Income Tax Appeal v. Shree Rajasthan Syntex Limited Udaipur

REPORTABLE IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR -------------------------------------------------------- J U D G M E N T (1) INCOME TAX APPEAL No. 70 of 2005 C I T UDAIPUR V/S SHREE RAJASTHAN SYNTEX LIMITED UDAIPUR (2) INCOME TAX APPEAL No. 23 of 2005 C I T UDAIPUR V/S SHREE RAJASTHAN SYNTEX LIMITED UDAIPUR(3) INCOME TAX APPEAL No. 13 of 2005 C I T UDAIPUR V/S SHREE RAJASTHAN SYNTEX LIMITED UDAIPUR (4) INCOME TAX APPEAL No. 50 of 2005 C I T UDAIPUR V/S SHREE RAJASTHAN SYNTEX LIMITED UDAIPUR Date of Judgment : May 6, 2008 HON'BLE SHRI N P GUPTA,J. HON'BLE SHRI KISHAN SWAROOP CHAUDHARI,J. Mr. KK BISSA, for the appellant Mr. ARUN BHANSALI, for the respondent BY THE COURT (PER HON'BLE GUPTA, J.): These four appeals arise in identicalcircumstances, basically involving a common question,though one question as involved in three appeals is notincorporated in Appeal No.13, however, in view of thecontroversy involved in all the four matters, we think itappropriate to decide all these four appeals by thiscommon judgment. Appeals No. 70, 50 and 23 have been admitted ondifferent dates, by framing following two substantialquestions of law, which are common in all the threematters, being as under :- “i) Whether, on the facts andcircumstances of the case the ITATwas justified in holding that theassumption of jurisdiction underSection 147/148 of the Income TaxAct is bad in law and accordinglyin quashing the reassessmentproceedings? ii) Whether on the facts andcircumstances of the case the ITATwas justified in holding that theassessee is entitled to getdepreciation under Section 32 onthe assets claimed to be taken onlease, as owner of the assets?” Appeal No.13 has been admitted on 13.03.2007,by framing following one substantial question of law, which happens to be question No.2 in other three appeals: “Whether on the facts andcircumstances of the case the ITATwas justified in holding that theassessee is entitled to getdepreciation u/s 32 on the assetsclaimed to be taken on lease, asowner of the assets?” All these four appeals relate to different assessment years. Necessary facts are, that assessee ShreeRajasthan Syntex Limited had leased out certain plant andmachinery to M/s. Rajasthan Texchem Limited, underdifferent agreements, executed on different dates, forspecified period of time, at a monthly rent, stipulatedin the agreements. The assessee lessor has its registeredoffice at Udaipur, while lessee M/s. Rajasthan TexchemLimited has its registered office at Mumbai, and isassessable there. The Assessing Officer assessed the assessee for the assessment years 1996-97, 1997-98 and 1998-99 so alsofor the assessment year 2001-02, and in these assessmentproceedings, the assessee claimed depreciation on thecapital assets, leased out to lessee, under theprovisions of Sec.32, in respect of three assessmentyears being 1996-97, 1997-98 and 1998-99, and theassessee was allowed depreciation. It so happened, thatthe lessee came to be assessed at Mumbai, by theAssessing Officer there, and it appears, that the lesseeclaimed revenue expenditure for the lease rent paid tothe lessor, but then the Assessing Officer there, insteadof allowing the expenditure, allowed depreciation on thecapital value of the plant and machinery. It appears thatthe stand of the assessee in that case was, that he didnot claim depreciation, be that as it may. On this fact coming to the notice of theAssessing Officer of lessor, about the Assessing Officerat Mumbai having allowed depreciation to the lessee,proceedings under Sec.147 were initiated by issuingnotice under Sec.148, for the three assessment years. On this fact coming to the notice of theAssessing Officer of lessor, about the Assessing Officerat Mumbai having allowed depreciation to the lessee,proceedings under Sec.147 were initiated by issuingnotice under Sec.148, for the three assessment years. So far as assessment year 2001-02 is concerned,since the assessment at Mumbai had already been made bythen, the Assessing Officer, while making assessment inoriginal, did not allow deduction for depreciation. Allthese orders were challenged in appeals, before the CIT(Appeals), who upheld the addition while deciding theappeals relating to the assessment years 1996-97 and1997-98, however, on further appeals before Tribunal, theTribunal allowed the appeals, and held the assessee entitled for depreciation on these assets, and theaddition made was ordered to be deleted. For the assessment years 1996-97 and 1997-98,the Tribunal passed a detailed common order on22.12.2003, which is subject matter of appeal in AppealsNo.23 of 2005 & 50 of 2007. It so happened, that by thattime, i.e. by the time of passing order of the Tribunaldated 22.12.2003, the appeals of the assessee, againstthe assessment orders made for the year 1998-99 and 2001-02 