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Star Chemicals (Bom) Pvt .Ltd v. Dy.CIT (Mum)( Trib) www.itatonline .org

S. 32: Depreciation – Asset purchased from and leased back – Entitle depreciation -Assessment – Direction of the Tribunal to follow the Judgement of Special Bench – While giving effect High Court decided contrary to the Judgement of Special Bench – Assessing Officer is bound to follow the order of High Court -Asset purchased from and leased back – Entitle depreciation – Business expenditure – Amount paid fees paid to ITC Classic Finance Ltd has direct nexus with acquisition of the machinery from RSEB – Allowable as deduction . [ S. 50, 143(3), 254(1)]

Tribunal set aside the matter to the Assessing Officer and directed to follow the Special Bench in case Mid East Folio Management v .DCIT (2003) 87 ITD 537 (Mum) (SB) ( Trib) .   In the set aside proceedings the assessee relied on the judgement of Orissa High Court in  Industrial development of Orissa Ltd v .CIT ( 2004 ) 268 ITR 130 ( Orissa ) (HC). The Assessing Officer disregarded the order of High Court and preferred to follow the Judgement of Special Bench . Order of Assessing Officer is affirmed by the CIT (A). On appeal the Tribunal held that  the Assessing Officer ought to have followed the Judgement of Orissa High Court . Tribunal held that West Cost Paper Mills Ltd v.JCIT  ITA No. 5403/B 99 dt 21-6 2005  which was affirmed by the High Court in case of CIT v. Apollo Finvest (I) Ltd ( 2016) 382 ITR 33 ( Bom)(HC). Amount paid fees paid to ITC Classic Finance Ltd has direct nexus with acquisition of the machinery from RSEB – Allowable as deduction  (ITA No. 5986/5987 /M .2006 dt . 27 -5 2022 ( AY. 1995 -96, 1996 -97 )