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2014 (3) TMI 611 - AT - Income TaxDepreciation - finance lease or operating lease – Addition on fixed assets – Difference in the accounting treatment of computers taken on lease - Held that:- The assessee has added a sum being value of leased computers in the block of assets and depreciation under Companies Act was computed and debited to the profit loss account - For income tax purposes, the assessee added back the depreciation under the Companies Act which was debited to profit and loss account - In the depreciation that under Income Tax Act, the assessee did not include Rs. 2,58,71,588/- worth of the computers instead assessee claimed Rs. 85,73,228/- being amount paid to the lessor as lease charges in terms of section 37(1) of the Act - As such no depreciation was claimed on such lease computers under the provisions of the Income Tax Act - The assessee has not at all made any depreciation claim in this regard in the Income Tax Act and AO has not disallowed any depreciation - thus, the basis of CIT(A)’s adjudication is wrong. For depreciation u/s. 32 of the Act there is no distinction between a finance lease or operating lease and it is the owner / lessor only who is entitled to claim depreciation in all leasing transactions - the contention of the assessee is accepted that the Accounting of the leased computers has been done as per the Accounting Standards and provision of Companies Act and Income Tax Act is correct - assessee has not claimed any depreciation on this lease computers - the contention of the assessee have not been noted or discussed either in the AO’s order or in the CIT’s order – thus, the matter remitted back to the AO for fresh examination – Decided inf avour of Assessee.
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