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2022 (9) TMI 57 - AT - Income TaxNature of expenditure - Disallowance of principal component of lease payment - disallowance of the principal portion of lease rent as capital expenditure as against the claim of the appellant that the entire lease rental is revenue expenditure as a lessee - AO disallowed the same on the ground that both SFL as well as assessee claimed depreciation on the same asset - CIT(A) upheld the stand of Ld. AO on the ground that principal portion was capital expenditure and allowing the same to the assessee would amount to double deduction - HELD THAT:- As decided in M/S. TRISTAR CONTAINER SERVICES (ASIA) PRIVATE LIMITED VERSUS ACIT COMPANY CIRCLE III (1) , CHENNAI [2022 (6) TMI 793 - ITAT CHENNAI] assessee as a lessee would be entitled for deduction of gross lease rental payments. The assessee’s methodology is to be accepted. The lease payments made by the assessee would be revenue expenditure for the assessee. We order so. The alternative claims as allowed by Ld. AO shall stand reversed. The claim of foreign exchange loss on these transactions shall be re-considered / re-adjudicated by Ld. AO in the light of our above adjudication. The ownership of the leased assets remains with the lessor. The assessee, as a lessee, pays lease rentals which are allowable as revenue expenditure for the reasons as stated in our adjudication as above. Therefore, facts being pari-materia the same, taking the same view, we would hold that principal portion of lease rentals would be an allowable deduction as revenue expenditure. The depreciation, if any, as separately claimed by the assessee on lease assets shall stand disallowed. The Ld. AO is directed to re-compute the income in terms of our above order.
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