Law:

Section:

Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts - Assessment years 1996-97 to 2001-02 - Assessee had leased out certain plant and machinery to 'R' and in assessment proceedings had been allowed depreciation thereon as owner - However, in case of lessee 'R', Assessing Officer disallowed lease rentals as business expenditure and treating it as owner of said plant and machinery, allowed depreciation thereon - On basis of that opinion of Assessing Officer in case of lessee, Assessing Officer of assessee reopened its assessment and disallowed depreciation - Whether when Assessing Officer had taken decision after considering all facts, reopening of assessment on basis of opinion of another Assessing Officer was justified - Held, no Section 32 of the Income-tax Act, 1961 - Depreciation - Allowance/Rate of - Assessment years 1996-97 to 2001-02 - Assessee had leased out certain plant and machinery to lessee - There was a specific stipulation in lease agreement that on termination of lease, leased assets would be returned to assessee in condition in which they were taken, except normal wear and tear - Whether it was a case of operating lease and not a finance lease and, hence, assessee was entitled to depreciation as owner of said plant and machinery - Held, yes FACTS The assessee at Udaipur had leased out certain plant and machinery to 'R' at Mumbai under different agreements and in the assessment had been allowed depreciation thereon. However, in the case of the lessee, the Assessing Officer disallowed the lease rent paid to the assessee, and treating the lessee as the owner of the assets, allowed depreciation on the capital value of said plant and machinery. Thereafter, the Assessing Officer of the assessee, on the basis of opinion of the Assessing Officer of lessee, reopened the assessment of the assessee and withdrew deprecia- tion allowed on the plant and machinery. On appeal, the Commissioner (Appeals) upheld the order of the Assessing Officer. On second appeal, the Tribunal quashed the reassessment proceeding, holding that assumption of jurisdiction under sections 147 and 148 on the basis of opinion of the…

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