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2014 (12) TMI 1357 - AT - Income TaxDisallowance of Lease Equalization Reserve - Disallowance of expenditure it is not a prescribed expenditure u/s 30 to 37 - HELD THAT:- We have gone through the order passed by the Tribunal for AY 1998-99, wherein the Tribunal has extracted the observations made by the co-ordinate bench in the order passed for AY 1994-95 to 1997-98, wherein the Tribunal has explained the concept of Lease equalization charge and accordingly restored the matter back to the file of the assessing officer for carrying out fresh examination. Consistent with the view taken by the Tribunal in the earlier years, we set aside the orders of Ld CIT(A) in this year and restore the same to the file of the assessing officer with the direction to decide the issue afresh in the light of discussions made by the Tribunal in AY 1994-95 to 1997-98. MAT Computation - addition of “Provision for Non-Performing Assets” while computing the book profit u/s 115JB - assessing officer added the same by treating as “unascertained liability” - HELD THAT:- We notice that the Finance Act 2009 has made amendment in sec. 115JB of the Act with retrospective effect from 1.4.2001 by inserting the following item to be added to the book profit:- “(i) the amount or amounts set aside as provision for diminution in the value of any asset.” Hence, the provision for non-performing assets”, being a provision for diminution in the value of asset, the same is required to be added to the book profits. Accordingly, we confirm the order of Ld CIT(A) on this issue. Addition of “Provision for diminution in the value securities” - HELD THAT:- We notice that the claim of the assessee that the securities are forming part of stock in trade has not been examined by the tax authorities. Further the claim of the assessee that it was following the system of valuing the securities under the principle, viz., “cost or market value whichever is lower” also requires examination at the end of the assessing officer. Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the same to the file of the assessing officer to examine the claim of the assessee afresh and take appropriate decision in accordance with the law. Expenditure incurred on clubs - Allowable revenue expenditure u/s 37 - HELD THAT:- A.R submitted that this issue is now covered by the decision of Hon’ble Supreme Court in the case of CIT Vs. United Glass Mfg. Co. Ltd [2012 (9) TMI 914 - SUPREME COURT] as held that the club membership fees paid for employees is allowable u/s 37 of the Act. Hence, we are of the view this issue requires fresh examination in the light of decision rendered. Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the same to the file of the AO for fresh consideration. Claim of depreciation made on leased assets - HELD THAT:- Tribunal has allowed the claim of depreciation on leased assets by following the decision of Hon’ble Supreme Court in the case of ICDS Limited [2013 (1) TMI 344 - SUPREME COURT] There should not be any dispute that the assessee is entitled to depreciation, if it has leased out the assets under operating lease. AO had taken the view that the lease transactions entered into by the assessee were not genuine lease transactions. CIT(A) has come to the conclusion that the lease transactions were genuine in nature and he held so by placing reliance on the decision rendered in the preceding years. It was submitted that the lease transactions has been accepted by the Tribunal in the earlier years and accordingly depreciation was allowed. Accordingly, consistent with the view taken in the earlier years, we uphold the order of Ld CIT(A) on this issue.
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