- Assessment years 1996-97 to 1998-99 - Assessee-company, engaged in manufacture of cooling towers, had a unit at ‘O’ in year 1985 to manufacture certain components required for round bottle (RB series) cooling towers - During financial year 1991-92, assessee had set-up a new unit at ‘C’ and entered into collaboration agreement with a foreign company ‘G’ for making ‘cross flow’ (XE series) and ‘counter flow’ (CM series) cooling towers - Assessee had also closed down its original unit at ‘O’ and plant and machinery and moulds from ‘O’ unit were transferred to new unit at ‘C’ - Modus operandi of assessee in carrying out business was that assessee on receipt of orders from clients manufactured basic components required for cooling towers in its unit and certain items/components like electric motors, fans, etc., were purchased from market - Assembly of unit and erection of same was carried out at customer’s site and assessee in addition raised bill for installation charges, forwarding charges and service charges - For relevant assessment years, assessee claimed deduction under section 80-IA on total turnover of manufactured items during year including sale of bought out components, installation charges, forwarding charges and service charges - Whether assessee was entitled to deduction under section 80-IA in respect of components manufactured in respect of XE series and CM series of cooling towers but it was not entitled to benefit of deduction under section 80-IA in respect of manufacture of components of RB series of cooling towers - Held, yes - Whether assessee was also entitled to benefit of deduction under section 80-IA both on manufactured items and bought out components used for erection of XE series and CM series cooling towers - Held, yes - Whether assessee was also entitled to benefit of deduction under section 80-IA on net receipts from installation, forwarding and service charges - Held, yes - Mihir Engineers Ltd. v. Jt. CIT (Mum.)

Depreciation

Allowance/Rate of

- Whether in case of financial lease, depreciation cannot be allowed to lessor, as it is lessee who becomes owner of property in such lease - Held, yes - Pursuant to an agreement, assessee-company leased out 97 vehicles to SIL for certain consideration on which it claimed depreciation at rate of 40 per cent - As per terms of lease agreement, lessee was liable to pay all taxes, cesses and charges, etc., in respect of leased vehicle; to insure vehicles; and to bear entire risk of any loss or damage, etc., to vehicles and assessee (lessor) was totally indemnified against all and any defects in vehicles - It was further apparent that 50 per cent of invoice price was received from lessee and that assessee intended to sell leased assets on expiry of lease period and was not interested in taking back vehicles from lessee - Whether on facts, it could be said that all features of a financial lease existed in agreement between parties - Held, yes - Whether, therefore, assessee could not be said to be owner of leased vehicles and, consequently, it was not entitled to any depreciation - Held, yes - J.M. Shares & Stock Brokers v. Dy. CIT (Mum.)

Income-tax Act, 1961

- Section 10(10CC)

- Section 32

- Section 80-IA

Perquisite, not provided by monetary payment

- Assessment year 2004-05 - Whether payment of tax on behalf of employee at option of employer is a non-monetary perquisite fully covered by sub-clause (iv) of clause (2) of section 17 and, thus, exempt under section 10(10CC) and is not liable to be included in total income of employee - Held, yes - Whether taxes paid by employer can be added only once in salary of employee and thereafter, tax on such perquisite is not to be added again - Held, yes - RBF Rig Corpn. LIC (RBFRC) v. Asstt. CIT (Delhi) (SB)

INCOME-TAX TRIBUNAL DECISIONS