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2014 (7) TMI 464 - AT - Income TaxNature of Bond service expenses Held that:- CIT(A) was rightly of the view that the bonds servicing expenses as revenue in nature for bond like loans are liability of the company which has to be returned back to the bond holders and cannot be equated with the share capital Relying upon Brooke Bond India Limited Versus Commissioner of Income-Tax [1997 (2) TMI 11 - SUPREME Court] - no disallowance was made by the assessing officer in any other year - it has no linkage with the resources for raising of the bonds - in factual terms the expenditure clearly amounts to revenue in nature thus, there was no infirmity in the order of CIT(A) Decided against Revenue. Capital recovery on leased assets Held that:- The decision in DCIT (LTU) LTU New Delhi Versus Indian Railway Finance Corporation Ltd. [2014 (7) TMI 125 - ITAT DELHI] followed - even after deduction of finance income, the full value of the cost of assets is fully recovered in lease period of 30 years and it is a case of Finance Lease as per the guidelines issued by ICAI - the AO should verify the charts and if the condition is satisfied, all the transactions should also be accepted as finance lease transactions thus, the matter is remitted back to the AO Decided in favour of Revenue. Bond issue expenses Held that:- The decision in M/s. Indian Railway Finance Corpn. Ltd. Versus Addl. Commissioner of Income-tax, Range 11, New Delhi [2011 (1) TMI 1272 - ITAT DELHI] followed - the expenditure would qualify only for amortization u/s 35D of the Act - the expenditure was a permissible deduction and accordingly deleted the addition made by the AO thus, bond issue expenses will be allowable as deduction as revenue expenditure Decided against Revenue. Prior paid expenses Held that:- The decision in M/s. Indian Railway Finance Corpn. Ltd. Versus Addl. Commissioner of Income-tax, Range-11, New Delhi [2009 (8) TMI 1114 - ITAT DELHI] followed - If the AO is of the view that the expenses are pertaining to the prior period, it is required to be considered for the prior and allowed in that year - If it is found that the expenses are allowable in this year on the basis of crystallization of liability, it may be considered in the year the assessee is directed to place necessary evidence in support of claim of expenses thus, the matter is remitted back to the AO Decided in favour of Assessee. Depreciation on office building Held that:- The decision in Mysore Minerals Ltd. Versus Commissioner of Income-Tax [1999 (9) TMI 1 - SUPREME Court] followed - depreciation is an allowance for the diminution in the value due to wear and tear of a capital asset employed by an assessee in his business - The very concept of depreciation suggests that the tax benefit on account of depreciation legitimately belongs to one who has invested in the capital asset and is utilizing the capital asset and thereby losing gradually the investment caused by wear and tear, and would need to replace the same by having lost its value fully over a period of time - there cannot be two owners of the property simultaneously and in the same sense of the term - The intention of the Legislature in enacting Section 32 of the Act would be best fulfilled by allowing deduction in respect of depreciation to the person in whom for the time-being vests the dominion over the building and who is entitled to use it in his own right and is using the same for the purpose of his business or profession - Assigning any different meaning would not sub-serve the legislative intent - the assessee is eligible to depreciation - There is no infirmity in the order of CIT(A) which is upheld Decided against Revenue.
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