses as a deductible business expenditure ....
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.... 3.6. Assessee did not divulge required information regarding the written down value of the assets in question- Para X page 7 of 19 of the AO order. 3.7. Inflated value of the transaction-Refer para VII at page 4 of 19 of the AO order and page 5 of the AO order. Judicial Position : 4.1. Hon'ble bench may duly consider the decision of Special Bench Income Tax Appellate Tribunal - Mumbai in the case of The ICICI Ltd. vs Dy. CIT, Special Range 36 on 14 August, 2003. 4.2. It may be noted that the facts of the case are similar to the facts of the cited case as in cited case, the issue involved was whether the instance of sale and lease back was genuine or not ? 4.3. Certain observations of the Special Bench are reproduced here which may be noteworthy : • It was contended that the transaction in truth was a borrowing of monies by the RSEB on the security of the assets, but the documentation had been so prepared as if it was a sale and lease-back arrangement. If it is a simple borrowing on the security of the assets, the assessee would not be entitled to depreciation, • that it is nothing more than a mere finance ....
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.... (a) Was there an intention to pass the property in the equipment to the assessee ? (b) Was the equipment identified / ascertained with reasonable clarity ? (c) Was the equipment valued, and if so, whether it was a bona fide valuation ? Was the value inflated? How credible is the report of the valuer, if there is one. (d) What are the terms of the lease ? Is the document more of an arrangement for security for the loan and less of a lease ? (e) Is there any parallel or collateral documentation or correspondence or an understanding between the parties which throws doubt on their intention professed by the principal documentation ? (f) What is the conduct of the parties? How transparent has it been ? (g) If the lessee is a public utility undertaking, whether the sale of the equipment would be in conformity with the rationale for its existence and whether it would have an adverse impact on its working ? These are only some of the factors that one is expected to keep in view in dealing with such cases. They are by no means exhaustive. Any other fact or circumstance which one considers relevant for reaching the soul of th....
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....y 29, 2020, had paid the lease rent to the petitioner and also deposited the GST with the public authority. However, the dispute on obligation to pay lease rent arose thereafter. It is important to note that the dispute between two parties arose in 2020 which is a later event (refer para 69 of the order) and the question of genuineness of sale and lease back per se which took place in FY 2014-15 was not an issue before the Hon'ble Court. On the other hand, it is noted that the facts captured in this decision do throw light on the issue of responsibility of providing maintenance services and the issue of operational lease vis-à-vis financial lease. These aspects have been discussed below in detail. Questions arising on the scheme of Agreement to transfer Certain Equipments and Lease Agreement:- A. Is there actual handing over/delivery of equipments in this case? A.1. This agreement was signed between the assessee and BSL for transfer of certain equipments. It may be relevant to take note of the same that the aforesaid agreement does not talk of handing over the possession of equipments or delivery of equipments. Clause-2.2 clearly mentions that it i....
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....discussion above, there can not be case of handing over such equipment back to the lessee( seller). Thus, it is evident that the documentation is merely a smoke screen without matching with the real picture on the ground. B. Whether the lessor was owner of the equipments which is prerequisite for claim of depreciation ? B.1. SC in the case of Poddar Cement Pvt. Ltd. (226 ITR 625)(SC) where the full rights of an owner recognised by law were held to be (a) power of enjoyment (b) possession, which includes the right to exclude others (c) power to alienate or to charge security and (d) power to leave the asset by will. B.2 Based on the facts of the case in hand as discussed above, the lessor did not get the possession of the equipments at any point of time. Lessor was not having right to possess, right to remove, right to dismantle, right to shift etc. The lessor never took any risk assessment in taking over the equipments. In such a situation, question of ownership with lessor does not arise. Effectively, it is a case where the ownership of equipments always remained with BSL and the arrangement of sale and lease back was to offload the loan from th....
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....rt where Tata Steel BSL Limited is a respondent and the assessee is a petitioner to settle dispute on payment of lease rentals. D.3 The relevant paras of the decision of Hon'ble Delhi High court are reproduced as under :- "73. At this stage, I may also refer to the plea of the Counsels that despite specific obligation, the petitioner has failed to undertake routine maintenance measures of the Oxygen Plants and keep the same in good working condition in accordance with best industry practice. In support of their submission, they had relied upon the Clause 6.1.(vii) of the Lease Agreement and Clause 6.1.7 of the Common Loan Agreement. 74. According to them, the petitioner has failed to even appoint a single technical person to oversee the operation of the Oxygen Plants since inspection of the Lease Agreement in 2015. It is only after repeated requests made by the respondent that at a very belated stage in July 2020, the details of technical appointee were provided. That apart, it is also stated that the petitioner has failed to provide the spares for the plants. In substance, it was their plea that the respondent has incurred expenses to the tune of Rs. 41,....