remained pending before the learned Commissioner, asthey have been decided vide order dated 18.10.2005, andthe learned Commissioner following the judgment of thelearned Tribunal dated 22.12.2003, deleted the addition,made by the Assessing Officer regarding depreciation.Aggrieved of these orders of the learned Commissionerdated 18.10.2005, the revenue filed appeals beforeTribunal, and the learned Tribunal by common order dated13.07.2006, while following its earlier order, upheld theorder of the learned Commissioner, in Para 6 of the orderdated 13.07.2006. This is how the four appeals come before us. In the order dated 22.12.2003, the learnedTribunal has discussed both the aspects, i.e. aboutsustainability of the action of the Assessing Officer inreopening the assessment, for examining the question asto whether the circumstances existed, authorizing theassessing officer to re-open the assessment, and afterdiscussing various case laws of different High Courts, and Hon'ble Supreme Court, so also this Court, came tothe conclusion, that the learned Assessing Officer didnot have any jurisdiction to review its own order, andthat, the opinion framed by the Assessing Officer, on theopinion of another Assessing Officer, could not be madebasis to initiate the re-assessment proceedings, as itwas described to be a “borrowed satisfaction”. Then,notwithstanding, the learned Tribunal proceeded toconsider the matter on merit also, and it was found, thatthe lease agreements in question cannot be said to befinance leases, but are operating leases, the lessorcontinues to be the owner, and the lessee does notacquire any right in the property, and that, on overallreading of the lease agreements, there was nothinginconsistent therein, which could show the intention ofthe parties to be otherwise. Thus it was held, that theassessee company is the owner of the leased assets, whichassets were leased out to the lessee company, for a rent,and thereby the assessee company is also in user of theassets, and as such the lessee is entitled todepreciation under Sec.32 of the Act. In view of the two questions framed in thethree appeals, we are required to examine, as to whether,in the facts and circumstances the ITAT was justified inholding, that assumption of jurisdiction under Sec. 147and 148 is bad in law, and secondly, as to whether on thefacts and circumstances the learned Tribunal wasjustified in holding that the assessee is entitled todepreciation under Sec.32, on the assets claimed to begiven, (sic. accidentally written in the admission order as 'taken') on lease, as owner of the assets. In view of the two questions framed in thethree appeals, we are required to examine, as to whether,in the facts and circumstances the ITAT was justified inholding, that assumption of jurisdiction under Sec. 147and 148 is bad in law, and secondly, as to whether on thefacts and circumstances the learned Tribunal wasjustified in holding that the assessee is entitled todepreciation under Sec.32, on the assets claimed to begiven, (sic. accidentally written in the admission order as 'taken') on lease, as owner of the assets. Arguing the appeals, it was contended by thelearned counsel for the revenue, that the learnedTribunal was in error in concluding, that reopeningproceedings had been undertaken, only on the ground ofchange of opinion, rather it was on account of materialfact, that subsequently came to the notice of theAssessing Officer, that with respect to the same assets,the purported lessor, as well as lessee, both had beenallowed the benefit of depreciation, and therefore it didconstitute sufficient ground, for the Assessing Officerto initiate proceedings for reassessment, on the groundof income having escaped assessment. Then, on the secondquestion, it was contended, that the circumstances of thecase are writ large, viz., that the lessor and lessee,though they are two companies, but they are sisterconcerns, inasmuch as the son of the key person of thelessor, is the key person in the lessee company, and insubstance, the lessee company had only availed financialassistance from the lessor company, and the activity hasbeen given a cover by articulate drafting of the leaseagreements, to show, as if the assets were acquired bythe lessor, and were leased out to lessee. The veil wasrightly required to be pierced, and has rightly beenpierced by the Assessing Officer, and was rightlyconfirmed by the learned Commissioner in appeals,relating to assessment years 1996-97 and 1997-98, bycoming to the conclusion, that the purported leaseagreements are only financial leases, and therefore theassessee is not entitled to any depreciation under Sec.32. It was contended, that the learned Tribunal hasnot properly construed the terms and conditions of thelease agreements, rather the learned Commissioner hadproperly appreciated various clauses of the leaseagreements. On