{"id":821,"date":"2009-07-24T16:31:11","date_gmt":"2009-07-24T16:31:11","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=821"},"modified":"2009-07-24T16:31:11","modified_gmt":"2009-07-24T16:31:11","slug":"cit-vs-punjab-state-electricity-board-punjab-haryana-high-court","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/cit-vs-punjab-state-electricity-board-punjab-haryana-high-court\/","title":{"rendered":"CIT vs. Punjab State Electricity Board (Punjab & Haryana High Court)"},"content":{"rendered":"\n\n
Click here to download the judgement (punjab_seb_sale_lease_back_sham.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n

Sale & Lease back transactions are not a “sham” <\/strong><\/p>\n

The assessee, a State Electricity Board, sold energy saving devices on which 100% depreciation was permitted and took the same assets on lease and claimed a deduction for the lease rent. The claim was disallowed by the AO & CIT (A) on the ground that the transactions were a \u201csham\u201d though this was reversed by the Tribunal. On appeal by the department, HELD, dismissing the appeal: <\/p>\n

(i) The fact that the machinery was an integral part<\/strong> of the boilers and continued<\/strong> with the assessee even after the sale is irrelevant because the assessee received the sale consideration and paid the lease rental<\/strong>. The mere reduction of tax liability is not conclusive<\/strong> of an arrangement being a \u201csham\u201d or a \u201cdevice\u201d. <\/p>\n

(2) The principle that an assessee is entitled to arrange his affairs to reduce tax liability<\/strong>, without violating the law has been approved by the Supreme Court in A. Raman<\/strong> 67 ITR 11 and Azadi Bachao Andolan<\/strong> 263 ITR 706 and the contrary observations in McDowell<\/strong> 154 ITR 148 are not the ratio of that judgement. <\/p>\n

(3) The words \u201cdevice\u201d or \u201csham\u201d cannot be used to defeat the effect of a legal situation<\/strong>.<\/p>\n

\n

See Also: MCorp Global<\/a><\/strong> 178 Taxman 347 (SC): \u201cSham\u201d lease transactions cannot be given relief as \u201cfinancial arrangements\u201d<\/p>\n

Note: A 5 Member Special Bench<\/strong> of the ITAT has been constituted in Indusind Bank Ltd<\/a><\/strong> to consider whether depreciation is allowable on \u201cfinancial lease transactions<\/strong>\u201d in view of Asian Brown Bovary <\/strong> 54 Taxman 512 (SC).\n<\/div>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Sale & Lease back transactions are not a “sham” The assessee, a State Electricity Board, sold energy saving devices on which 100% depreciation was permitted and took the same assets on lease and claimed a deduction for the lease rent. …<\/p>\n

CIT vs. Punjab State Electricity Board (Punjab & Haryana High Court)<\/span> Read More »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[4,5],"tags":[],"class_list":["post-821","post","type-post","status-publish","format-standard","hentry","category-all-judgements","category-high-court"],"acf":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/posts\/821","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/comments?post=821"}],"version-history":[{"count":0,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/posts\/821\/revisions"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/media?parent=821"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/categories?post=821"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/tags?post=821"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}