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....oans. It further added that simultaneously it was also able to enjoy the uninterrupted usage of the same. (refer para 4.5, page 8 of 19 of the AO order) E.2. The fact is that the alleged sale and lease back is without transfer of assets and the main intent is to reduce the loans in the hands of the seller. Thus, it is a case of financial lease. E.3. As regards operational lease, the assessee has no wherewithal to manage the same in the absence of technical manpower. The fact of providing routine maintenance by lessor has also been denied by the counsel of petitioner (lessor) before Hon'ble Delhi High Court which is in contradiction to the lease agreement clause 6.1 (vii). E.4. In light of the above facts, the lessor was not handling any function relating to operations of the equipments and it was not equipped to do the same in the absence of any know how in this case. It did not assume risks associated with the ownership as the lessor never had right of possession and right to remove the equipments. E.5. It was a simple case of balance sheet deleveraging and the scheme was at the behest of lenders of BSL(lessee). Thus, effectively, the assessee m....
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.... petitioner)........." F.2. Thus, the facts as submitted before Hon'ble Delhi High Court show that the assessee was controlled entity of erstwhile promoters of BSL group. The assessee being petitioner in the case nowhere contested this fact before Hon'ble Court." 10.1. So far as the decision of Hon'ble Jurisdictional Delhi High Court on the dispute between the Tata Steel BSL Limited and the Assessee is concerned, he submitted that as per the facts of the said case, the respondent, on taking over the management of the BSL for the period between May 18, 2018 to February 29, 2020, had paid the lease rent to the petitioner and also deposited the GST with the public authority. However, the dispute on obligation to pay lease rent arose thereafter. He submitted that the dispute between two parties arose in 2020 which is a later event [referred to Para-69 of the order] and the question of genuineness of sale and lease back per se which took place in F.Y. 2014-15 was not an issue before the Hon'ble Court. On the other hand, it is noted that the facts captured in this decision do throw light on the issue of responsibility of providing maintenance services and the issue of ....
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..... However, the case in hand does not involve transaction with government entity. 3.2. Decision in the case of Cosmos Films Ltd. decided by Hon'ble Delhi High Court;- 3.2.1. The appellant claimed that in the case of Cosmos Films Ltd. (supra), the Hon'ble Delhi H.C. has held that the intention of the parties have to be gathered form the words of the agreement in a tangible and objective fashion, and not on any such hypothetical pretext that the assessee held the supposed motive of evading the payment of tax. 3.2.2. Interestingly, vide written submission dated 17/05/2021, inherent contradictions in the agreement to transfer equipments vis-à-vis lease agreement have been highlighted at various paras(A.7 & A.8) of written submission dated 17/05/2021. In such a scenario of conflict in the documentation relied upon by the appellant, the applicability of aforesaid decision of Delhi High Court does not have any relevance. 3.2.3. It is relevant to note that the fundamental principle of judicial interpretation of contracts is that the Court should be concerned with the real substance of the transaction rather than the form of the same. If there are r....
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....ced for ready reference:- "30. The Patna High Court has cited this Court's judgment in R.B. Jodha Mal Kuthiala's case (supra) and also number of other judgments of the different High Courts. The High Court had also gone into the concept of 'ownership' and referred to passages from G.W. Paton on Jurisprudence, Dias on Jurisprudence, Stroud's Judicial Dictionary and Pollock on Jurisprudence. We may usefully extract certain passages from the judgment of the Patna High Court. ..." 10.3. So far as the various decisions relied upon by the Learned Counsel for the Assessee are concerned, he submitted that all those decisions are distinguishable and not applicable to the facts of the present case. 11. The Learned Counsel for the Assessee in his rejoinder submitted that the Special Bench decision relied upon by the Ld. D.R. in the case of ICICI Ltd., vs., DCIT vide Order Dated 14.08.2003 is not applicable to the facts of the present case, since, the Special Bench in that case has itself held that there could be no pigeonholing of the facts in order to mean that if a particular factual pattern is followed then the conclusion will be the same. The Hon'ble Spe....
