Income Tax Appellate Tribunal - Mumbai
Deputy Commissioner Of Income-Tax, ... vs Housing Development And Finance Corpn. ... on 12 September, 2005
Equivalent citations: [2006]98ITD319(MUM), (2006)99TTJ(MUM)1188
ORDER
K.C. Singhal, Judicial Member
1. Since common issues are involved in these appeals, the same are being disposed of by the common order for the sake of convenience.
2. The major issue arising in these appeals relates to depreciation on the leased plant and machinery.
3. Briefly stated the facts are these. The assessee is engaged in the business of long term housing finance and also earn income by way of dividend and leasing finance. During the assessment year 1991-92, the assessee claimed depreciation of Rs. 5,05,68,858 in respect of leased plant and machinery @ 100 per cent but restricted to 75 per cent of the same as per the provisions applicable to the year concerned. The said plant and machinery was stated to have acquired from M/s. Larsen and Toubro Ltd. (L&T) vide invoice No. G/139394 dated 25-3-1991 and leased out to Reliance Petrochemicals Ltd. (RPL) under lease agreement dated 26-3-1991. Further investigation by the Assessing Authority (A.O.) revealed that prior to purchase of the said plant and machinery, a Memorandum of Understanding by way of tripartite agreement was entered into on 15-3-1991 between the assessee, RPL and L&T, which showed that RPL had already entered into an agreement with L&T for acquisition of Captive Co-generation Plant (CCP) which was to be installed at the premises of RPL at Hazira. The consideration for the same was Rs. 6,25,02,000. Since RPL was not in a position to provide finance of its own for acquiring the CCP, it entered into the tripartite agreement with L&T and the assessee under which, the entire benefit and rights in the contract between RPL and L&T was to be transferred in favour of assessee and in turn it would, under separate agreement, lease the said plant and machinery to RPL for a period of 30 years (extendable for further period of 22 years) against payment of lease rentals to be specified. It also revealed that RPL had already made payment of Rs. 3,97,38,000 to L&T and this payment was to be reimbursed by the assessee to RPL and the balance payment was to be paid by the assessee to L&T. Accordingly, lease agreement was executed between assessee and RPL on 26-3-1991, under which, RPL was required to pay lease rental of Rs. 8,75,028 per month for a period of first two years, Rs. 11,84,430 per month for a further period of six years and, thereafter, Rs. 62,502 per month for balance period of lease. The Assessing Officer noted that lease rental was fixed at the above rates on the assumption that depreciation @ 100 per cent would be available to assessee under the provisions of the Income-tax Act, 1961 ('Act') and rules thereunder. However, if for any reason, the depreciation was not allowed wholly or partly, then the lease rental would be revised accordingly. It was also noted that period of lease was non cancellable.
4. The Assessing Officer disallowed the claim of assessee by observing as under:--
(i) That it is a case of simple financing and colour of leasing has been given to ensure the security of money advanced.
(ii) That civil work in connection with the erection of plant and machinery was carried out by RPL. After erection, the asset became immovable property and, therefore, there was no scope for further leasing to other parties.
(iii) That the whole Captive Co-generation Plant was leased by four parties and, therefore, the same was incapable of being leased to other parties.
(iv) That lessor does not have any right to conclude the lease before the period of 30 years while the lessee can extend the lease for further period of 22 years. Thus, after such a long period, the leased plant and machinery would hardly have any value. Therefore, impliedly, the RPL became owner of such plant and machinery for all purposes.
(v) That lease rentals were fixed on the assumption that assessee would be able to claim 100 per cent depreciation. The clause in the agreement authorizing the lessor to readjust the lease rental confirms the doubtful nature of assessee's claim.
(vi) That major part of the finance has been recovered in first 8 years and, therefore, the rental is fixed for petty sum of Rs. 62,502 per month. Had it been a case of genuine and real transaction, at least some uniformity in lease rental would have been provided.
(vii) That plant had already been erected and constructed in the business premises of RPL who were in full possession of the same even prior to purchase by the assessee company.
(viii) That there was no real intention of assessee to acquire plant and machinery and the entire exercise was merely a device with the sole objective of avoidance of tax liability.
The Assessing Officer was of the view that in case depreciation is held to be allowable, then depreciation would be allowed @ 25 per cent since plant and machinery leased is part of the generating plant and is not the full system on which 100 per cent depreciation could be claimed.
