MAHARASTRA AEPX CORPORATION LTD. REPRESENTED BY ITS EXECUTIVE DIRECTOR, SRI. G.A. REGO Vs. THE COMMISSIONER OF INCOME TAX AND THE JOINT COMMISSIONER OF INCOME TAX (ASSESSMENTS), SPECIAL RANGE

JUDGEMENT

(1.) THIS appeal by the assessee is arising out of the impugned order dated 21.2.2005 passed in Int. Tax Appeal No. 2/Bang/2001 by the Income Tax Appellate Tribunal, Bangalore, for consideration of the following substantial questions of law:

(2.) THE facts of the case in brief are, the assessee is a non -banking financial company doing Hire Purchase and Leasing business. The Assessee, filed a return of income on 30.11.1997 declaring a total income of Rs. 3,70.82,954/ -. The said case was taken up for scrutiny by the Assessing Officer. The Assessing Officer, after issuing notice Under Section 143(2) and 142(1) to the assessee after affording opportunity to the representative of the assessee and after considering the material available on file, has proceeded to pass the order by dis -allowing the depreciation claimed by the assessee. Assailing the correctness of the said order, the assessee had filed an appeal before the First Appellate Authority the Commissioner of Income Tax (Appeals) -I, Bangalore, in appeal No. Int. Tax Appeal No. 3/SR/MNG/CIT(A) -I/2000 -2001. The First Appellate Authority, after hearing both sides and after considering the order passed by the Assessing Officer, has dismissed the said appeal and upheld the order passed by the Assessing Officer holding that the transactions are financial transactions and they have been upheld in income tax assessment order and therefore, the treatment of the interest portion in the so called 'lease rent' as 'interest' and part of chargeable interest is correct. Being aggrieved by the order of the First Appellate Authority and the Assessing Officer, the assessee had filed an appeal before the Income Tax Appellate Tribunal, Bangalore Bench, Bangalore, (Tribunal' for short) in Int. T.A. No. 2/BANG/2001 for the Assessment Year 1997 -98. The said matter came up for consideration before the Tribunal. The Tribunal, in turn, after going through the order passed by the Assessing Officer and the First Appellate Authority and after considering the relevant material available on file, has dismissed the appeal filed by the assessee. Against the said order passed by the Tribunal, the assessee has presented this appeal, raising the aforesaid substantial questions of law and seeking other reliefs.

(3.) LEARNED Senior counsel appearing for the appellant at the outset submitted that, the order impugned passed by the Tribunal is not sustainable and it is liable to be set aside. Further, he submitted that, all the three authorities have passed the orders without assigning any reasons, without application of mind and only on the basis of the Income Tax Assessment Order passed by the Assessing officer against the assessee that the assessee is liable to pay the interest under the Interest Tax Act, because whatever the income he is getting is by way of business and not by way of lease and since it was a financial transaction. To substantiate his submission, he has taken us through the orders passed by all the authorities and submitted that, such orders cannot be sustained and they are liable to be set aside.