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....ansactions and not the one under consideration. Can it be expected of a State Government to do something, which is not above board and to be part of a tax avoidance scheme engineered between the assessee and one of the State Government" 3.1.3. Thus, it is evident that the decision in this case is clearly influenced due to peculiar feature of transaction where government entity was involved and thus genuineness of the transaction was taken to be sacrosanct. However, the case in hand does not involve transaction with government entity." 2. The Assessee is not relying upon the decision of Consortium Finance (supra) to submit that (on facts) the present case stands covered by the former. As noted by the Hon'ble Special Bench in ICIC Ltd. (supra)- no case of an SCBL transaction will be factually identical, and that each case is to be decided on its own merits. In fact the Hon'ble ITAT in Consortium Finance (supra) has itself held that SCBL transactions which are a part and parcel of business deals have been viewed with suspicion by the Revenue, and that it must be emphasised that every transaction has to be considered on its own facts. See Para 25. 3.Thus factual dissimilari....
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....act a financial and loan transaction that had been masked as a purchase and lease transaction. (See Para 1). 2. The Hon'ble ITAT in this case had dismissed the Department's case by observing that the Revenue could not bring on record any fact which showed that the SCBL transaction was ingenuine. (See Para 3). 3. The Hon'ble H.C. after a detailed consideration of the facts and circumstances of the case, held as follows: a. Upon a plain reading of the lease agreement, while the possession of and the right to use the equipment was transferred to the lessee, the lessor retained the title/ownership of the equipment as well as the right to reversion at the end of the lease period/termination of the lease. See Para 10. (Clauses of the same nature exist in the present case as well). 3.2.2. Interestingly, vide written submission dated 17/05/2021, inherent contradictions in the agreement to transfer equipments vis-à-vis lease agreement have been highlighted at various paras (A.7 & A.8) of written submission dated 17/05/2021. In such a scenario of conflict in the documentation relied upon by the appellant, the applicability of aforesaid decision of Delhi High Court do....
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....e Hon'ble Delhi H.C. has held that when no material is available on record, then the agreement of a SCBL transaction can only be treated as ingenuine when one party to the agreement claims it to be so and not on a whimsical basis of the Department. See internal Pg.7/9 of the decision. 6. Further in the case of Sharyans Resources Ltd., [2002] 83 ITD 340 (MUM.)the ITAT Mumbai had read through the terms of the lease agreement to hold that the same was not in the nature of a finance lease as alleged by the Department and in that context also held that onus was heavily cast upon the Revenue to establish that the entire arrangement was a disguise to hide the transfer of assets in favour of the lessee. "Merely because in the perception of the Assessing Officer, certain clauses of the lease agreements were unreasonable or even incongruous, it could not be concluded that the assessee had not entered into these agreements as a lessor-owner of the assets in the ordinary course of its business of leasing. It is well-settled position in law that Court cannot rewrite an agreement for the parties. Further, an agreement is to be read and construed as a whole, effect being given to all the pa....
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.... position to arrive at a conclusion. See Para 17. 6. In the present case, the Assessee is nowhere disputing that apart from the terms and conditions specified in the agreement, the surrounding circumstances can play a role in adjudicating a case. Our contention is simply that the facts of this case are not in dispute, since the Lease Agreement is an admitted document between the parties, the terms of which are binding on both parties as duly recorded by the Hon'ble Delhi H.C. in M/s Brace Iron and Steel Pvt. Ltd. vs. Tata Steels BSL Ltd., OMP(I)(COMM) 285/2020 decision dt.14.12.2018. Thus the concept of 'preponderance of probability, surrounding circumstances etc.' does not come into the picture. 7. There is no material that has been brought on record by the A.O. to rebut / refute the terms of the Lease Agreement that has clearly recorded the transaction to be in the nature of an operating lease, where even the obligation to provide maintenance (as argued by the Respondent before the H.C.) has been admitted to lie with the Assessee herein. 8. The decision of the ITAT Mumbai in Sharyans Resources Ltd., (supra) is of relevance here since IAS 17 was cited therein to determine....
