TaxTMI 
TaxTMI 
1995 (3) TMI 127
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....ection with gas cylinders. The assessee claimed 100 per cent depreciation on gas cylinders. It has been the case of the assessee that all along the department has allowed the depreciation on gas cylinders except in the assessment year under appeal. In the year under appeal, the Assessing Officer found both from the past records and subsequent records that the assessee had purchased and sold gas cylinders. From this, it was concluded that the gas cylinders are nothing but the stock-in-trade of the assessee and, therefore, it was concluded that the assessee was not entitled to depreciation on gas cylinders. The learned Commissioner of Income-tax (Appeals) agreed with the conclusion reached by the Assessing Officer and the assessee is aggrieved. 4. The learned counsel for the assessee submitted that the gas cylinders were part of its plant and machinery and the assessee is in the leasing business and has earned substantial rentals from leasing these cylinders and from year to year the rentals are accepted by the department as business income and in all the earlier years the department has granted the depreciation. The assessee, the learned counsel submitted, is in the business of l....
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....of matchbox and an empty matchbox to argue that the assessee has only dealt in cylinders and not the gas cylinders, i.e., cylinders filled with gas and, therefore, under the item III(3)(v), the assessee is not entitled for any depreciation at 100 per cent. According to him, what are referred to in that item are cylinders filled with gas. Drawing our attention to page 85 of the assessee's paper book, it was argued by the learned departmental representative that it is clear from the sale proceeds of the cylinders that the assessee, in fact, made profit on sale of the cylinders. According to him, the depreciation is normally granted to an asset which depreciates or loses its value on account of user of the asset. There is no depreciation but there is an appreciation in the value of the asset by the lapse of time. Therefore, according to him, the assessee is not entitled for any depreciation. Drawing our attention to page 84 of the assessee's paper book further argued that it is a tax planning device by Chawla group of companies. According to the learned departmental representative, it is an arrangement whereby the income is distributed between this different family concerns of Chawla ....
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....Assessing Officer has given this finding when for the first time the assessee started this new business. The said order of assessment for the assessment year 1982-83 has clearly recognised that the assessee was in the business of giving cylinders on rental basis. In all the assessment years, the department itself gave the depreciation as claimed by the assessee on the gas cylinders used in the assessee's business. The theory that the entire object of doing business in gas cylinders is with a view to avoid taxes and income of the group concerns, it may be observed that it is not the angle from which the Assessing Officer has built up the case. Therefore, we are of the opinion that it is not proper for the departmental representative to now build up a case where we should look behind the transactions to negative the assessee's claim for depreciation. The assessee had used these cylinders in its leasing business and the assessee had earned substantial rental income from the lease of cylinders right from the assessment year 1982-83 and such lease rental income was assessed in each year. The only ground on which the Assessing Officer and the Commissioner of Income-tax (Appeals) have rej....
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....s a loss. The Income-tax Officer rejected the claim of the loss but allowed depreciation on furniture according to the normal rules. The assessee claimed that the loss should be allowed inasmuch as the furniture, which was let out for various functions, would get destroyed or spoiled and the depreciation allowed under the normal rules was inadequate. The assessee was partially successful before the first appellate authority. In further appeal the Tribunal held that the furniture was not the stock-in-trade of the assessee but was a capital asset. So far as the claim of higher depreciation was concerned, the Tribunal held that the assessee was not entitled to more than what is admissible under the normal rules. The Hon'ble High Court of Gujarat held that the essential characteristics of stock-in-trade are : It must be a commodity in which there is a dealing, i.e., which is bought and sold as distinguished from the commodity with which the business is carried on, viz., from the exploitation of which the income is derived. On the basis of these tests, the Gujarat High Court held that the furniture employed in the business of hiring out the furniture did not constitute the stock-in-trad....