5. In respect of assessment year 1992-93, the assessee had claimed depreciation of Rs. 1,56,25,500 being 25 per cent of the cost of plant and machinery inasmuch as in the preceding assessment year, the claim of depreciation had been restricted to 75 per cent. The Assessing Officer disallowed the claim of the assessee following his order for assessment year 1991-92.
6. On appeal, the Learned CIT (Appeals) posed two questions - (i) whether assessee is the owner of the plant and machinery and (ii) whether such plant and machinery is separately owned and identifiable. On examination of the agreements and the material on record, he answered both the questions in affirmative. Regarding the first question, he relied on the facts : (t) that agreement declares the assessee as owner, (ii) the invoice is drawn by the supplier in the name of assessee, (iii) payment has been made by assessee directly to the supplier, (iv) assessee continues to be the owner during the lease period and on termination, it can re-possess the property, (v) in case of failure to pay the lease rent or any breach of the terms of agreement, the assessee is entitled to terminate the lease, and (vi) on termination, the assessee is entitled to use, control or operate the said payments. Regarding the second question, he noted that lease finance for the entire Captive Co-generation Plant was done by a consortium of 4 parties including the assessee but it was apparent from the agreement that separate packages had been identified and separate lease agreements were entered into. In view of the fulfilment of these two conditions, it was held by him that assessee was entitled to depreciation. Regarding rate of depreciation, he restored the matter to the Assessing Officer for fresh adjudication. Aggrieved by the same, the Revenue is in appeal before the Tribunal for both the years.
7. The Learned Departmental Representative has assailed the orders of the Learned CIT (Appeals) by reiterating the reasonings given by the Assessing Officer and, therefore, the same need not be repeated. In addition, it was submitted that the Learned CIT (Appeals) had not made any observations regarding the finding of the Assessing Officer that the agreement between the parties was colourable device to evade the tax. Hence, without vacating such finding, the Learned CIT (Appeals) could not allow the depreciation to the assessee. Proceeding further, it was submitted that the Learned CIT (Appeals) should have first decided the issue with reference to the substance of the transaction rather than the format and then adjudicate the issue relating to the allowance of depreciation. Lastly, it was submitted that the issue is now covered in favour of the Revenue by the decision of the Tribunal, Special Bench in the case of Mid East Portfolio Management Ltd. v. Dy. CIT [2003] 87 ITD 537 (Mum.) wherein similar claim of the assessee had been disallowed.
8. On the other hand, the Learned Counsel for the assessee had reiterated the reasonings given by the Learned CIT (Appeals). Apart from that, he relied on the judgment of the Apex Court in the case of Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706, wherein, it has been held that legitimate tax planning is permissible if it is within the parameter of law and the decision of Supreme Court in the case of McDowell would not apply to such a situation. In support of the submission, he also relied on the judgment of Orissa High Court in the case of Industrial Development Corporation of Orissa Ltd. v. CIT and the judgment of Guwahati High Court in the case of CIT v. George Williamson (Assam) Ltd. , where the claim of depreciation was held to be allowable in the case of sale and lease back of the assets. Accordingly, it was contended that the decision of the Tribunal, Special Bench, in the case of Mid East Portfolio Management Ltd. (supra) is no more a good law. Proceeding further, it was submitted that no adverse inference could be drawn merely because the plant and machinery were fixed to the earth. He also relied on various decisions of the Tribunal reported as Sharyans Resources Ltd. v. Joint CIT [2002] 83 ITD 340 (Mum.), Bombay Burmah Trading Corporation Ltd. v. Asstt. CIT [2002] 82 ITD 531 (Mum.), decision in the case of Soni Capital Markets [lT Appeal No. 4091 (Mum.) of 2000] and in the case of Poly tax India Ltd. in ITA No. 5168/Bom./1994.
9. Rival submissions of the parties have been considered carefully in the light of the materials placed before us. At the outset, it may be mentioned that neither the Assessing Officer nor the Learned CIT (Appeals) had adjudicated the issue in the right prospective. The Assessing Officer, on the one hand, held that the alleged leased transaction was a colourable device with a view to evade the tax while on the other hand, he assessed the lease rent received by the assessee as its income. Such approach of the Assessing Officer was improper and erroneous in law. He could not blow hot and cold simultaneously. Having held that the entire arrangement was a colourable device, he was duty bound to carry its finding to the logical end. If the transaction was merely financing transaction as held by him, then he should not have assessed the leased rent in the hands of assessee. In the case of financial transaction, he should have assessed only the interest component, which accrues to the assessee under the aforesaid arrangement.