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....ges is this- '(a) The power of enjoyment (e.g., the determination of the use to which the res is to be put, the power to deal with produce as he pleases, the power to destroy); (b)Possession which includes the right to exclude others; (c)Power to alienate inter vivos, or to charge as security; (d)Power to leave the res by will 4.4 Para 30 of the order is reproduced for ready reference:- "30. The Patna High Court has cited this Court's judgment in R.B. Jodha Mal Kuthiala's case (supra) and also number of other judgments of the different High Courts. The High Court had also gone into the concept of 'ownership' and referred to passages from G.W. Paton on Jurisprudence, Dias on Jurisprudence, Stroud's Judicial Dictionary and Pollock on Jurisprudence. We may usefully extract certain passages from the judgment of the Patna High Court. ..."" 2. In this context it is pertinent to note that the CIT(DR) has erred in understanding the ratio decidendi of the decision of Podar Cement (supra )that is in favor of the Assessee, since the decision holds that the term 'owner' must be interpreted and assigned a wider under the....
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....t be two owners of the property simultaneously and in the same sense of the term. The intention of the Legislature in enacting Section 32 of the Act would be best fulfilled by allowing deduction in respect of depreciation to the person in whom for the time-being vests the dominion over the building and who is entitled to use it in his own right and is using the same for the purposes of his business or profession. Assigning any different meaning would not subserve the legislative intent. To take the case at hand it is the appellant-assessee who having paid part of the price, has been placed in possession of the houses as an owner and is using the buildings for the purpose of its business in its own right. Still the assessee has been denied the benefit of Section 32. On the other hand, the Housing Board would be denied the benefit of Section 32 because inspite of its being the legal owner it was not using the building for its business or profession. We do not think such a benefit-to-none situation could have been intended by the Legislature......" 4. The decision of Mysore Minerals (supra) has been followed in umpteen other decisions, a fact that the CIT(DR) cannot deny. The entir....
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.... Patna H.C. reproduced by the S.C. in Para 30, goes in our favour and not against us. This is because at Para 30, the excerpt of the Patna H.C. first deals with the general interpretation of the term 'owner' including the 4 points that the CIT(DR) is referring to and has then gone on to give the following finding: "30......Thus, the juristic principle from the view point of each one is to determine the true connotation of the term 'owner' within the meaning of section 22 of the Act in its practical sense, leaving the husk of the legal title beyond the domain of ownership for the purpose of this statutory provision. The reason is obvious. After all, who is to be taxed or assessed to be taxed more accurately - a person in receipt of money having actual control over the property with no person having better right to defeat his claim of possession or a person in legal parlance who may remain a remainder man, say, at the end or extinction of the period of occupation after, again say, a thousand years? The answer to this question in favour of the assessee would not merely be doing palpable injustice but would cause absurd inconvenience and would make the Legislature to b....
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.... fairly look at the language used and the tax laws have to be interpreted reasonably and in consonance with justice. So far, we have dealt with the case in this respect on juristic principles as if it were a matter of first impression. We have, therefore, now to refer to the case law on the subject." (p. 361)" e. The Hon'ble S.C. affirmed the finding of the Patna H.C. at Para 35& 39 by holding as follows: "34. The contrary view taken by the other High Courts was mainly based on the facts that unless there is a registered deed conveying the property, the person in possession/enjoyment of the property cannot be considered as legal owner and, therefore, he cannot be called upon to pay the tax under section 22. 35. The law laid down by this Court in R.B. Jodha Mal Kuthiala's case (supra), according to us, has been rightly understood by the High Courts of Punjab and Haryana, Patna, Rajasthan, etc. The requirement of registration of the sale deed in the context of section 22 is not warranted. ......... 39. Accordingly, we hold that the views taken by the High Courts of Allahabad, Patna, Rajasthan, Punjab and Haryana are the correct views. ....
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....e already depreciated Assets [on which depreciation has already been claimed by the M/s BSL beforehand for quite a number of years] were then conveniently sold at an inflated book value cost to the Assessee 4) The Assessee has only purchased "plant and machinery' devoid the building, civil work and other accompaniments that are vital to the operation of the same. The same therefore, proves the Revenue's contention that the Assessee never intended to us the assets. 5) The Assessee has thus acted in collusion with M/s. BSL, by entering into the SCBL arrangement as part of its modus operandi in order to further the business interests of the latter (since 1000 Crores was infused into the books of M/s BSL) as well as falsely inflate the value of the Assets in the books of the Assessee Co. in order to claim a huge depreciation. 6) The entire transfer is merely on paper, where the Assessee neither had the possession of the Assets or the infrastructure to utilise them. And thus, in the process, the Assessee Co. has incurred a colossal debt and huge interest expenditure, at no business advantage. 12.1. We find the Ld. CIT(A) confirmed the disallowance made ....
