The Commissioner Of Income Tax - 5, Mumbai v. M/S.essar Shipping Limited

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.532 OF 2009 The Commissioner of Income Tax - 5, Mumbai..Appellant. Versus M/s.Essar Shipping Limited ..Respondent. Ms.Suchitra Kamble for the appellant.Mr.P.J. Pardiwala, Senior Advocate i/by Mr.Atul K. Jasani for the respondent. CORAM : J.P. Devadhar & Smt.R.S. Dalvi, JJ. P.C. : DATE : 7[th] March, 2011. 1.Two substantial questions of law have been raised by the Revenue in this appeal, which are as follows : a)Whether the Income Tax Appellate Tribunal was justified in upholding the order of CIT (A) and holding that the charter party agreement executed by the assessee in the case of two ships and twelve mini bulk carriers was a hire purchase agreement and entitled to depreciation ? b)Whether on the facts and in the circumstances of the case, the Tribunal was justified in upholding the order of CIT (A) and allowing depreciation on the additional liability on account of foreign exchange fluctuation ? As regards question (b) is concerned, the learned Counsel for the Revenue states that the said question stands answered against the Revenue by the decision of the Apex Court in the case of Commissioner of Income-tax V/s. Woodward Governor India P Limited reported in [2009] 312 ITR 254. Accordingly, question (b) cannot be entertained. 3.As regards question (a) is concerned, the finding of fact recorded by the Tribunal is that in the light of CBDT circular No.9 of 1943 dated 23-3-1943, an assessee is entitled to claim depreciation allowance in respect of assets taken on hire purchase agreement. In the present case, the assessee company had procured ships and carriers on the basis of Bare Boat Cum Demise agreements. On perusal of the agreements, the Tribunal came to the conclusion that the assessee company has chosen all the relevant options available in the standard format of the agreements so as to make it clear that the agreements entered into by the assessee company are nothing but hire purchase agreements. The Tribunal has further recorded a finding of fact that the interest paid by the assessee company on the basis of the payment schedules have been granted exemption under Section 10(15)(iv)(c) which exemption is available to an assessee only where payments are made towards acquisition of assets. Accordingly, the Tribunal held that the vessels have been cleared by the assessee company on the basis of the hire purchase agreement and the vessels have been used as de facto owners by the assessee company. 4.Since the findings recorded by the Tribunal are findings of fact, the question raised by the Revenue cannot be said to be substantial question of law arising from the order of the Tribunal. The appeal is accordingly dismissed with no order as to costs. (Smt.R.S. Dalvi, J.) (J.P. Devadhar, J.)