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2014 (6) TMI 969 - AT - Income TaxDepreciation on the assets given on lease under financial lease agreements - Held that:- As per the parity of reasoning laid down by the Hon’ble Supreme Court in the case of I.C.D.S. Ltd. (2013 (1) TMI 344 - SUPREME COURT) the assessee company being the owner of assets, is entitled to depreciation even where the assets have been leased out in terms of a financial lease. The Tribunal has noted the terms and conditions of the lease arrangement and observed that during the subsistence of the lease, the assessee-lessor continued to retain the ownership of the assets. Secondly, the requirement of putting to use of the assets for the purposes of business also stands fulfilled, inasmuch as assessee has used the assets in the course of his business of leasing. In this manner, the Tribunal, following the ratio of the judgment of the Hon’ble Supreme Court in the case of I.C.D.S. Ltd. (supra) held the assessee eligible for the claim of depreciation on leased assets. The facts and circumstances of the case in the year under consideration are similar to those considered by the Tribunal in the assessee’s own case for the assessment years 2004-05, 2005-06 and 2006-07 (supra) and therefore following the said precedent - Decided in favour of assessee Ad-hoc disallowance of commission expenditure - Held that:- There is no direct clinching evidence to show that the claim made by the assessee was false or bogus and therefore the ad-hoc disallowance made by the Assessing Officer is quite unjustified. In this view of the matter, the CIT(A) ought to have deleted the entire addition rather than allowing part-relief, that too, on an ad- hoc basis. In conclusion, we hold that the income-tax authorities were not justified in making the impugned disallowance and accordingly, we set-aside the order of the CIT(A) and direct the Assessing Officer to delete the entire addition. - Decided in favour of assessee Addition on account of Bad debts - Held that:- The impugned disallowance has been made by the Assessing Officer on mere conjectures and surmises. It is quite clear that the claim of the assessee for the bad debts written-off is in terms of section 36(1)(vii) r.w.s. 36(2) of the Act. It is also quite clear that the debts in question have been actually written-off as irrecoverable in the account books of the assessee. It is also not disputed by the Revenue that the impugned debts have arisen in the course of carrying on assessee’s business of financing. In the background of the aforesaid undisputed facts, in our considered opinion, the issue is squarely covered by the proposition of law laid down by the Hon’ble Supreme Court in the case of TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT ]. Thus no error on the part of the CIT(A) in deleting the impugned addition. - Decided in favour of assessee Addition on income on account of non- performing assets - Held that:- We hereby affirm the order of the CIT(A) holding that the amount representing unrecognized income on NPAs classified as per the RBI guidelines cannot be assessed on accrual basis - Decided in favour of assessee Disallowance u/s 14A - Held that:- In the present case, the Assessing Officer has merely observed in one line that he does “not agree with the contention of the assessee”. Ostensibly, having regard to the manner in which the Assessing Officer has discussed the issue in the assessment order, the objective satisfaction contemplated in section 14A(2) of the Act is conspicuous by its absence. Therefore, in our view, the CIT(A) erred in rejecting the plea of the assessee that there was no satisfaction recorded by the Assessing Officer as required in terms of section 14A of the Act before invoking rule 8D of the Rules. Secondly, the CIT(A) has also proceeded on the basis that from the assessment year under consideration i.e. assessment year 2008-09 onwards application of rule 8D of the Rules is automatic. No doubt, rule 8D of the Rules is effective from assessment year 2008-09 onwards.Therefore, the CIT(A) is wrong in proceeding on the basis that from assessment year 2008-09 onwards application of rule 8D of the Rules is automatic and mandatory. Thus, in our view, the CIT(A) erred in sustaining the action of the Assessing Officer on the issue of computation of disallowance u/s 14A of the Act.- Decided in favour of assessee Denial of credit for the tax deducted at source on behalf of the assessee - Held that:- We deem it fit and proper to affirm the directions of the CIT(A) with certain modifications. The Assessing Officer is hereby directed to allow credit for the tax deducted at source on behalf of the assessee in the light of the judgement of the Hon’ble Allahabad High Court in the case of Rakesh Kumar Gupta ( 2014 (5) TMI 520 - ALLAHABAD HIGH COURT ). - Decided in favour of assessee for statistical purposes.
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