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....for the Assessee. We find BSL Limited, prior to undergoing insolvency and resolution process, had availed financial assistance in the form of secured term loan, secured working capital loans and other secured fund and non-fund based facilities from various Banks/Financial Institutions. Subsequently, as part of deleveraging exercise and decisions taken at the meeting of Lenders of BSL held on August 18, 2014, BSL was required to monetize four oxygen plants having capacity of 1200,1120,405 and 340 tons per day (TPD), which are part of Integrated Steel Facility at Mermandali, Odisha through 'Sale and Lease Back Arrangement'. The Lenders of BSL thereafter issued an NOC on February 21, 2015 permitting BSL to execute a Sale and Lease Back Agreement with the Assessee on the condition that interest over the lease for the Oxygen Plants shall be charged for the benefit of the Lenders. In pursuance thereof, BSL sold the Oxygen Plants situated at the Integrated Steel Facility to the Assessee viz., M/s. Brace Iron & Steel Pvt. Ltd. We find, the assessee on February 26, 2015 entered into separate agreement with the Lenders to raise Rs. 850 Crores in debt to finance the acquisition of the....
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.... of and uninterrupted access to Equipments for its Business during the Lease Term, subject to the terms and conditions of this Lease Agreement." "5.1. In consideration of the Lease being granted, the Lessee shall pay to the Lessor a monthly rent (not of all taxes and tax deduction at source), details of which are set out in Schedule 2 hereof, in arrears on or before 2 (two) business days prior to the last date of each month (Rent) . . . . Further, the Parties acknowledge that the above Rent is based on, among others, a benchmark rate (based on the cost of financing the purchase of the equipments by the Lessor) that has been agreed between the Parties prior to the date of execution of this Lease Agreement. .. " "5.2. Notwithstanding anything contained in this Lease Agreement, the Lessee shall be liable to pay the Rent to the Lessor in accordance with the terms hereof with effect from the Han dover Date (Rent Commencement Date), and the Rent and other amounts payable by the Lessee in accordance with terms hereof shall always be paid in/ to the credit of the Lessor's Designated Bank Account." "6.3. Use and enjoyment (a) The Lessee shall, subject....
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....alance of convenience, it is stated that: 3.1. Rent collected is utilized towards servicing the loans taken for acquiring the leased equipment; 3.2. Respondent is in possession and continued commercial usage of the leased equipment worth over Rs. 1000 crores, without paying rent; 3.3. Owing to the non-payment respondent is unjustly enriching itself whereas the petitioner is suffering financially; 3.4. The respondent has security in form of possession of the Leased Equipment, the petitioner has no such security for ensuring payments of lease rentals; 4. On irreparable injury, it is stated that: 4.1. The non-payment has resulted in forced liquidity crunch for the petitioner; 4.2. This might lead to petitioner facing legal proceedings and damaged credit ratings; 4.3. In addition to the penal interest on account of moratorium opted due to non-payment by the respondent. 5. Relief sought is not final in nature and falls within the scope of Section 9 of the Act. Reliance is placed on Value Source Merchantile (supra), Friends Motels Pvt. Ltd. (supra), Supertrack Hotels Pvt. Ltd. (supra) and Sona Corporation In....
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....on proceedings. (Ref: Nirbhay Pratap Singh (supra)). 6. Relied upon Goodwill Non-Woven Ltd. (supra), wherein it was inter-alia held that disputed factual positions cannot be decided in a Section 9 petition, more so when there is no threat of frittering away of the properties either before during the pendency of the Arbitration proceedings. 7. On merits, it is stated that: 7.1. The entire transaction was clearly not an arm's length but rather a friendly transaction which has led to payments of exaggerated amounts as lease rentals that were artificially fixed to meet the requirement of INR 1000 Crore (sale price), making it further into nature of a financial lease; 7.2. The same is mentioned in a SFIO Complaint and Investigation Report; 7.3. The fact that the Lease Agreement and Common Loan Agreement records existence of four Oxygen Plants and the admitted stand that the 340 TPD plant was always non-functional is further indicative that the transaction was not at arm's length; 7.4. It was while reviewing various contracts /transactions as per the Annual Reports of the Company after reviving the respondent that it was reali....
