Case Law Details
Star Chemicals (Bom) Pvt. Ltd. Vs DCIT (ITAT Mumbai)
Undisputedly, the assessee company has sold three energy saving devices for Rs.88,50,000/- in A.Y. 2003-04 and in the computation of income entire amount of Rs.88,50,000/- was offered as deemed capital gains under section 50 of the Act. Tribunal in A.Y. 2003-04 while overturning the findings returned by the AO and the Ld. CIT(A) held that the sale of three energy saving devices are rightly taxed as deemed capital gain under section 50 of the Act. It is also not in dispute that this is first year of claiming depreciation by the assessee. It is also not in dispute that as per Tripartite agreement dated 30.03.1995 between ITC Classic Finance Ltd. as owner, assessee as hirer and RSEB as lessee confirming the hire purchase agreement as well as agreement for lease of equipment assessee and RSEB, available at page 165 to 189 of the paper book, RSEB was in possession of the equipment and then hire purchase agreement between assessee and RSEB came into existence. It is also not in dispute that assessee has purchased the assets of RSEB in question under hire purchase agreement on 30.03.1995 and was leased back to RSEB. It is also admitted fact that after 10 years the ownership of these assets will be transferred to RSEB.
It is also not in dispute that vide Tripartite agreement dated 30.03.1995 between ITC Classic Finance Ltd. as owner, assessee as hirer and RSEB as lessee confirming the hire purchase agreement as well as agreement for lease of equipment, the assessee entered into an agreement with ITC Classic Finance Ltd. and thereby acquired on hire purchase basis certain equipment.
In the backdrop of the aforesaid undisputed facts the Ld. A.R. for the assessee contended that when the saving devices are held to be rightly taxed as deemed capital gain under section 50 of the Act, consequent depreciation claimed by the assessee for the year under consideration are liable to be allowed and relied upon the decision rendered by Hon’ble Orissa High Court in case of Industrial Development Corporation Orissa Ltd. vs. CIT (supra) which was further followed by co-ordinate Bench of the Tribunal in case of The West Coast Paper Mills Ltd. (supra) by distinguishing the case of Mid East Portfolio Management Ltd. (supra) decided by the Special Bench.
We have perused the order passed by the co-ordinate Bench of the Tribunal in case of The West Coast Paper Mills Ltd. (supra) available at page 345 to 361 of the case law paper book, which is on identical facts as in the present case wherein the assessee had entered into sale and lease back transactions with various electricity boards and thereafter sought depreciation on assets purchased and leased back to various electricity boards as in the instant case. Coordinate Bench of the Tribunal by relying upon the decision rendered by Hon’ble Orissa High Court in case of Industrial Development Corporation Orissa Ltd. vs. CIT (supra) and decision rendered by Hon’ble Gauhati High Court in case of CIT vs. George Williamson (Assam) Ltd. 265 ITR 626 and decision rendered by Hon’ble Kolkata High Court in case of Smt Bani Roy Chowdhari 138 ITR 578 decided this issue in favour of the assessee.
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