10. On the other hand, the Learned CIT (Appeals) did not make any observation regarding the finding of the Assessing Officer that the entire arrangement was a colourable device with a view to avoid tax. Without vacating such finding of the Assessing Officer, the Learned CIT (Appeals) could not adjudicate the claim of the assessee. Apart from the same, the Learned CIT (Appeals) posed two questions - (z) whether the assessee was owner of the plant and machinery, and (n) whether such plant and machinery was an identifiable asset. Surprisingly, he did not pose any question regarding the user of plant and machinery by the assessee which is a condition precedent to allow the claim of the assessee. Thus, the approach of the Learned CIT (Appeals) in allowing the claim of the assessee was totally erroneous.
11. Now we come to the issue arising before us. It is settled legal position that nomenclature given to the particular document is not relevant in deciding the nature of transaction. The true nature of the transaction has to be ascertained from the covenants of the contract in the light of surrounding circumstances [National Cement Mines Industries Ltd. v. CIT ]. It is also true that legal character of the transaction cannot be ignored unless it is shown that parties have concealed the legal relation by adopting a device [CIT v. B.M. Kharwar and Sunil Siddharthbhai v. CIT ]. It is also the settled legal position that what is apparent is real unless proved otherwise and the onus to prove otherwise is on the person who alleges so [CIT v. Daulatram Rawatmull . In the background of this legal position, let us examine the real issue before us.
12. In the present case, the stand of the Assessing Officer has been that the entire arrangement was merely a financing arrangement and a device was adopted to give a colour of lease in order to claim 100 per cent depreciation with a view to avoid the legitimate tax due to the Revenue. On the other hand, the stand of the assessee is that the plant and machinery was acquired by the assessee itself and then it was given on lease to RPL. Thus, the assessee being the owner of the plant and machinery which was identifiable was legally entitled to depreciation under the provisions of the Act.
13. Therefore, the first question to be answered is whether the entire arrangement is a financing arrangement or the transaction between the assessee and RPL is really a leased transaction. The answer to this question would depend on the consideration of the entire terms of the agreement between the assessee and RPL as well as the terms of tripartite agreement between assessee, RPL and L&T. We have gone through the terms of both the agreements. After considering the same, we are of the view that it is not a case of genuine lease and in reality it is a case of financing arrangement between the parties. This conclusion is based on the reasonings given hereafter.:
(i) The admitted fact is that the assessee is neither a dealer in nor a manufacturer of plant and machinery nor in the business of leasing of such items. On the contrary, the assessee is engaged in the business of providing long term finance for construction or purchase of house in India for residential purposes. This is apparent from Para 3 of the preamble of the tripartite agreement, which is reproduced as under:--
HDFC is a public limited company incorporated under the Companies Act, 1956 and is engaged in the business of providing long term finance for construction or purchase of house in India for residential purposes.
Thus, there was no need to acquire any plant and machinery for the purpose of leasing.
(ii) In fact, the plant and machinery was designed and manufactured by L&T as per the specification of RPL under the purchase order dated 25-8-1989 and the same was erected by L&T at the premises of RPL at Hazira. The entire civil work was done by RPL for erection/construction of the plant (Page 8 of assessment order). The possession of the plant, thus, had already been given to RPL before the assessee coming into picture. Thus, there was really no intention of assessee to purchase such plant and machinery.
(iii) In fact, RPL was short of funds and was unable to make payments to L&T out of its own funds. This fact compelled RPL to seek finance from outside. This is apparent from Para-6 of the preamble of the tripartite agreement. It is because of this reason that RPL approached four financing companies including assessee to finance RPL to meet the cost of captive generation plant. The assessee and other three companies agreed to finance RPL to meet the cost of such plant. So the entire motive behind the transaction was financing of the plant.
(iv) The lease rent was fixed on the basis of interest rate of 17 per cent per annum.
The above facts, in our humble opinion, clearly indicate that the real intention behind the tripartite agreement was to provide finance to RPL to meet the cost of plant purchased by L&T from RPL.