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....ubmissions of the learned counsels for the parties and perused the record, it is the case of the petitioner that the Oxygen Plants were leased out to the respondent at the monthly consideration of Rs. 15 Crores (net of all taxes and TDS) for the period ending March 31, 2020 and Rs. 18 Crores (net of all taxes and TDS) w.e.f. April 01, 2020, as per Clause 5.1 read with Schedule 2 of the Lease Agreement. Therefore, I find it apposite to reproduce Clauses 5.1, 5.2 and Schedule 2 of the Lease Agreement herein under: "5. RENT 5.1 In consideration of the Lease being granted, the Lessee shall pay to the Lessor a monthly rent (net of all taxes and tax deduction at source), details of which are set out at Schedule 2 hereof, in arrears on or before 2 (two) business days prior to the last date of each month (Rent). The Lessor and the Lessee may mutually decide to increase or decrease the prevalent Rent (and/or other payables) at any time during the subsistence of this Lease Deed. Further, the Parties acknowledge that the above Rent is based on, among others, a benchmark rate (based on the cost of financing the purchase of the Equipments by the Lessor) that has been agreed between the....
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....o-rata to the number of remaining days of that month." 68. Mr. Sibal is right in relying upon the Clauses 5.1 and 5.2 of the Lease Agreement to contend that there is an admitted obligation to pay lease rent on the part of the respondent. In fact I note, the respondent on taking over the management of the BSL for the period between May 18, 2018 to February 29, 2020, had paid the lease rent to the petitioner and also deposited the GST with the public authority. 69. The dispute has arisen thereafter. According to Dr. Singhvi and Mr. Nigam (Counsels) the entire transaction leading to the lease agreement is not at arm's length. It was while reviewing various contracts / transactions as per an Annual Report of the company it was realised by the respondent that Rs. 18 Crores per month leased rental is not in accordance with prevalent market standard, but is far excess of it. 70. The submission of the Counsels was that Clause 5.2 of the Lease agreement read with clause 5.1 imposes an obligation on the parties to decide increase or decrease, the prevalent rent at any time during the subsistence of the Lease Agreement. In other words, they stated that the lease....
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.... of technical appointee were provided. That apart, it is also stated that the petitioner has failed to provide the spares for the plants. In substance, it was their plea that the respondent has incurred expenses to the tune of Rs. 41,79,48,852/- for the upkeep of the plants. 75. On the other hand, Mr. Sibal has contested the submission made by Dr. Singhvi and Mr. Nigam by stating that the respondent has been in effective possession, control and commercial usage of the oxygen plants and is responsible for the routine and operation costs of the Oxygen Plants and the Lenders in the appraisal memo have clearly noted that the routine maintenance and operation and maintenance charges are on the respondent. 76. Further, according to Mr. Sibal the entire bogey of alleged maintenance cost has been created as an afterthought pursuant to the joint inspection report dated November 20, 2019 conducted by the Lenders and the parties herein. The joint inspection report records that the respondent has admittedly not faced any issue regarding the usage of the Oxygen Plants as generation of oxygen was as per the requirements. That apart, the respondent has been deliberately....
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....t of the Single Bench, directing the appellant therein to pay a sum of Rs. 1,30,44,960/- which was the outstanding amount of agreed rent as per the lease deed from November 2015 till April 2016. The Division Bench in paragraph 19 of the said judgment has stated as under: 19. We are therefore of the opinion that while exercising the powers under Section 9 of the Act, the Court can certainly be guided by the principles of Order XV-A and Order XXXIX Rule 10 of CPC. The same view was expressed by another Division Bench of this Court in the case of Value Source Mercantile Ltd. (supra) . The relevant portion of the said judgment reads: "13. Section 9 of the Arbitration Act uses the expression "interim measure of protection" as distinct from the expression "temporary injunction" used in Order XXXIX Rules 1&2 of the CPC. Rather, "interim injunction" in Section 9 (ii) (d) is only one of the matters prescribed in Section 9 (ii) (a) to (e) qua which a party to an Arbitration Agreement is entitled to apply for "interim measure of protection". Section 9(ii) (e) is a residuary power empowering the Court to issue/direct other interim measures of protection as may appear to the C....
