LexMCORP GLOBAL PVT. LTD. versus COMMISSIONER OF INCOME-TAX, GHAZIABAD
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[2009] 2 S.C.R. 213 MCORP GLOBAL PVT. LTD. A v. COMMISSIONER OF INCOME-TAX, GHAZIABAD Civil Appeal No. 955 of 2009 FEBRUARY 12, 2009 B [S.H. KAPADIA AND H.L.DATTU, JJ.] Income Tax Act, 1961 : .... J Depreciation - claim for - In respect of two lease trans- actions by the assessee- In respect of first transaction initially c partly denied by AO but on remission of the matter assessee held to be 100% entitled- Order of AO on remission not cha/- Jenged - The order of AO denying depreciation confirmed by Tribunal and High Court - In respect of second transactions, depreciation denied by AO and the appellate court~ holding D + the same to be a sham- On appeal, held: Denial of deprecia- tion in respect of first transaction not correct - Tribunal has no power to enhance the assessment- The order of AO after re- mand granting depreciation also attained finality - Second transaction since not proved and since held to be a sham, E denial of depreciation, correct. Assessing Officer disallowed claim of the assessee a lessor of soft drink bottles, for depreciation, in respect of two transactions i.e. regarding lease dated 15.2.1991 and regarding lease dated 15.3.1991. F In respect of first transaction, as regards lease of 5,46,000 bottles, depreciation was allowed by AO only in respect of 42,000 bottles having been received prior to 31.3.1999 i.e. ttie relevant period. The depreciation claim of assessee was also disallowed by Income Tax Appel- G ~ ..,,( late Tribunal and by High Court. During pendency of the appeal before Tribunal, the case having been remanded by CIT(A), the AO held that the assessee was entitled to 213 H 214 SUPREf\/1E COUR-r f~t:F'()R1··~ [2009] 2 S.C.R. A 100% depreciation. That findir;g of AO has not been chal- lenged so far. ·~ In respect of the second transaction, AO denied de- preciation, holding that the lease deed was not proved B and in fact it was a sham. The said finding was accepted by the Tribunal and the High Court. Hence, the present appeal in respect of both the transactions. Partly allowing the appeal, the Court ..... " .. HELD : 1.1 The Tribunal is not authorized to take back c the benefit granted to the assessee by the AO. The Tribu- nal has no power to enhance .the assessment. In the present case, the AO had granted depreciation in respect of 42,000 bottles out of the total number of bottles (5A6,000), by reason of the impugned judgment. That D benefit is sought to be taken away by the Department, which is not permissible in law. [Para 6) [218-8, CJ _._ 1.2 According to the impugned judgments of the High Court and the Tribunal, the transaction dated 15.2.1991 E was a financial transaction and not a lease. If deprecia- tion is to be granted for 42,000 bottles under transaction dated 15.2.1991 then it cannot be said that 42,000 bottles came within the lease dated 15.2.1991 and the balance came within the so-called financial arrangement. In the .,_. circumstances, the benefit of depreciation given to the I F assessee by the AO in respect of 42,000 bottles out of 5,46,000 bottles cannot be withdrawn by the Department and to that extent alone the assessee succeeds in this civil appeal.[Para 7) [ 218-D, E, F] G 1.3 CIT(A) had remitted the matter to the AO who on remand came to the conclusion that all 5,46,000 bottles stood sold before 31.3.1991. This finding of fact has be- \- >- come final. It has not been challenged. Hence, the Depart- I ment has erred in disallowing depreciation of Rs. H 18,04,572/-. [Para 7] [218-F, G] MCORP GL08AL PVT. L TO. V. 21 ~ COMMISSIONER OF INCOME-TAX, GHAZIABAD Hµkumchand Mills 4td. vs. CIT (1997) 63 ITR 232 ..,.. re- A lied on. 2. 1 The a$se~!rne has ngt proved the transaction dated 16.3. 1991. Th~ qµe&tion (lf ' 1appropriation" of the bottles to a particular c;ontrnc.t is different from the con,. cept relating to the nature Qf the transaction, !n the present B case, ~ub .. lease is dated 8.3.1~l!1 between le~see ~nd syb,, lessee precede$ the l~~se ~~tact 1~-3,1991 between the, assessee (let1$or) and les~e~, As rj~fltly q~~~1ion~q l?Y the AO as to lessee could tiave entered into a sub-lease on 8.3.1991 when it had not acquired leasehold rights till c 16,3.1991 from the assessee as the lessor. Moreover, there Is nothing in the alleged lease deed dated 15.3.1991 indi- cating commencement of the !e~s@ from a prior date. There Is nothing In the $O-called lease dated 15.3.1991 a
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