14. The next question is whether any colourable device was adopted to avoid the payment of tax. In a pure financial arrangement, there was no need for assessee to purchase the plant and then lease the same to RPL. The object of finance could be achieved by giving loans to RPL and the plant could be kept under pledge/hypothecation by way of security. Such a course was neither beneficial to assessee nor to RPL from the tax point of view. The reason is obvious. The RPL was in the process of setting up the plant and, therefore, depreciation could not be allowed to RPL prior to commencement of business. Even after the business had commenced, it would not be beneficial to RPL as in the initial stage, since the RPL would not be in a position for same years to earn sufficient profits to absorb the depreciation. On the other hand, if assessee is shown as owner by documentation, it would immediately be entitled to depreciation and set-off the same against income from financing as per the probable advice to the assessee. This is apparent from Clause 2 of the lease agreement which provides that lease rental had been calculated on the assumption that assessee would be allowed 100 per cent depreciation on such plant and machinery. It further provides that lease rentals would be increased in case claim of depreciation is disallowed or allowed at a lesser rate. So, the purpose of entering into lease agreement was to get immediate benefit by way of tax saving. Such arrangement was also beneficial to RPL as it was required to pay lesser amount of lease rental. It is because of this motivation that RPL surrendered its ownership in favour of assessee and L&T was allowed to issue invoice in the name of assessee. RPL was in reality not affected by such action since non cancellable lease was made for 30 years in favour of RPL which could be extended for further period of 22 years. That means, for all practical purposes, RPL was the owner without loosing anything. 52 years is more than the usual life of machinery. Thus, the arrangement was beneficial to both the parties. Therefore, the entire exercise, in our opinion, was made only to avoid the tax liability. In other words, the state exchequer was thus deprived of the legitimate tax. Hence, it is held that exercise was a colourable device to avoid the tax. Our view is also fortified by the decision of Special Bench in the case of Mid East Portfolio Management (supra) where sale and lease back transaction was found to be a colourable device to avoid the legitimate tax due to State and consequently, depreciation claimed by the financing company was disallowed.
15. Even assuming for the sake of argument that entire documentation was made in bonafide manner and there was no intention to avoid the tax, we are still of the view that assessee is not entitled to depreciation. Admittedly, the assessee is not dealing in plant and machinery. It is also not in the business of leasing of plant and machinery. There is no evidence before us to indicate that assessee is in the business of leasing of plant and machinery. Considering this factual aspect, it cannot be said that plant and machinery was used by the assessee for the purpose of financing business carried on by it. The user of plant and machinery is condition precedent for allowing the claim of depreciation. The actual user is RPL and not the assessee. The judgment of the Apex Court in the case of CIT v. Shaan Finance (P.) Ltd. , can be applied only where the assessee is engaged in the business of leasing of plant and machinery. Thus, if any lease is effected in the course of financing or money-lending business, the requirement of Section 32 cannot be said to be fulfilled. This view is also fortified by the observations of the Special Bench mentioned above Mid East Portfolio Management Ltd. 's case (supra). Therefore, even on this account, the claim of assessee cannot be accepted.
16. Before parting with this issue, we would like to say few words about the case law referred to. The Learned Counsel for the assessee has referred to the judgment of Hon'ble Supreme Court in the case of Azadi Bachao Andolan (supra), in support of his contention that judgment of Supreme Court in the case of McDowell is no more applicable and tax planning, if any, is permissible in law. According to him, the judgment of Supreme Court in the case of CIT v. A. Raman & Co. , is still applicable wherein it was held that tax avoidance was not prohibited. We have gone through the judgments of the Hon'ble Supreme Court in the aforesaid cases. We find that their Lordships, in the case of Azadi Bachao Andolan (supra), have commented upon the opinion of Chinnappa Reddy, J. (at page 755 of 263 ITR) and held that opinion of majority delivered by Ranganath Misra, J. was a far cry from the view expressed by 0. Reddy, J. But they have neither made nor could have made any comment on the majority view. That means that majority opinion delivered by R. Misra, J. still prevails and has to be respected by all means.
17. We have carefully gone through the majority opinion. Their Lordships, at Page 170 of 154 ITR, referred to the earlier judgments of Supreme Court in the case of A. Raman & Co. (supra), B.M. Kharwar's case (supra), Jiyajeerao Cotton Mills Ltd. v. CIT , and judgment of Privy Council in the case of Bank of Chettinad Ltd. v. CIT [1940] 8 ITR 522, and then held as under :--
Tax planning may be legitimate provided it is within the framework of law. Colourable devices cannot be part of tax planping and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by resorting to dubious method. It is the obligation of every citizen to pay the taxes honestly without resorting to subterfuges. On this aspect, one of us, Chinnappa Reddy, J. has proposed a separate and detailed opinion with which we agree. (p. 171) The above observations are now the law of land since such observations have neither been commented upon nor overruled by any larger Bench.
