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During the year under consideration, the assessee took on hire purchase basis certain Water Pollution Control Equipment from M/s. ITC Bhadrachalam Finance Investments Ltd. (hereinafter referred to as "ITC Bhadrachalam"). The assessee has claimed depreciation on these assets which were purchased by ITC Bhadrachalam from Rajasthan State Electricity Board (hereinafter referred to as "RSEB"). The chronology of xvents which ultimately resulted into tripartite agreement between RSEB, ITC Bhadrachalam and the assessee on the basis of which the assessee has claimed depreciation are as under : 
 13-1-1995         RSEB invites public offer for sale and lease back
                  of its machinery installed at kota plant under Sale
                  and lease back finance scheme. 
19-1-1995         M/s Kotak Mahindra Finance Ltd. gives its offer on
                  behalf of a consortium of financiers including ITC
                  Bhadrachalam. 
 2-2-1995         The said offer by M/s Kotak Mahindra Finance Ltd.
                  is accepted by RSEB. 
15-2-1995         M/s Chaudhary & Associates, registered Valuer places
                  value of the plant and machinery comprising of Water
                  Pollution Control Equipment installed at Kota Plant
                  of RSEB after inspection on 11th February, 1995 at
                  Rs. 292 lacs. 
18-3-1995         Rajasthan Government exempts the transactions of sale
                  of Water Pollution Control Equipment by RSEB to
                  ITC Bhadrachalam from sales-tax. 
25-3-1995         Invoice raised by RSEB upon ITC Bhadrachalam for
                  Rs. 206 lacs. 
27-3-1995         ITC Bhadrachalam gives the assets (Water Pollution
                  Control Equipment) on hire purchase to the assessee,
                  Unimed Technologies. 
25/27-3-1995      The assessee Unimed Technologies gives these very
                  assets (Water Pollution Control Equipment) on issue
                  to RSEB.

28. It was submitted that the legal rights and obligations created as a result of various agreements signed by the different parties viz. sale agreement between RSEB and ITC Bhadrachalam and hire purchase agreement between ITC Bhadrachalam and the assessee M/s Unimed Technologies and the lease agreement between the assessee M/s Unimed Technologies and RSEB were quite different from the actual intention of those parties. To prove this, the learned senior Departmental Representative has filed a representative copy of the Resolution approved by the Board of Directors of the RSEB on 2nd August, 1995 approving the agenda noted for availing of lease finance under "sale and lease back" of existing assets. It was submitted that that such decision must also have been taken for the impugned sale it was submitted that a perusal of the resolution clearly indicates that the depreciation available on the assets were linked with the amount of security deposit and the rate of finance charges to be paid against the agreement of "sale and lease back". It was further submitted that had it been a normal sale transaction, then the purchaser and the seller would have drawn up a detailed inventory of the equipment intended to be sold and there would have been normal handing over and taking over of the assets even if the assets were not to be moved from their place of location. It was submitted that no inventory list was prepared and or filed before the AO during the course of assessment proceedings. It was further submitted that the assets have not moved from the place of location and it has been contended by the authorised representative of the assessee that this is not necessary but is was pleaded that the fact remains that RSEB continued to have the possession and control over the same assets and there have been no transfer of ownership. It was submitted that a perusal of the dates of the agreement would show that the whole arrangements were pre planned and preordained because if the benefits of depreciation had to be availed of by any concern other than RSEB then all the legal formalities including handing over of assets had to be completed by 30th March, 1995 i.e. the sale of assets to M/s ITC Bhadrachalam, the handing over of the assets by ITC Bhadrachalam to Unimed Technologies and the leasing of the assets by Unimed Technologies to RSEB was all accomplished within two days prior to the close of the financial year 1994-95. The learned senior Departmental Representative also referred to copy of lease agreement furnished to us at pp. 2 to 31 of the paper book wherein the date of the agreement initially mentioned is 25th March, 1995. The same date is indicated at pp. 9, 27 and 29 also. These dates have been cut and changed to 27th March, 1995 on all these pages. From the above the learned senior Departmental Representative pleaded that the agreement of lease between the assessee M/s. Unimed Technologies and RSEB had already been prepared even before the assets were received by the assessee from ITC Bhadrachalam because the assessee received the assets from ITC Bhadrachalam only on 27th March, 1995. Reference was also made to cls. 2(g) and 2(q) of the hire purchase agreement dated 27th March, 1995 wherein it is stipulated that the hirer will not sell, assign, transfer, mortgage etc. any of the equipments of the hires while in cl. (2)(q) an exception has been carved out and it has been stated that notwithstanding cl. (2)(g) the assessee can lease the equipment to RSEB. Thus it was submitted that the exception has been carved out in advance to enable such equipment to be given back to RSEB only. It was further submitted that the installation certificate dated 27th March, 1995 given by RSEB to Unimed Technologies indicates that the date of lease agreement was originally mentioned as 25th March, 1995 which has been cut and changed to 27th March, 1995. It was submitted that such a certificate is not valid as it is undated. For all the aforesaid reasons it was submitted that all the steps taken by the three parties in the series of transactions were preplanned and preordained steps and the Tribunal should not accord approval to such transactions in view of the ratio of the decision of the Supreme Court in the case of McDowell & Co. Ltd. vs. CTO (1985) 154 ITR 148 (SC). Reliance was also placed on the decision of the Supreme Court in the case of CIT vs. Sakarlal Balabhai (1972) 86 ITR 2 (SC). Accordingly it was pleaded that the claim of depreciation made by the assessee was rightly rejected by the AO and upheld by the CIT(A).

36. From the above clarification of the Supreme Court it is clear that a sham transaction is one in which A purports to sell his property to B without intending that his title is ceased or passed to B and for the transaction no consideration is paid at all. However in the present case it is undisputed that the consideration has been paid by ITC Bhadrachalam to RSEB on the execution of the agreement of sale. The assessee also paid a substantial sum viz. Rs. 45,67,270 to ITC Bhadrachalam against the hire purchase management fees and the instalment of hire purchase were fixed for which post dated cheques spanning over a period of three years were given by the assessee to ITC Bhadrachalam. In this view of the matter although the transactions were preplanned and preordained these cannot be called sham transactions as consideration were paid by the assessee to ITC Bhadrachalam and from ITC Bhadrachalam to RSEB. Reliance of the learned senior Departmental Representative on the case of McDowell & Co. (supra) is misplaced because even in that decision the Supreme Court has held at p. 148 that tax planning may be legitimate provided it is within the framework of the law. Every assessee has legal rights to so arrange his affairs as to reduce the brunt of taxation to a minimum amount. Avoidance of tax is not tax evasion and it carries no ignominy with it, for it is sound law and, certainly, not bad morality for anybody to so arrange his affairs to pay minimum possible tax. The above legal position has not altered even after the decision of the Supreme Court in the case of McDowell & Co. (supra). The argument of the learned senior Departmental Representative that the decision of the McDowell & Co. (supra) have changed and altered the legitimacy of the tax avoidance is not completely correct.