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2014 (4) TMI 215 - HC - Income TaxAccrual of income - Nature of Lease – Finance by hire purchase lease - Whether the Tribunal was right in holding that in the case of "Finance Lease" transaction the entire lease rental should be offered as income contrary to the AS-19 dealing with accounting of leases issued by the ICAI – Held that:- In respect of lease of a car, the terms of lease was stated to be three years, with monthly rentals and total rentals payable - The terms of the lease agreement point out that the lessor takes on lease the goods described in the Schedule on terms and conditions set forth in the Schedule - the agreement is a lease agreement sample and that there is nothing in the agreement to speak about mere financing for the purchase of an equipment as it had been contended by the assessee. The fact that the equipment is delivered by the supplier to the location of the assessee thus by itself, will not make the agreement, the Finance Agreement and the terms thus seen are matters of arrangement between the parties, which in effect clearly points out that it is only a simple lease agreement and not a finance agreement - even in the calculation of the lease rental, the monthly repayment of the rent and the number of months of the lease rent payment is also clearly stated in the agreement - there was no justifiable ground to accept the case of the assessee that based on AS19 only that the agreement in question was entered into by the assessee and it has to be treated as the finance agreement - relying upon Sundaram Finance Limited vs. State of Kerala [1965 (11) TMI 123 - SUPREME COURT OF INDIA] - the question has to be seen from the terms of the agreement entered into between the assessee, which was placed before the AO as well as before other Appellate Authorities - the contentions of the assessee's is rejected that the transaction is only a finance lease. - Decided against the assessee.
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