18. Their Lordships of Supreme Court in the case of B.M. Kharwar (supra) held as under:
The taxing authority is entitled, and is indeed bound, to determine the true legal relation resulting from a transaction. If the parties have chosen to conceal by a device the legal relation, it is open to the taxing authorities to unravel the device and to determine the true character of the relationship. But the legal effect of a transaction cannot be displaced by probing into the "substance of the transaction". This principle applies alike to cases in which the legal relation is recorded in a formal document, and to cases where it has to be gathered from evidence - oral and documentary - and conduct of the parties to the transaction.
In the case of Sunil Siddarthbhai (supra), their Lordships observed as under:--
We have decided these appeals on the assumption that the partnership firm in question is a genuine firm and not the result of a sham or unreal transaction and that the transfer by the partner of his personal asset to partnership firm represents a genuine intention to contribute to the share capital of the firm for the purpose of carrying on the partnership business. If the transfer of the personal asset by the assessee to a partnership in which he is or becomes a partner is merely a device or ruse for converting the asset into money which would substantially remain available for his benefit without liability to income-tax on a capital gain, it will be open to the income-tax authorities to go behind the transaction and examine whether the transaction of creating the partnership is a genuine or a sham transaction and, even where the partnership is genuine, the transaction of transferring the personal asset to the partnership firm represents a real attempt to contribute to the share capital of the partnership firm for the purpose of carrying on the partnership business or is nothing but a device or ruse to convert the personal asset into money substantially for the benefit of the assessee while evading tax on a capital gain. The Income Tax Officer will be entitled to consider all the relevant idicia in this regard, whether the partnership is formed between the assessee and his wife and children or substantially limited to them, whether the personal asset is sold by the partnership firm soon after it is transferred by the assessee to it, whether the partnership firm has no substantial or real business or the record shows that there was no real need for the partnership firm for such capital contribution from the assessee. All these and other pertinent consideration may be taken into regard when the Income Tax Officer enters upon a scrutiny of the transaction, for in the task of determining whether a transaction is a sham or illusory transaction or a device or ruse, he is entitled to penetrate the veil covering it and ascertain the truth.
The til oresaid observations in all judgments clearly show that tax planning is permitted provided it is within the framework of law but colourable device cannot be part of tax planning. It is the duty of the tax authorities to unravel the device if the parties have chosen to conceal by a device the legal relation. On fact of the case, we have already held that in reality the arrangement between the parties was financing arrangement which has been given the colour of lease transaction by adopting a device. All these exercises were made only to avoid the tax.
19. In view o( the above discussions, the orders of the Learned CIT (Appeals) are set aside and the orders of the Assessing Officer disallowing the depreciation are sustained. However, we further hold that transaction of alleged lease has to be ignored since finding has to be carried to logical end. Accordingly, the Assessing Officer is directed to exclude the revenue receipt in the form of lease rent from the assessment and in turn to assess only the interest component which had actually and legally accrued to the assessee.
20. The next issue relates to the addition of Rs. 1,62,98,254 and Rs. 2,28,36,460 pertaining to assessment years 1991-92 and 1992-93 on account of interest on securities held as stock in trade.
21. Briefly stated, the facts are these. The assessee was holding various securities as stock in trade. The interest on securities was due and payable on specified date. The assessee offered interest income on the basis of such specified dates. However, it did not offer any income of interest where the specified date would fall beyond the accounting period. However, the Assessing Officer was of the view that interest on securities accrued to assessee on day to day basis and, therefore, the assessee was liable to tax on such interest as assessee had been following mercantile method of accounting. Assessing Officer determined the amounts of interest on such securities as mentioned in earlier para and included the same in the assessment for these years.
22. On appeal, the Learned CIT (Appeals) did not agree with the views expressed by the Assessing Officer. The Learned CIT (Appeals) held that interest on securities did not accrue on day to day basis but accrued on fixed or prescribed dates. He also relied on the High Court judgment in the case of CIT v. Canara Bank , wherein it was held that unless a debt was created in one's favour and a right is acquired to receive the payment, it cannot be said that any income had accrued. Accordingly, it was held by him that assessee did not acquire any right to receive the interest till the due date or date of maturity and, therefore, no interest accrued to assessee before that date. Accordingly, he directed the Assessing Officer to delete the additions made by him. Aggrieved by the same, the Revenue is in appeal for both the years.
