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2017 (8) TMI 417 - AT - Income TaxAddition of lease transaction as operating lease - capital recovery of the assets to lease income - leasing Rolling Stocks assets by the assessee to the Ministry of Railways - CIT-(A) held that lease transaction as finance lease - Held that:- Ld. CIT-(A) following the direction of the ITAT in earlier years, correctly accepted the lease transaction of the assessee as ‘finance lease’ transaction and restored the matter to the Assessing Officer for verification of facts of lease charges. Hon’ble Delhi High Court in the case of the assessee for assessment year 2001-02 (2014 (6) TMI 224 - DELHI HIGH COURT) considered the lease transaction as finance lease. Also lease equalization charges should not be disallowed. - Decided in favour of assessee. Disallowance u/s 14A under the normal provisions of the Act - Held that:- Once the Assessing Officer recorded the dissatisfaction and invoked section 14A(2) of the Act, he is duty-bound to compute the disallowance in terms of Rule 8D of the Rules. In the case of Gujarat Narmda Valley Fertilisers Company Limited (2014 (3) TMI 847 - GUJARAT HIGH COURT) the issue was that interest free funds available with the assessee were much larger as compared to the investment in mutual funds and shares and therefore, the Assessing Officer was held wrong in disallowing interest expenditure under section 14A of the Act. Before us, the Ld. counsel of the assessee has not brought on record any facts which could establish that the ratio of the Hon’ble High Court would apply in the case. In view of above facts and circumstances, we do not find any infirmity in the order of the Ld. CIT-(A) on the issue in dispute and accordingly, the ground of the appeal of assessee is dismissed. MAT - calculating the book profit under section 115JB of the Act, disallowance related to exempt income cannot be made following section 14A read with Rule 8D - Held that:- We find that the issue has been decided recently by the special bench of the Tribunal in the case of Vireet Investment (2017 (6) TMI 1124 - ITAT DELHI) in assessment year 2008-09, wherein it is held that computation under clause (f) of Explanation-1 to section 115 JB(2) of the Act is to be made without resorting to the computation as contemplated under section 14A read with rule 8D of the rules. Thus, respectfully following the above decision of the special bench of Tribunal, we set aside the decision of the Ld. CIT-(A) and delete the disallowance. - Decided in favour of assessee Disallowance of prior period expenses - Held that:- CIT-(A) has already allowed substantial relief holding that expenses on Salary, Leave Travel concession etc. related to employees on deputation, were crystallized in the year under consideration. We find that the remaining expenses are in respect of the arrear of salary and service tax. We find that payment of service tax is allowed on the paid basis in terms of section 43B of the Act. Thus, only expense left is a arrear of salary amounting ₹ 7,89,000/-. The Ld. counsel claimed that the said expense was crystallized during the year under consideration similar to other expenses on salary which have been allowed by the Ld. CIT-(A) and against which, the Revenue has not filed any appeal. Before us, the Revenue did not bring on record any evidence to controvert the arguments of the ld. counsel. See case of Excel Industries Ltd.,[2013 (10) TMI 324 - SUPREME COURT ] - Decided in favour of assessee Addition under section 115JB for provision of leave travel assistance and addition for provision of gratuity - Held that:- The assessee has claimed that provision have been made on the actuarial valuation, however we find that no documentary evidence in support of the claim has either been made before the lower authorities or before us. In absence of any such documentary evidence furnished, the claim of the assessee that same are ascertained liability cannot be accepted. In the decision of Rotork Controls India Pvt. Ltd. Vs. CIT [2009 (5) TMI 16 - SUPREME COURT OF INDIA] as relied upon by the assessee, the provision made for warranty claim on the basis of past experience, was held to be allowable under section 37(1) of the Act. Thus, the said decision is not relevant in the instant case. - Decided against assessee.
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