Law: Income Tax Act, 1961

Section: 256,32

Income-tax-----Reference---Depreciation---Ownership---Finding by Tribunal that transaction of sale was not genuine and that assessee was not owner of asset in question---Tribunal justified in refusing depreciation---No question of law arose---Indian Income Tax Act, 1961, Ss. 32 & 256. Held, dismissing the application for reference, that the Tribunal had found that A was the manufacturer of the computers. It sold the computers to P, its selling agent. P, in its turn, sold the computers to the assessee. The assessee entered into an agreement of lease with A. The computers were given on lease by the assessee to A. A, in turn, sub-leased the computers to P and P again sub-leased the same computers to various parties at Calcutta. Having noticed these facts the Tribunal had come to the conclusion that the entire transaction was so inter-woven that it gave a colour of a mere paper transaction without any actual transaction of sale: there was no material on record to establish that the title to the computers ever actually passed to the assessee. The Tribunals conclusion was based on facts and not on mere surmises. The Tribunal was right in denying depreciation to the assessee. No question of law arose from its order. Krishna Flour Mills v. CIT (1962) 44 ITR 501 (SC) ref. JUDGMENT In the return of income filed by the assessee in respect of the assessment year 1989-90 it, inter alia, claimed depreciation amounting to ps.37,69,273 in respect of 15 computers acquired by it on March 15, 1989, stated to be mainly used in the course of carrying on its business. These computers were said to have been purchased by the assessee from Pertech Computers Ltd. (for short "PCL") for an aggregate sum of Rs.50,26,200. Subsequently, under an agreement, dated March 18, 1989, these computers were said to have been leased out by the assessee to Altos India Ltd. (for short "Altos") for a period of three years against a security deposit of Rs.25,13,100. The claim of the assessee of depreciation was disallowed by the Assessing Officer. The disallowance was upheld in appeal by the Commissioner of Income-tax (Appeals) as also by the Income-tax Appellate Tribunal. The application of the…

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