Prabha Sridevan, J.@mdashThe revenue has come forward with this appeal raising the following question of law:
Whether on the facts and circumstances of the case, the Tribunal was right in holding that Assessee is the owner of the windmills and is entitled for the depreciation u/s 32 of the Act?
2. In addition to the above, the learned Counsel appearing for the Appellant submitted that he may be permitted to raise an additional question of law of non-consideration of the grounds raised before the Tribunal" and also filed an additional typed set of papers containing the copy of the grounds of appeal filed by the revenue before the Tribunal.
3. The brief facts of the case are as follows:
The relevant assessment years are 1997-98 and 1998-99. The question of law. relates to the disallowance of the depreciation claimed with regard to windmills. The Assessee claimed that they had purchased the windmills from its sister company and it had been duly recorded in their books of accounts and the entire consideration has also been paid by the "Assessee. The entire bank loan which was taken by the sister company was also discharged by the Assessee. Therefore, the Assessee is the owner for the purpose of the Income Tax Act and that they are entitled to claim depreciation. This was rejected by the, assessing officer ton the ground that the windmills are still under hypothecation with the bank and that the application to the Tamil Nadu Electricity Board was made only by the sister company and the loan taken from the bank continued to appear as liability in the books of the sister company. There was no evidence to show that there was a transfer of the windmills and that for the same property, viz., windmills, depreciation has been claimed both by the sister company and by the Assessee. Hence, the assessing officer disallowed the claim of depreciation.
4. On appeal, the authority found that possession had been handed over to the Assessee by the sister company, which is the transferor and an invoice had been raised by the transferor company on the Assessee. Further, a board resolution had been passed by the Assessee for the purchase of windmills. The windmills had been used for the business of the Appellant and the income generated on such business was admitted for assessment by the Assessee and the sale was accepted in the assessment year by the transferor company whose capital gain on such sale was brought to tax for the assessment year 1996-97. The appellate authority also found that the evidence proved beyond doubt that the Assessee is, the legal owner of the windmills. The possession of the property was also handed over to the Assessee and the fact that the windmills are still hypothecated with the bank in the name of the transferor company, or the fact that the agreement with the TNEB was in the name of the transferor company would not change the position. The conclusion of the appellate authority was further reinforced by the fact that the entire bank loan availed of by the transferor company was repaid by the Assessee and not by the transferor company. Therefore, the appeal was allowed.
5. The Tribunal dismissed the revenues appeal treating the Assessee as the owner for the purpose of Income Tax Act in view of the following facts:
(1) The windmill is in the possession of the Assessee-company, although it stands hypothecated with the bank of Baroda.
(2) The Assessee has declared income from this windmill which has been admitted and accepted by the assessing officer.
(3) An invoice dated 15-3-1996 for a consideration of Rs. 85,00,000 from M/s Kences Investment (P) Ltd., a group company, was produced. The sale has been approved by the board of directors of both companies, and this is only recorded in their books of accounts.
(4) Originally, the windmill was commissioned in the name of M/s Kences Investments (P) Ltd., who acquired this mill by seeking loan from bank of Baroda. But, the loan was repaid by the Assessee-company and the income from this windmill has been declared by it.
(5) The sister company has declared the capital gains on the sale of this windmill which has been accepted by the department in its assessment order of that year.
The Tribunal, therefore, held that when the income from the windmill is assessed in the hands of the Assessee, all related expenses and depreciation thereon have to be allowed. It is against this order, the appeal has been filed.
6. Learned Counsel appearing for the Appellant submitted that it is doubtful whether there was really a transfer with the transferor company, which had also claimed depreciation. Hence it was not permissible for the Assessee to claim depreciation. The learned Counsel reiterated that all the grounds raised have not been considered by the Tribunal. When we asked the learned Counsel whether for the same assessment year, both the Assessee and the sister company had claimed depreciation, he answered in the negative. Therefore, that objection cannot be taken in favor of the Appellant. We also find that all the questions raised by the Appellant have been effectively answered by the five conclusions drawn by the Tribunal which are extracted above. These are purely questions of fact and the conclusion appears to be correct since the possession is with the Assessee. The loan has been discharged by the Assessee and the income from the property is assessed in the hands of the Assessee. Therefore, we do not think that there is an erroneous appreciation of fact or non-consideration of the relevant materials. In, these circumstances, we have no hesitation to hold that no question of law arises much less the one raised in this appeal. Accordingly, the tax case appeal is dismissed. No costs. Consequently, Misc. Petn. Nos. 1 and 1 of 2010 are closed.
