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2012 (6) TMI 688 - AT - Income TaxFinancial lease - principal payments made towards financial lease - revenue or capital expenditure - Held that:- A finance lease is one where the lessee uses the asset for substantially the whole of its useful life and the lease payments are calculated to cover the full cost together with interest charges. It is thus a disguised way of purchasing the asset with the help of a loan. In view of decision in case of CIT vs. The Instalment Supply Ltd(2012 (5) TMI 59 (HC)) and on analyzing various terms and conditions of the agreement with lessor, it is held that assessee is not entitled to deduction of payment of principal amount under the aforesaid financing arrangement - Decided against the assessee. On alternative contention of claim of depreciation it is held that in terms of clause 10.5 of the agreement, the assessee agreed that the assessee shall not claim any relief by way of any deduction, allowance or grant available to LPIN as the owner of the vehicle under the Income-tax Act, 1961 or under any other statute, hence in view of aforesaid, claim of depreciation is not available to assessee. Preliminary expenses - dis-allowance - Held that:- Indisputably, the assessee failed to submit necessary information in support of the claim of expenses written off. Hence dis-allowance upheld. Contribution towards Federation of Indian Mining Industries Building Fund - revenue or capital expenditure - assessee being one of the members of the said Federation - Held that:- Expenditure incurred by way of contribution towards building fund of the said federation, is for commercial consideration and it is not incurred for the purpose of securing any capital assets. Therefore, the same is allowable as revenue expenditure - Decided in favor of assessee.
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