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2018 (1) TMI 717 - AT - Service TaxClassification of services - nature of lease - operating lease of finance lease - Banking and Other Financial Services or otherwise? - business in operating lease with reference to motor vehicle given to the clients - Revenue entertained a view that the terms and conditions governing both types of leases, namely financial lease and operating lease are similar and as such the consideration received in such business transaction is liable to be taxed under BOFS - Held that: - The whole thrust of the distinction for financial lease and operating lease is the ownership of the asset. This aspect has been adequately analysed and covered in the impugned order with more specific reference to Accounting Standard 19 - We are in agreement with the respondent-assessee and the findings of the Commissioner regarding the treatment of Accounting Standard 19 to decide the nature of lease arrangement - the income for operating lease were shown as lease rental and the assets were depreciated in the lesser’s account as these are shown as own assets. In financial lease no depreciation is accounted for. The income shown on such arrangement is EMI received which is principal + interest. Listing out the difference between operating lease and financial lease the impugned order categorically recorded that the lease arrangements on which the respondent–assessee discharged VAT are operating leases and are not liable to service tax - the impugned order is legally sustainable - Appeal dismissed - decided against Revenue.
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