23. Both the parties have been heard at length. However, we find that the issue before us is squarely covered by the decision of the Tribunal in the case of Union Bank of India v. Dy. CIT [IT Appeal No. 8817/(Bom.) of 1992 dated 23-12-2003], wherein it has been held that (i) Section 145 cannot override the provisions of Section 5 and, therefore, no persons can be assessed unless any income accrues to him, (ii) interest on securities accrues to assessee on the specified dates and not on day to day basis as assessee has no right to receive the income before the fixed date. No contrary decision has been brought to our notice. Therefore, following the said decision, the issue is decided against the Revenue. The orders of the Learned CIT (Appeals) are, therefore, upheld.
24. Before parting with this issue, we may mention that on going through the assessment order for the assessment year 1992-93, we do not find any addition of Rs. 2,28,36,460 in the computation of income. The Learned CIT (Appeals) had directed the Assessing Officer to delete this addition. The Assessing Officer is, therefore, directed to verify the same and lake appropriate action in case of excess relief, if any, allowed to assessee in pursuance of order of Learned CIT (Appeals).
25. The last issue relates to deletion of disallowances made by the Learned CIT (Appeals) in respect of guest house expenses on account of rent, rates, taxes and repairs. The Learned Departmental Representative has submitted that order of the Learned CIT (Appeals) cannot be sustained in view of the Special Bench decision in the case of Eicher Tractors Ltd. v. Dy. CIT [2003] 84 ITD 49 (Delhi) and the judgments of Bombay High Court in the cases of CIT v. Ocean Carriers (P.) Ltd. [1995] 211 ITR 357 and Raja Bahadur Motilal Poona Mills Ltd. v. CIT . We are unable to accept such contention for the reasons that Bombay High Court in the case of Chase Bright Steel Ltd. (supra) has held that provisions of Section 37(3) and 37(4) could not override the provisions of Sections 30 to 36 of the Act. It could override only the provisions of Sub-section (1) of Section 37. Therefore, only those expenses relating to guest house which are allowable under Section 37(1) can be disallowed under Section 37(3) or 37(4) of the Act. The decision of Special Bench cannot be applied to the assessee within the jurisdiction of Bombay High Court as the judgment of Bombay High Court is binding on the authorities as well as the Tribunal functioning within its jurisdiction. The reference may also be made to the decision of the Tribunal in the case of Hindustan Lever Ltd. v. IAC [1996] 58 ITD 555 (Bom.) where it has been held that expenditure relating to guest house falling within the ambit of the provisions of Sections 30 to 36 (including depreciation) cannot be disallowed. The Bench also discussed the subsequent judgments of Bombay High Court in the cases of Ocean Carriers (P.) Ltd. (supra) and Raja Bahadur Motilal Poona Mills Ltd.(supra) and held that these decisions were distinguishable on facts. We may also mention that Special Bench has not adversely commented on the judgments of Bombay High Court in the case of Chase Bright Steel Ltd. (supra) and in the case of Century Spg. & Mfg. Co. Ltd. v. CIT [1991] 189 ITR 6602 (Bom.). The following observations of the Special Bench in Para 26 [Eicher Tractors Ltd. 's case (supra)] of the order are noteworthy.
Before we part with this Special Bench reference we must specifically observe that we, in the present decision, have not attempted to reconcile the judgments of the Hon'ble High Courts, which as a quasi-judicial Tribunal, we are not permitted to do under the law. We have merely given a factual narration of the views expressed in the various judgments cited before us by the parties and which was necessary to come to a conclusion on the issue before us. No judgment of the Hon'ble Supreme Court or the jurisdictional High Court was brought to our notice and which would have made our task much easier.
26. The above observations clearly suggest that the Special Bench had not commented on any decision of High Court holding the issue in favour of the assessee. The earlier judgments of Bombay High Court in the case of Chase Bright Steel Ltd. (supra) and in the case of Century Spg. & Mfg. Co. Ltd. (supra) have neither been overruled nor adversely commented upon in any subsequent judgment. In the absence of any judgment on this point by the Apex Court, we hold that above two judgments of Bombay High Court are still applicable and binding within the territorial jurisdiction of Bombay High Court. Therefore, respectfully following the same, we uphold the deletion made by the Learned CIT(A).
27. In the result, the appeals of the Revenue are partly allowed.