CIT Vs. ENGLISH INDIAN CLAYS LTD.

JUDGEMENT

(1.) THESE connected appeals, filed by the Revenue against the orders of the Tribunal, arise from the assessment completed in respect of the respondent -assessee for the assessment years. 1997 -98, 1999 -2000, 2000 -01 and 2001 -02. We have heard standing counsel appearing for the appellant and Shri A. Kumar, advocate, appearing for respondent -assessee.

(2.) TWO questions raised are common for all the assessment years. So far as the issue as to whether assessee is entitled for depreciation on calciner plant is concerned, we have decided the issue in favour of the assessee in an earlier judgment rendered in assessees own appeal, IT Appeal No. 183 of 2009. Following the said judgment, we reject the Departments appeals on this issue.

(3.) SO far as the question of disallowance of interest in respect of lease with JCT Ltd. is concerned, it is seen that there was some lease arrangement which happened in the previous year relevant for assessment year 1994 -95. The transaction was for 5 years. The AO, however, completed assessments for the years 1994 -95, 1995 -96 after conducting inquiry and it was found that the lease arrangement was bogus in as much as assessee did not acquire assets or lease out the same to JCT Ltd as claimed by them. In first appeal, assessments for 1994 -95 and 1995 -96 got confirmed by orders of CIT(A). The assessee accepted the orders of CIT(A) by not filing appeal on this issue before the Tribunal. In spite of the assessee accepting the finding of the CIT(A) that the transaction was bogus, the CIT(A) as well as the Tribunal allowed the same claim for subsequent years by stating that the AO has not proved that any interest is debited for the loan taken for these transactions. Before us, counsel appearing for the assessee repeated the same argument by stating that AO has not established that any interest is debited towards borrowal for the lease transactions with JCT Ltd.