The Tax Publishers2021 TaxPub(DT) 0143 (Karn-HC)

INCOME TAX ACT, 1961

Section 32

Where assessee had produced sanction letters, master/supplemental lease agreements, purchase invoices, installation certificates and inspection reports, a joint inspection conducted by the bank officials, independent valuation report in respect of assets leased out to the companies, therefore, depreciation on leased assets to be allowed to assessee where assessee proved existence of leased assets with incontrovertible evidence.

Depreciation - Depreciation claimed on assets leased - Allowability -

Assessee-bank claimed depreciation on assets leased to three companies. AO disallowed the depreciation claimed on the assets leased on the ground that the assets were not found to be in existence in a search conducted under section 132 by Department in the premises of a Group. Tribunal held that AO had failed to furnish the copies of the statements recorded during the course of search as well as other material and has also not provided sufficient opportunity to the assessee to cross-examine the lessee. Tribunal therefore, remitted the matter to AO with a direction to furnish copies of all the material relied upon by AO and to afford an opportunity to the assessee of cross-examination. Held: Assessee had produced sanction letters, master/supplemental lease agreements, purchase invoices, installation certificates and inspection reports, a joint inspection conducted by bank officials, independent valuation report in respect of assets leased out to the companies as well as inspection reports pertaining to pre-search and post-search period. It was held that the transactions of assessee with companies in question was genuine and the assets, which were leased out were in existence and assessee was entitled to depreciation. Therefore, assessee was entitled for depreciation on leased assets.

Relied:Santhosh Hazari v. Purushottam Tiwari [2001] 3 SCC 179, Pr. CIT v. Soft Brands (P.) Ltd. [2018] 94 Taxmann.com 426/406 ITR 513 (Kar.) : 2018 TaxPub(DT) 3520 (Karn-HC), Kulwant Kaur S. Gurdial Singh Mann [2001] 4 SCC 262, Vijay Kumar Talwar v. CIT [2010] 8 Taxmann.com 264/[2011] 196 Taxman 136/330 ITR 1 (SC) : 2011 TaxPub(DT) 693 (SC), K. Ravindranathan Nair v. CIT (2001) 114 Taxman 53/247 ITR 178 (SC) : 2001 TaxPub(DT) 871 (SC) and Sudarshan Silks and Sarees v. CIT [2008] 169 Taxman 321/300 ITR 205 (SC) : 2008 TaxPub(DT) 1908 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 1999-2000


INCOME TAX ACT, 1961

Section 32

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