the other hand, learned counsel for theassessee supported the impugned judgment of the learnedTribunal, on all counts. We have heard learned counsel, have gonethrough the judgments, and have considered the legalprovisions, and the case laws as well. Coming to the first question, about validity ofassumption of jurisdiction under Sec. 147 and 148 by theAssessing Officer, we may gainfully quote provision ofSec.147(1), which reads as under:- “147. If the Assessing Officer hasreason to believe that any incomechargeable to tax has escaped assessmentfor any assessment year, he may, subject tothe provisions of sections 148 to 153,assess or reassess such income and also anyother income chargeable to tax which hasescaped assessment and which comes to hisnotice subsequently in the course of theproceedings under this section, or re-compute the loss or the depreciationallowance or any other allowance, as thecase may be, for the assessment yearconcerned. . . ” A look at this provision shows, that pre-requisite condition, which can be said to be sine-qua-nonis, that the Assessing Officer “has reason to believe”that income chargeable to tax has escaped assessment. Thelearned Tribunal has considered this aspect of the matter in detail, and has found, that in the present case, theAssessing Officer had taken the decision afterconsidering all the facts, and reopening proceedings hadbeen initiated, on account of opinion of anotherAssessing Officer (at Mumbai), and came to theconclusion, that opinion of one Assessing Officer cannotreplace the opinion of another Assessing Officer. In sucha case, law does not permit re-assessment, on change ofopinion. For this purpose, the learned Tribunal hasrelied upon a series of judgments, being as under: A look at this provision shows, that pre-requisite condition, which can be said to be sine-qua-nonis, that the Assessing Officer “has reason to believe”that income chargeable to tax has escaped assessment. Thelearned Tribunal has considered this aspect of the matter in detail, and has found, that in the present case, theAssessing Officer had taken the decision afterconsidering all the facts, and reopening proceedings hadbeen initiated, on account of opinion of anotherAssessing Officer (at Mumbai), and came to theconclusion, that opinion of one Assessing Officer cannotreplace the opinion of another Assessing Officer. In sucha case, law does not permit re-assessment, on change ofopinion. For this purpose, the learned Tribunal hasrelied upon a series of judgments, being as under: 1.Jt. CIT (Assessment) & Ors. Vs. George Williamson(Assam) Ltd. (2002) 258 ITR (Gauhati)2.Mercury Travels Ltd. Vs. Dy. CIT (2002) 258 ITR 533(Calcutta)3.Garden Silk Mills Ltd. Vs. Dy. CIT (1996) 222 ITR 68(Gujarat) 4.Jindal Photo Films Ltd. Vs. Dy. CIT & Anr. (1998) 234ITR 170 (Delhi)5.CIT Vs. Hickson & Dadajee Ltd. (1980) 121 ITR 368(Bombay)6.Garden Silk Mills Pvt. Ltd. Vs. Dy. CIT (1999) 237 ITR668 (Gujarat)7.CIT Vs. Corporation Bank Ltd. (2002) 254 ITR 791 (SC)8.Sheth Brothers Vs. Joint CIT (2001) ITR 270 (Gujarat) 9.CIT Vs. Sambhar Salt Ltd. (2003) 262 ITR 675(Rajasthan)10.CIT Vs. Kelvinator of India Ltd. (2002) 256 ITR 1(Delhi) In the case of Garden Silk Mills Ltd., whereinoriginal assessment was done after considering theexplanation of the assessee, and no new information hadcome to the effect, that the income had escapedassessment, it was held, that the re-assessment,initiated merely on change of opinion could not sustain.Likewise, in the case of Jindal Photo Films Ltd., Income-tax Officer attempted to reopen an assessment,because the opinion formed earlier by him, in his opinion was found to be incorrect. It was held that reopeningcould not be done. In that case, it was also held, thatif an expenditure or deduction was wrongly allowed, whilecomputing the taxable income of the assessee, the samecould not be brought to tax by reopening the assessment,merely on account of the Assessing Officer subsequentlyforming an opinion, that earlier he had erred in allowingthe expenditure or the deduction. Then, in other cases,view has been taken, that “reason to believe” is a sine-qua-non, and such reason must be based on material, whilechange of opinion does not satisfy the requirement ofsuch material. intelligibly projected, that the factum of AssessingOfficer at Mumbai having allowed depreciation allowanceto the lessee, did constitute a fact, which came to thenotice of the Assessing Officer here, and that furnishedreason to believe, that the income of the assessee,chargeable to tax, had escaped assessment, but then ifproperly appreciated, all that it comes to is, that a setof lease deeds, had been appreciated by the AssessingOfficer of lessee at Mumbai, who after appreciating themallowed depreciation, and the Assessing Officer here cameto the conclusion, that the assessee continues to be theowner of the assets, and