IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 225 of 2009 (O&M) Date of decision: 11.8.2009 Commissioner of Income Tax, Chandigarh -II. ......Appellant Vs. The Investment Trust of India Ltd., Chennai (now M/s HFCL Infotel Ltd., Mohali.) ...Respondent CORAM:- HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MRS.JUSTICE DAYA CHAUDHARY PRESENT: Ms Urvashi Dhugga, Standing Counsel for revenue. **** ADARSH KUMAR GOEL, J. (Oral) 1. The revenue has preferred this appeal under Section 260A of the Income Tax Act, 1961 (for short, “the Act”) against the order of the Income Tax Appellate Tribunal, Chennai Bench-A in ITA No. 123/Mds/99 dated 19.5.2006 for assessment year 1995-96, proposing to raise following substantial question of law: “ Whether the Hon'ble ITAT is justified in law in allowing depreciation on an asset which is claimed to be sold and leased back whereas the sale and lease back transaction is on papers only just to avoid tax by adopting colourable device/dubious methods.” 2. The assessee claimed depreciation on certain equipments which were leased out in the course of business by the assessee. The Assessing ITA No. 225 of 2009 [2] Officer rejected the claim on the ground that the assessee only received lease rent in the form of recovery towards interest /profit on loan and, in fact, the equipments belonged to the so-called lessee. Transaction of lease was stated to be loan transaction between assessee and the lessee. CIT(A) reversed the view taken by the Assessing Officer and held that machinery in question was duly purchased by the assessee and was thereafter leased. Thus, the assessee was entitled to depreciation in accordance with law laid down by the Hon'ble Supreme Court in CIT v. Shaan Finance Private Limited 231 ITR 308. This view has been upheld by the Tribunal. 3. Learned counsel for the revenue submits that the lease was only a paper transaction and, in fact, the transaction was of loan between assessee and the so called lessee and there was, thus, tax avoidance by using colourable device. 4. In view of the concurrent findings recorded by the CIT(A) as well as the Tribunal that transaction was of lease and equipments were duly purchased by the assessee and then leased out, we are unable to hold that any substantial question of law arises. 5. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE (DAYA CHAUDHARY) August 11, 2009 JUDGE raghav Note: Whether this case is to be referred to the Reporter? ........Yes/No ITA No. 225 of 2009 [3] ITA No. 225 of 2009 [4]