Tca/244/2011 Of Commissioner Of Income Tax I v. M/S Baghmar Finance Ltd

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMANDTHE HONOURABLE MR.JUSTICE N.SATHISH KUMAR Tax Case (Appeal) No.244 of 2011 Commissioner of Income Tax-IChennai. .. Appellant M/s.Baghmar Finance LtdNo.49 (Old No.41)Erulappan StreetChennai- 600 049...Respondent Tax Case (Appeal) filed under Section 260-A of the IncomeTax Act, 1961 against the order of the Income Tax AppellateTribunalChennaiBench'D',dated13.01.2011inI.T.A.No.1930/Mds/2010 for the assessment year 2007-08 againstthe order of the Commissioner of Income Tax (Appeals)III,Chennai order dated 09.08.2010 made in I.T.A.No.135/2009-2010/A-III for the Assessment year 2007-2008 and against the order ofthe Assistant Commissioner of Income Tax, Company Circle i(3)Chennai 34 order dated 15.10.2009 made in GIR/PAN.No.AACB35972for the assessment year 2007-2008. For Appellant :Mrs.R.Hemalatha,Senior Standing Counsel (Delivered by T.S.Sivagnanam, J.) This appeal, by the Revenue filed under Section 260A of theIncome-tax Act, 1961 (hereinafter referred to as “the Act”), isdirected against the order passed by the Income Tax AppellateTribunal Chennai Bench 'D' (for brevity “the Tribunal”), dated13.01.2011 in I.T.A.No.1930/Mds/2010 for the assessment year2007-08. 2.The above appeal has been admitted, vide order dated04.07.2011, on the following substantial questions of law:- https://hcservices.ecourts.gov.in/hcservices/ “1. Whether on the facts and circumstances ofthe case, the Income Tax Appellate Tribunal wasright in holding that assessee company was theowner of the asset and was entitled todepreciation of Rs.3,87,06,802/-? 2. Whether on the facts and circumstances ofthe case, the Tribunal was right in holding thatthe transfer of windmill to the assessee by whichthe assessee's claimed ownership, was a genuinetransaction? 3. Whether on the facts and circumstances ofthe case, the Tribunal was right in holding thatthe cost of one windmill has to be allocated onpro rata basis out of total cost of about Rs.81crores allegedly incurred by M/s.Surana IndustriesLtd.,?” 3.We have heard Mrs.R.Hemalatha, learned Senior StandingCounsel for the appellant; and Mr.A.S.Sriraman, learned counselappearing for the respondent/assessee. 4.The Tribunal, while dismissing the appeal filed by theRevenue and confirming the order passed by the Commissioner ofIncome Tax (Appeals)-III, Chennai, (for brevity “the CIT(A)”)dated 09.08.2010, followed the assessee's own case for theassessment year 2006-07 in I.T.A.No.1368/Mds/2009. 5.Before the Tribunal, the Revenue contended that the saiddecision of the Tribunal, for the assessment year 2006-2007, hasnot attained finality, as the Revenue are in the process offiling appeal before this Court under Section 260A of the Act.Nevertheless, the Tribunal held that this Court having notpassed any orders reversing the common order passed by theTribunal in the assessee's own case, followed the said order anddismissed the appeal filed by the assessee. 6.We have heard this appeal on two earlier hearings andsince the order of the Tribunal was an order following itsearlier order, we were inclined to list this appeal along withthe appeal filed by the Revenue against the order passed by theTribunal for the assessment year 2006-2007, dated 23.04.2010.However, the learned counsel on either side submitted that theywill produce the copy of the order passed by the Tribunal, dated23.04.2010, and argue as to the correctness of the said orderand the Court may test the same to arrive at a decision. 6.We have heard this appeal on two earlier hearings andsince the order of the Tribunal was an order following itsearlier order, we were inclined to list this appeal along withthe appeal filed by the Revenue against the order passed by theTribunal for the assessment year 2006-2007, dated 23.04.2010.However, the learned counsel on either side submitted that theywill produce the copy of the order passed by the Tribunal, dated23.04.2010, and argue as to the correctness of the said orderand the Court may test the same to arrive at a decision. 7.By consent, the said procedure was adopted andaccordingly, We heard the appeal today. The order passed by theTribunal in the assessee's own case for the assessment year2006-07, dated 23.04.2010, was placed before us. The AssessingOfficer, while completing the assessment, vide order dated15.10.2009, under Section 143(3) of the Income Tax Act, 1961,held that the assessee will not be entitled for depreciation onthe windmill, as the Assessing Officer disbelieved thetransaction to be one of purchase of 80% shares in the windmilland held that the transaction is only a finance transaction,certain reasons were assigned by the assessing officer to termthe transaction as a 'sham transaction' to justify its decisionto deny depreciation. 8.When the matter was taken up on appeal by the firstappellate authority, namely, the CIT(A), the CIT(A) had followedthe order passed for the assessment year 2006-07 and allowed theassessee's appeal. The Revenue filed appeal to the Tribunalagainst the order passed for the assessment year 2006-07. Thisappeal was dismissed by order dated 23.04.2010. 9.We have perused the said order passed by the Tribunal andwe find that the Tribunal has analysed the entire transactionsin great depth to confirm the order passed by the CIT(A), hadanalysed the business prudence and found that no businessmandoing finance would lend money to earn such a low interest evenassuming that the assessee is able to get the benefit ofdepreciation at 100% which would result in reduction of theincome of the assessee in the present case over a period of twoyears by Rs.8.10 Crores. 10.Further, the Tribunal observed that it would be of nobenefit to the assessee, insofar as when the windmill is sold atany point of time the windmill will be depreciated asset and theincome would be taxable as a short term capital gain due to theapplicability of Section 50 of the Act. Further, the Tribunalnoted that the existence of the windmill was not disputed by theRevenue and the payment by M/s.Surana Industries Ltd., to theassessee in regard to the quantum and the method of computationof quantum was also not disputed. Further, it analysed everyattendant facts and circumstances, and rejected the stand takenby the Assessing Officer that the transaction was a 'shamtransaction'. 11.We find that the order passed by the Tribunal is a wellreasoned order taking into consideration the facts andcircumstances. In fact, the Tribunal had re-appreciated thefactual position, which was considered by the CIT(A). 12.Thus, in our considered view, no substantial question oflaw arises for consideration in the present appeal.Accordingly, the appeal filed by the Revenue is dismissed. Nocosts. -s/d- Assistant Registrar(CS-IV) True Copy Sub-Assistant Registrar abr To 1.The Income Tax Appellate Tribunal Chennai Bench 'D'.2. The Commissioner of Income Tax Appeals III 121, Mahathma Gandhi Road, Chennai 34.3. The Assistant Commissioner of Income Tax Company Circle 1(3) Chennai 34.4. The Commissioner of Income Tax I Chennai,+1 CC to Mrs.R.Hemalatha, Advocate sr 7898.+1 CC to Mr.S.Sridhar, Advocate sr 7822. T.C.(A) No.244 of 2011CP(CO)SP(11/03/2019) https://hcservices.ecourts.gov.in/hcservices/