TMI Blog2014 (3) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting that the alleged difference of Rs. 2,58,71,588/- was on account of difference in the accounting treatment of computers taken on lease under the Companies Act and under Income Tax Act and the same was not an undisclosed income. The appellant craves lave to add, alter, amend or vary from the aforesaid grounds of appeal before or at the time of hearing. 3. On this issue AO noted that on perusal of the records for A.Y. 2002-03 reveals that as per depreciation chart under Companies Act, an addition to fixed assets of Rs. 22,21,84,655/- was made. However, in the depreciation chart for the purpose of income tax, the addition is Rs. 19,63,13,067/-. As a result of inventory in the fixed assets of balance sheet was overstated by Rs. 2,58, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the Act. As such no depreciation was claimed on such lease computers under the provisions of the Income Tax Act. 6.1 It has been submitted by the Ld. Counsel of the assessee that neither of the authorities below have appreciated the facts in their correct perspective. In this regard, assessee s submissions is reproduced as under:- The AO and the CIT(A) have failed to appreciate that (i) in terms of Accounting Standard -19 issued by the Institute of Chartered Accountants of India, in case of finance lease transactions, the asset is capitalized by the lessee who is allowed depreciation under the Companies Act, however (ii) for grant of depreciation under section 22 of the Act, there is no distinction between a finance lease or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regard in the Income Tax Act and AO has not disallowed any depreciation. Hence, the basis of Ld. CIT(A) s adjudication is wrong. 6.3 Now we find that it is the assessee s claim is that assessee has taken computers on lease and accounting thereof has been done in accordance with Accounting Standard 19 issued by the ICAI. In case of financial lease transaction, the asset is capitalized by the lessee who is allowed depreciation under the Companies Act. However, 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. Hence, principally we are in agreement with the contention of the Ld. Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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