INCOME TAX ACT, 1961

--Business deduction under section 36(1)_(vii)--Bad debts Amount invested in P&M had been converted into loans by way of making VDIS disclosure--Assessee-company had written off certain amount from fixed assets given on lease and claimed deduction of same under section 36(1)(vii) as the amount invested in plant and machinery (P&M) had been converted into loans by way of making VDIS disclosure and thus, the irrecoverable amount of loan has to be allowed as bad-debt. Assessing officer, however, disallowed the claim of assessee as assessee had not given loan to the parties concerned but leased machinery to them and no evidence had been led to prove that debt had actually become bad in relevant financial year. Held: Was not justified as Tribunal recorded a finding that the amount written off was a loan advanced during the course of business and that the interest thereon had been taxed as business income by the Department in accordance with assessee's declaration under VDIS and it also found that the certificate accepting the VDIS declaration was issued by the Commissioner after consultation with the Central Board of Direct Taxes and, therefore, the contention on behalf of the Revenue that assessee is not entitled to rely on VDIS declaration would not be tenable in law. Tribunal also found that the condition of the debt having been bad on account of dishonour of cheques from the concerned parties proved that the debt, as a matter of fact, had become bad and, therefore, no infirmity was found in the order of Tribunal so far as this issue is concerned.

Income Tax Act, 1961, Section 36(1)(vii)

INCOME TAX ACT, 1961

--DepreciationAllowability Sale and lease back transaction--Assessee purchased secondhand assets from Kalyani Ltd. which were continued to be used by such person and the same were shown as leased to Kalyani Ltd. by the assessee in its books of account. Assessing officer, however, disallowed assessee's claim of depreciation in respect of leased assets as the assessee never became the owner of these assets and these assets were not installed in its premises. Held: Was not justified as Commissioner (Appeals) noticed that the transactions entered by assessee with Kalyani were not the sham transactions. Moreover, the transaction the transaction of leasing out was genuine or not, was based on appreciation of evidence on record as found by the Tribunal. In absence of any evidence to show anything to the contrary, no legal infirmity existed in the impugned order of the Tribunal so as to give rise to any question of law, much less a substantial question of law as proposed or otherwise.