is entitled to depreciationallowance, while the Assessing Officer at Mumbai formedan opinion from the same set of lease deeds, that thelessee should be taken to be the owner, and has right todepreciation. Thus net result, which comes to is, thatsimply because, after the Assessing Officer here had formed a particular opinion, on a particular set ofdocuments, simply because, the Assessing Officer atMumbai had formed a different opinion, on the same set ofdocuments, the action was sought to be initiated here forre-assessment, which in our view, has rightly been foundby the learned Tribunal, that it was a “borrowedsatisfaction” under the opinion of the Assessing Officerat Mumbai, and has rightly been found to be notsufficient, to confer power on the Assessing Officer, toinitiate re-assessment proceedings. formed a particular opinion, on a particular set ofdocuments, simply because, the Assessing Officer atMumbai had formed a different opinion, on the same set ofdocuments, the action was sought to be initiated here forre-assessment, which in our view, has rightly been foundby the learned Tribunal, that it was a “borrowedsatisfaction” under the opinion of the Assessing Officerat Mumbai, and has rightly been found to be notsufficient, to confer power on the Assessing Officer, toinitiate re-assessment proceedings. Likewise, we may just take another hypothesis,that if the Assessing Officer at Mumbai had not alloweddepreciation allowance to the lessee, and would have cometo the conclusion, on the basis of these very leasedeeds, about the lessor being continuing as owner, it isnot in dispute, that the re-assessment proceedings wouldnot have been initiated here. This obviously makes itclear, that re-assessment proceedings had been initiated,only on account of the opinion arrived at by theAssessing Officer at Mumbai. Thus, question No.1, as framed in three appealsis answered in affirmative, i.e. against the revenue, andin favour of assessee. Then, we take up question No.2, regardingentitlement of the assessee to claim depreciationallowance on the leased plant and machinery. The learnedCommissioner, though has purportedly recapitulatedvarious clauses of the agreements, like Clause 8, 12, 13, 16, 17, 27 and 29, and pressed them into service, butthen in Para 18, the learned Commissioner has alsoconsidered the assessment order, passed by the AssessingOfficer at Mumbai, and the conclusions drawn by him inthis regard, to the effect, that lessor never intended tobe the real owner of the assets in question, and hadnever intended to possess and exploit them for thepurpose of profit, so also the loan transactions were putin the form of lease transaction, only to avail taxbenefits. Then, the learned Commissioner purportedlyproceeded to consider various clauses of the lease deeds,and described the above clauses to be general clauses,utilized normally in preparing a lease agreement, notgiving clear indication about the substance of thetransactions. Then, the learned Commissioner proceededto take into account Clauses 4, 8, 9, 10, 14, 15, 18 &30, and on that basis concluded, that it is clear, thatin real substance the alleged lease agreement is only afinance lease, and not an operating lease, and alsoconcluded, that the risks of accidents to the ownershipof the assets stand substantially transferred to thelessee, although apparently the title to the assets hasnot been so transferred, and held the lease agreement being in the nature of a finance lease, not a normaloperating lease. Clause 4 of the lease agreement stipulates,about payment of rental, notwithstanding the fact, thatmachinery, or any of them remain out of commission, orout of order, due to whatever circumstances. Then, Clause8 provides for the lease being not cancelable. Clause 9 Clause 4 of the lease agreement stipulates,about payment of rental, notwithstanding the fact, thatmachinery, or any of them remain out of commission, orout of order, due to whatever circumstances. Then, Clause8 provides for the lease being not cancelable. Clause 9 comprises the acknowledgements on the part of the lesseewith the lessor, about there being no warranty forfitness of the machinery or it being in merchantablecondition, that the machinery is accepted by the lesseewith all faults and defects, and that delivery by lessorshall be conclusive evidence about the machinery being ingood working condition and order, and that, the lessorhas not made, and does not make, any representation ofwarranty with respect to merchantability, quality,condition, durability or suitability of said machinery,in any respect. Then, sub-clause (h) of Clause 9 isregarding obligation of the lessee to pay rent in timeduring the contract period, regardless of fact, as towhether the machinery is under repair, or is otherwisenot working. Then Clause 10 is about obligation of thelessee to keep the machinery insured, and