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....ourt inter-alia held that the Indian Contract Act, does not enable a party to a contract to ignore the express covenants thereof and to claim payment of consideration of performance of the contract at rates different from the stipulated rates on vague plea of equity. Similarly, in Sona Corporation India Pvt. Ltd. (supra) a coordinate Bench of this Court, guided by the Division Bench judgment in Supertrack Hotels Pvt. Ltd. (supra), has in paragraph 14 directed the respondents therein to pay the quarterly lease rent to the petitioner for the period commencing from March 01, 2018 till the date of occupation of the leased premises and the arears of rent within three weeks from the date of order. 82. Likewise, in Value Source Mercantile Ltd. (supra) as well a Division Bench of this Court, in paragraph 13 and 14 has held as under: 13. Section 9 of the Arbitration Act uses the expression "interim measure of protection" as distinct from the expression "temporary injunction" used in Order XXXIX Rules 1 & 2 of the CPC. Rather, "interim injunction" in Section 9(ii)(d) is only one of the matters prescribed in Section 9(ii) (a) to (e) qua which a party to an Arbitration Agreement is en....
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.... 83. That apart, a submission was made by the Counsels that as per the past ledger / statement of accounts maintained with the Company, an amount of Rs. 10,19,91,600 is outstanding/payable by the petitioner to the respondent in view of the 'Sale and Lease Back' transaction by relying upon an e-mail dated July 19, 2020 of the Vice-President of Accounts and Operation at SREI Equipment Finance Limited sent to the Manager, Finance Account of the respondent Company and also on the stand alone finance statement of the petitioner for the financial year 2017- 18 wherein at page 73 note 23 shows "balance convertible is of INR 21.94 Crores and payable in INR 10.19 Crores from Bhushan Steel Limited subject to confirmation". 84. On the other hand, Mr.Sibal had contested the plea of the Counsels by stating that the statement on which reliance has been placed is neither unequivocal nor clear or categorical for it to be an admission. Rather, it is qualified by two factors 'balance convertible of Rs. 21,94,96,885/-' and 'subject to confirmation'. Further, the alleged claim of Rs. 10,19,91,600/- does not arise under the Lease Agreement and as such is not covered un....
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.... nor in the present review expresses any opinion on the merits of the claims advanced by either party, but only reiterates that these claims must be tested at trial...." (Emphasis supplied.) 86. In view of the above, it is clear that Rs. 18 crores being the contractual amount w.e.f April 01, 2020, the said amount is prima facie payable by the respondent atleast till such time the parties seek adjudication of the disputes as per the contractual provisions. 87. So, it is directed that the respondent shall pay the arrears of lease rent (net of all taxes / TDS), after adjusting the amount already paid, to the lead Lender Bank with applicable interest within six weeks from today. 88. This payment shall be subject to the outcome of the prospective arbitration proceedings. The aforesaid is a tentative view. It is made clear; this Court has only adjudicated the issue which fell for determination in this petition in terms of the prayers made. 89. The petition is allowed to the aforesaid extent. No costs." 12.4. From the above, it is clear that the various allegations of the A.O. as well as the arguments of the Ld. D.R. has been answered by the....
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....g. We further find from Clauses 9.1, 9.2 and 9.3 of the Lease Agreement wherefrom it is clear that the assessee is the qualified and unequivocal owner of the assets. We further find from the annual report of M/s. BSL for the year ending 31.03.2015 that at Note-51 [Page-141 of the paper book] it has been categorically outlined the sold equipments [being 04 oxygen plants with accessories] as being taken-over by M/s. BSL under an "Operating Lease" for a period of 10 years from 26.02.2015. We, therefore, find merit in the arguments of the Learned Counsel for the Assessee that the assessee, in his capacity as the lessor-owner is entitled to claim depreciation under section 32 of the Income Tax Act,1961 which allows for depreciation on specified tangible assets and intangible assets, when such assets are owned, wholly or partly, by the assessee and are used for the purpose of its business or profession. 12.5.1. A perusal of the object clause of the Memorandum of Association of the Company shows that the assessee is in the business of leasing of assets. Since in the instant case the assessee owned the asset as per the Purchase Agreement Dated 23.02.2015 and has utilised such assets for....
