TaxTMI 
TaxTMI 
1981 (12) TMI 55
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.... shagun'. This issue also came to be decided by us in ITA No. 869 in the assessee's own case. For the very same reasons and as per consistent view of the Bench on this issue, we accept the contention of the assessee. 4. The third and fourth grounds in the assessee's appeal are in respect of disallowance of Rs. 14,420 out of interest claim of Rs. 15,694 payable to M/s. Buckau Wolf India Development Corporation, Bombay. In the course of assessment proceedings, the ITO disallowed the assessee's claim on account of interest paid to M/s. Buckau Wolf India Development Corporation amounting to Rs. 16,694 observing that 'the assessee has claimed interest of Rs. 16,694 payable to one M/s. Buckau Wolf India Development Corporation, Bombay. In this case, the Civil Judge, Poona, vide his order dt. 22nd September, 1971 directed the assessee to pay Rs. 57,900 to the above party with future interest @ 6%. Therefore, after, the assessee filed an appeal to the High Court which passed an order dt. 19th June, 1973 directing the assessee to deposit in the court Rs. 20,000 and furnish security for the balance amount of Rs. 37,000 plus interest. The High Court further allowed the assessee vide order ....
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....ion and delaying justice. The assessee's claim is, therefore, on the basis of facts and for the sake of natural justice also is accepted during the year under consideration. 7. The fifth and the sixth grounds in the assessee's appeal are in respect of disallowance of depreciation amounting to Rs. 14,293 and initial depreciation amounting to Rs. 57,171 claimed on the labour quarters purchased by the assessee company under hire-purchase agreement from the Haryana Housing Board for its employees, which was made by the ITO and confirmed by the CIT (Appeals). In the alternative, the assessee also raised a plea that if depreciation and initial depreciation are not allowed the claim of rent paid by the assessee company @ Rs. 71 per month per quarter should have been allowed. The facts, in brief pertaining to the issue are that the assessee was allotted 27 EMS houses by the Haryana Housing Board constituted under the Haryana Housing Board Act, 1971 (Act No. 30 of 1971) vide Board letter No. 124 dt 30th September, 1971. The total cost of these 27 EWS houses was worked out at Rs. 2,85,855 in case payment for the same was to be made immediately. The assessee not making the payment right th....
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....arried before the CIT (Appeal) and many a contentions were raised by the assessee as detailed in the said order, which came to be rejected and the action of the ITO confirming disallowance of initial depreciation and depreciation was confirmed. It will not be out of place to mention that an additional ground was raised by the assessee before the CIT (Appeals) that in case the assessee's claim of depreciation and initial depreciation is not accepted, he should be allowed deduction of rent payment @ Rs. 71 per month per quarter. This too was rejected by the CIT (Appeals) for the reasons given in his order. 9. It is this action of the CIT (Appeals), which is contested by the assessee before us. The ld. counsel for the assessee beside reiterating all the submissions made before the CIT (Appeals) placed his reliance on the case of Allahabad High Court in Addl. CIT vs. U.P. State Agro Industrial Corporation Ltd. (1981) 20 CTR (All) 141 : (1981) 127 ITR 97 (All) and (1981) 16 Taxation (3) - 18 and vehemently argued that so far as the ownership of the houses was concerned it belonged to the assessee and simply because the assessee could not make out-right payment and arrangement for def....
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.... per month per quarter, the CIT (Appeals) made the following observations : "The sum of Rs. 71 to be paid as monthly instalment per quarter does not really represent the rent of a quarter. On a proper analysis of the hire-purchase tenancy agreement, it is clear that what the appellant has to pay is the cost of the houses plus the interest to be paid in respect of the rent on outstanding price during the entire period of the currency of the hire purchase agreement. In view of the decision of Hon'ble Supreme Court in the case of Challapalli Sugars Ltd. vs. CIT 1974 CTR (SC) 309 : (1975) 98 ITR 167 (SC), the interest payment in respect of an asset goes to increase the cost of the asset and, therefore, the interest payments cannot be allowed as a revenue deduction. Therefore, in view of the decision in Challapalli Sugar Ltd. even the element of interest in the monthly payments cannot be allowed as a revenue deduction". We could not be in agreement with the above observation of the CIT (Appeals) but when we look to the specific terms of the agreement, referred to above, were find that but for the said terms of the agreement in cl.2 the assessee would have succeeded in its first co....