to takeinsurance in joint names of lessee and lessor, and that,if the machinery is damaged during the term of the lease,the insurance moneys payable under the said policy, shallbe paid to the lessor, to compensate the lessor, for theloss, and surplus if any, will be paid to the lessee.Then, this clause further provides, that any loss ordestruction caused to the machinery, shall not effectcontinuing of the lease, or the lessee's liability forpayment of rent. Then, Clause 14 provides that the lesseeshall pay all tax, rates and out goings of everydescription. Clause 15 stipulates about expenses to beborn by lessee for major or minor repairs and up-keepingand maintenance of machinery. Then, Clause 18 is aboutthe lessee being responsible to bear entire risk of lossor damage to the machinery, and to pay continuously the lease rental, without any disturbance. Then, Clause 30provides obligation of the lessee to assume all theliabilities and risk for the use, operation and storageof the machinery. We have recapitulated these clauses only forthe purpose of seeing, as to how, from these clauses, thelearned Commissioner could possibly arrive at aconclusion, about the agreement being only a financelease, and not operating lease. The learned Tribunal hasconsidered these stipulations of the lease in detail, andagain threadbare, and also considered the other attendingcircumstances, including as found in Para 42 of thejudgment, that under the Memorandum of Association, it iscarrying on the business of leasing and hire purchase,and that, the assessee company, during the relevant year,carried out the business of leasing to more than oneperson. It was also found, as a fact available onrecord, that the public financial institutions like ICICIand IDBI provided financial assistance of Rs.1500 lacs tothe assessee, against security of assets, for carryingthe lease business. It was further found, that the twocompanies are independent limited companies, which arelisted in recognized Stock Exchange, and are independentlegal entities, incorporated under the companies law. Ithas also been found, that the supplier of the equipmentshave supplied, and delivered the assets, and payment oftaxes etc. have also been made by the assessee company,and insurance cover also mentions the assessee company asthe owner of equipments. Then, in the financial statements of the assessee company, the leased assets statements of the assessee company, the leased assets have been separately shown, and the accounts are auditedby the statutory auditors, and same have been approved bythe Board of Directors. With this, the learned Tribunalagain reproduced/recapitulated various clauses of thelease deed, as considered by the learned Commissioner,and it was considered, that in this particular case,machines were received at the premises of the lessorcompany, the same is recorded in the Central Exciserecord, duly received, and the assessee has claimed theCentral Excise Modvat on these machines, and then theywere given on lease to the lessee company, by issuance ofCentral Excise Gate-pass, and following Central ExciseRules, prevalent at that time, and considering theassessee to be the owner, consequent benefits have beengiven. The assets were delivered to the lessee by trucktransport, and freight charges were paid by the assesseecompany, and were added in the amount of value of theassets. The assets were covered by transit insurance, andinsurance premium was paid by the assessee company, andsame were declared as the assets of leasing company tothe insurance company. Then, complete details ofmachines, given on lease, in respect of assessment years,showing respective amount, break-up, dates of lease, havebeen given. The custom duty, bank charges, freightcharges were also paid by the assessee, which also provedthe assessee to be the owner. Then, the learned Tribunalconsidered various case laws on this aspect, being asunder:- 1.CIT Vs. Maharashtra Apex Corporation Ltd. (2002) 254ITR 98 (SC)ITR 98 (SC) 2.CIT Vs. Shaan Finance (P) Ltd/First Leasing Co. OfIndia Ltd. (1998) 231 ITR 308 (SC)India Ltd. (1998) 231 ITR 308 (SC) 3.CIT Vs. Essan Investments Ltd. (2002) 254 ITR 83(Madras)4.CIT Vs. Madan & Co. (2002) 254 ITR 445 (Madras) 5.Joint Commissioner of Income-tax Vs. Anatronics GeneralCo. (P) Ltd. (2001) 247 ITR 25 (Delhi)6.CIT Vs. Rensult Investment & Finance P. Ltd. (1998) 233ITR 172 (Bombay)7.Mulraj Dvarkadas Goculdas Vs. Dy. CIT (1994) 48 TTJ(Bombay) 5318.Peacock Chemicals Pvt. Ltd. Vs. Dy. CIT (1995) 51 TTJDelhi) 264. We need not multiply all the cases, as thebest, and nearest case we find is, that of Hon'bleSupreme Court, in the CIT Vs. Shaan Finance’s case, inPara 17 whereof it has been held by the Hon'ble SupremeCourt as under :- “17. Neither of these cases dealswith an agreement of hire of machinery incontradistinction to an agreement of hirepurchase. When the