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..... We find the Hon'ble Supreme Court in the case of Liquidators of Pursa Ltd., vs., CIT (supra) has held that for the purpose of section 32, the expression "used for the purpose of business" means uses for the purpose of business during the accounting year. The machine and plant must be such as were used atleast for a part of the accounting year. 12.5.8. We further find as per Explanation-4A of Section 43(1) of the I.T. Act, 1961, in the case of such SCBL transaction, the lessor [New Owner] is entitled to claim depreciation at the WDV of the assets in the hands of previous owner at the time of the sale. The Finance (No.2) Act of 1996 introduced Explanation (4A) to Section 43(1) of the I.T. Act to specifically address the issue of sale and lease back arrangement/transaction. We are of the considered opinion that the very mention of SCLB transaction in Explanation 4A is a recognition of the position that all sale and lease back transaction cannot be held to be motivated only for the tax evasion. In our opinion, tax planning means avoidance and not evasion of tax by planning the affairs within the four corners of the Law. In the instant case, we are of the considered opinion that th....
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.....2014 reveals the value of the oxygen plants to be at Rs. 981.68 crores as has been extracted by the A.O. at Pages-5 and 6 of the assessment order. So far as the allegation of the A.O. that the assessee herein has purchased only oxygen plant devoid of building, civil work and other accompaniments is concerned, the same is also factually incorrect since the assessee in the instant case has purchased both oxygen plants and other related equipments and also other ancillary installation equipments which is clearly evident from Schedule-1 of the Asset Purchase Agreement Dated 23.02.2015 [Paper Book 192 to 194] as well as from Schedule-1 of the Lease Agreement Dated 26.02.2015 [Paper Book 331 to 337]. Therefore, the allegation of the Revenue on this count also fails. 12.5.12. We further find the A.O. has also failed to consider the fact that depreciation claimed either by BSL or the assessee under the SCLB transaction would amount to the same, showing that the situation is tax neutral. Therefore the assessee company cannot in any manner be accused of entering into the SCLB transaction with BSL as a tax evasion mechanism. 12.5.13. We, therefore, are of the considered opinion t....
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....arried-out any business operation nor utilised the machinery for any business purposes. According to him the claim itself is under question rather than the nature of the claim. He, therefore, held that the payment of up-front fee does not qualify as business expenditure. In the preceding paragraphs while adjudicating the ground of disallowance of depreciation, we have already held the transaction being genuine and not a sham or paper transaction in the light of the decision of the Hon'ble Jurisdictional Delhi High Court in the case of assessee's dispute with Tata Steel BSL Ltd., who acquired M/s. BSL. Therefore, the up-front fee of Rs. 1,10,82,175/- debited in the P & L A/c on account of term loan taken by the assessee during the relevant year for acquiring the fixed asset as "Plant" is an allowable business expenditure. Accordingly, the Order of the Ld. CIT(A) on this issue is set aside and the Ground of Appeal No.7 raised by the assessee is allowed. 15. Ground No.8 of appeal relates to disallowance of interest expenditure of Rs. 1,62,10,881/-. 16. After hearing both the sides, we find the claim of interest expenditure of Rs. 1,62,10,881/- debited in the Profit & Loss ....
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....tle in the Equipments is being transferred or conveyed by the Seller to the Purchaser under this Agreement (for the avoidance of doubt, if any Ancillary Document is required under applicable law to be executed by the Parties with respect to the transfer of possession in the Equipments, the Parties shall execute such documents and not rely on this Agreement in respect thereof in any manner whatsoever). The Parties further agree that the possession of the Equipments is not being handed over to the Purchaser simultaneously with the execution of or under this Agreement. Document 2 SCHEDULE 1 LIST OF EQUIPMENTS 37 EQUIPMENT RELATING TO PRODUCTION OF OXYGEN, NITROGEN, AND ARGON IN GASEOUS AND LIQUID FORM ([340 TPD (OXYGEN), 405 TPD (OXYGEN), 1120 TPD (OXYGEN), AND 1200 TPD (OXYGEN)]) S.NO. 1 DESCRIPTION OF EQUIPMENTS Main air compressor RELATING TO 1200 TPD 2 Main air compressor-Motor 1200 TPD 3 DCAC/Chilled Water pumps 1200 TPD 4 Air water exchanger 1200 TPD 5 Main heat exchanger 1200 TPD 6 Refrigeration unit 1200 TPD 7 8 Adsorbders -Radial type with Alumina & Mol....