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2019 (10) TMI 308 - AT - Income TaxDepreciation on leased assets - whether income derived from leasing of the trucks would be business income? - HELD THAT:- In this case the assessee was a leasing company which leased out trucks that it purchased and in M/S ICDS. LTD. [2013 (1) TMI 344 - SUPREME COURT] held that the income derived from leasing of the trucks would be business income and, therefore, the requirement of section 32 i.e. the assets must be used in the course of business stood fulfilled. In the present case also it is undisputed that the assessee is earning income from leasing activities and the leased out assets are being used by the lessees for their business purposes. A perusal of the profit and loss account also shows that the assessee has been earning income from lease business. Circular No. 2/2001 issued by the CBDT on 9.2.2011 explicitly provides that under the Income Tax Act, in all leasing transactions, the owner of the assets is entitled to depreciation if the same is used in the business. As the assessee was being allowed the benefit of depreciation prior to the two assessment years under consideration. Copies of assessment orders for assessment years 2004-05 and 2005-06 also show that the assessee’s claim with respect to depreciation was allowed. Thus, it is apparent that there has been no change in the facts and circumstances of the case and, therefore, there is no cogent reason for the department to deviate from its earlier stand. Although it is settled law that principle of res judicata does not apply to income tax proceedings, it is also settled law that without a change in circumstances and facts the accepted position by both the department as well as the assessee should not be disturbed. We find ourselves unable to persuade ourselves to agree to the conclusions reached by the lower authorities and, therefore, for both the years under consideration, we set aside the order of Ld. CIT (A) and direct the AO to allow the benefit of deprecation to the assessee corporation.- Decided in favour of assessee.
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