machinery is given onhire by the owner to the hirer on paymentof hire charges, the income derived bytheowner is business income. The owneris also entitled to depreciation on themachinery so hired out. The hirer, on theother hand, who pays hire charges, isentitled to claim these as revenueexpenditure. The hirer has not acquiredany new asset. A transaction of hire is,therefore, of bailment of the machinery.There is no extinguishment of any rightof the owner in the machinery. There ismerely a license given to the hirer touse, for a temporary period, themachinery so hired. In the case of M/S.Damodar Valley Corporation v. The Stateof Bihar (AIR 1961SC 440), this Courtexamined the contract under which themachinery and equipment was supplied bythe Corporation to the contractors. Thequestion was whether it was a merecontract of hiring or a sale or a hirepurchase. The Court said (p.445): "It is well-settled that amere contract of hiring, withoutmore, is a species of the contractof hiring, without more, it aspecies of the contract of bailment,which does not create a title inthe bailee, but the law of hirepurchase has undergone considerabledevelopment during the last half acentury or more and has introduced a number of variations, thus leadingto categories, and it becomes aquestion of some nicety as to whichcategory a particular contractbetween the parties comes under." We need not dwell on the nicetiesof a hire purchase contract between theparties of a hire purchase contract sincewe are concerned only with contracts ofhire simpliciter.” "It is well-settled that amere contract of hiring, withoutmore, is a species of the contractof hiring, without more, it aspecies of the contract of bailment,which does not create a title inthe bailee, but the law of hirepurchase has undergone considerabledevelopment during the last half acentury or more and has introduced a number of variations, thus leadingto categories, and it becomes aquestion of some nicety as to whichcategory a particular contractbetween the parties comes under." We need not dwell on the nicetiesof a hire purchase contract between theparties of a hire purchase contract sincewe are concerned only with contracts ofhire simpliciter.” With this, it is required to be considered,that the basic distinguishing feature between the leasebeing finance lease or operating lease would be, that incase of finance lease, at some point of time, theownership transfers to the lessee, or the lessee has theoption to purchase, the hired assets, in consideration ofa token price. Obviously, in that event, the lease rent,or hire charges, called by whatever name, with passage oftime, partake the character of the price of the asset inpossession of the lessee, or hirer, under the financelease agreement, as distinct from the lease in question,where there is a very specific stipulation in clause 8that on termination of the lease, the leased plant andmachinery are to be returned to the lessor, in thecondition, as they were taken, except normal wear andtear. Clause 8 of the lease deed reads as under: “The said machinery shall at all timesremain sole and exclusive property ofthe lessor and lessee shall have noright, title or interest thereon.The lessee irrevocably undertakes thatat no time during currency of leaseagreement, which shall be non-cancelable, not to capitalize leaseassets in lessee's Balance Sheet. Ithas been agreed that the ownership ofsaid assets during tenure of lease, andinclusive of any renewal that lessor mayconcur, indisputably rest with thelessor. Lessee shall not claim any relief by wayof any deduction, allowance, or grantavailable to the lessor as owner of theequipment under Income Tax Act, 1961 orany other statute, rule of regulationissued by the govt. Or any statutoryauthority. The lessee shall keep machinery at alltimes for the full term of lease inlessee's possession and control and haveright to use said machinery at plant oflessee. On expiry of the lease period, thelessee shall deliver back the saidmachinery to lessor in as good conditionas at commencement of this agreement,reasonable wear and tear excepted andshall pay all arrears of rent that maybe outstanding. Such delivery is to bemade to lessor at destination indicatedby lessor at the lessee's cost unlessotherwise decided by the lessor. Lessee is a trustee of the machineryleased to it, and, without prejudice toother obligation for the agreement willrender himself liable for breach oftrust in case of misapplication ormisappropriation of the machineryleased”. The controversy, thus, can very well be said tobe standing concluded by the judgment of Hon'ble SupremeCourt, in Shaan Finance's case. In view of above discussion, Question No.2 isalso answered in affirmative, i.e. in favour of theassessee, and against the revenue. All the 4 appeals are consequently dismissed. (KISHAN SWAROOP CHAUDHARI),J. ( N P GUPTA ),J.