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M/s Bharti Hexacom Limited Versus ACIT Circle 2 (1) , New Delhi.

2016 (5) TMI 34 - ITAT DELHI

TDS u/s 194H and 194J - non-deduction of TDS on commission expenses - free talk-time was being given as a discount or margin to the distributors on the retail price of prepaid products - Held that:- The provisions contained in Chapter XVIIB have to be given effect to while quantifying the liability of an assessee. The computation of income cannot be effected without having recourse to section 40(a)(ia) and consequently to provisions of chapter XVII-B. Section 40(a)(ia) comes into play when any i .....

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AY 2008-09 have clearly held that the said provisions of section 194H are not applicable

Therefore, it follows that there should be sum paid by assessee on which tax was deductible at source under Chapter XVIIB before 40(a)(ia) could come into play. Admittedly in the case of assessee, it has been held that the provisions of section 194H as well as provisions of section 194J are not attracted and therefore, there was no amount on which tax was deductible. Therefore, section 40(a)(ia) .....

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rated code and, accordingly, effect has to be given to the decisions of Tribunal’s Guwhati and Jaipur Benches, which will operate as res-judicata. In any view of the matter, the view beneficial to the assessee is to be taken. - Decided in favour of assessee

Addition on account of amortization of license fee and spectrum charges U/S 35ABB - Held that:- As decided by Hon’ble Delhi High Court in assessee’s own case the expenditure incurred towards licence fee is partly revenue and partly .....

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e substance of the transaction is to be considered - Held that:- There cannot be any quarrel with the proposition that the substance of the transaction has to be taken into consideration and merely because in books of a/c, the assessee had complied with the requirement of AS 19 and, accordingly, charged depreciation on the asset treating the whole transaction as capital in nature, could not disentitle the assessee to claim the expenditure in computation of income on the basis of true nature of t .....

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ed over to the assessee upon exit of IBM. With reference to these two aspects, ld. CIT(DR) submits that the assessee was the beneficial owner of these assets and the IBM was only titular owner. His contention is that these being movable properties, such titular ownership does not entitle the owner to any benefit or right except, principal security against finance lease charges.

Had the ownership rights been effectively transferred to assessee it would have taken all necessary steps to .....

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see : Shri Anil Bhalla CA and Shri V.K. Meena CA and Shri Gaurav Wadhwa CA For the Department : Shri A.K. Saroha CIT (DR) ORDER PER S.V. MEHROTRA, A.M: The assessee as well as the revenue are in cross appeal against CIT(A) s order dated 28.3.2012 for AY 2008-09. The assessee has also preferred appeal against CIT(A) s order dated 13.02.2013 relating to AY 2006-07. Since, common issues are involved for adjudication, all these matters were heard together and are being disposed of by this composite .....

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7; 47,33,71,527/-. However, tax was paid under the provisions of MAT at book profit at ₹ 3,80,93,09,820/- computed u/s 115JB of the Income-tax Act. The assessment was completed at a gross total business income of ₹ 5,11,30,00,146/- and at net business income of ₹ 1,96,14,39,488/-, after making following additions/ disallowance i) Amortization of license fee and spectrum charges b u/s 35ABB of the Act ₹ 75,82,37,380/- ii) Disallowance of free airtime to distributors u/s 40 .....

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n facts and in law in confirming the addition made by the Assessing Officer under section 40(a)(ia) of the Income Tax Act, 1961 (the "Act") of ₹ 54,29,30,111/- for non deduction of tax at source under section 194H of the Act on account of transaction with the distributors of prepaid vouchers treating the discount offered on sale of prepaid vouchers as commission. 1.1. That the learned CIT (A) has erred both on facts and in law in confirming the action of the Assessing Officer in .....

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both on facts and in law in confirming the action of the Assessing Officer in treating the payment made by the appellant to the other service providers for roaming as fee for technical services without deciding on the merits as to whether the provisions of section 194J of the Act is applicable to the payments for roaming. 3. That the learned CIT (A) has erred both on facts and in law in confirming the addition made by the Assessing Officer under section 40(a)(ia) of the Act of ₹ 1,90,40,55 .....

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ions that such amount is not chargeable to tax in India. 4. That the learned Assessing Officer has erred on facts and in law in levying interest under section 234B of the Act. 5. The appellant craves leave to add to, alter, amend, or vary the above grounds of appeal at or before the time of hearing. 6. Grounds no. 1 to 3.1, raised by assessee are on account of disallowance made u/s 40(a)(ia) for non-deduction of TDS under various provisions of the Act. 7. Brief facts apropos ground nos. 1 & .....

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wever, since the assessee had not deducted TDS on this amount on the ground that the transaction between the assessee and its distributors were carried out on principal to principal basis and, thus, were outside the purview of provisions of section 194H and thereby sec. 40(a)(ia) of the Act was not applicable. 8. The AO, however, did not accept the assessee s contention in view of the decision of Hon ble Delhi High Court in the case of CIT Vs. Idea Cellular Ltd. (2010) TIOL 139, wherein the rela .....

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3,74,72,942/- on account of roaming charges to various operators. AO was of the opinion that these payments were in the nature of fee for technical services and, therefore, TDS should have been deducted u/s 194J before making these payments. The assessee s explanation was that it was collecting roaming charges from the subscribers and was paying to the other operators on behalf of the subscribers and, therefore, the provisions of section 194J were not applicable to roaming as well as interconnec .....

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10. Ld. CIT(A) upheld the AO s action. 11. Aggrieved, the assessee is in appeal before the Tribunal. 12. At the outset, ld. counsel for the assessee submitted that the ITAT Jaipur Bench in the case of assessee in ITA no. 656/JP/2010 for AY 2009- 10, a copy of which has been filed in the PB at page nos. 601 to 637, has held that the provisions of section 194H are not applicable because the selling of prepaid products from the company to the distributor was actually a sale of right to service and .....

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s of section 194J are not attracted, because the charges were not towards fees for rendering any technical services as is envisaged in section 194J. 14. Ld. counsel further pointed out that ITAT Jaipur Bench in the case of assessee in ITA nos. 251 to 256/JP/2013 for AY 2004-05 to 2008-09, a copy of which is contained at pages 710 to 725 of PB, has followed the decision for AY has 2009-10 in regard to both the issues. 15. Ld. counsel further submitted that the ITAT Gauhati Bench in the case of as .....

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allowed to distributors has been held to be not applicable, therefore, there is no question of any disallowance u/s 40(a)(ia). He pointed out that the decision of Hon ble Jurisdictional High Court, relied by AO cannot be made applicable in assessee s case, more particularly because in assessee s own case the provisions of section 194H has been held to be inapplicable. Ld. counsel submitted that for triggering the applicability of section 40(a)(ia), it is necessary that first there should be def .....

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red to the decision of Hon ble Delhi High Court in the case of CIT Vs. JDS Apparels (P) Ltd. (2015) 53 taxmann.com 139 (Del), wherein it has been held that the doubtful penalization should be avoided. He referred to para 17 of the said decision, which is reproduced hereunder: 17. Another reason why we feel Section 40(a)(ia) of the Act should not have been invoked in the present case is the principle of doubtful penalization which requires strict construction of penal provisions. The said princip .....

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efore, requires a strict construction and the principle against doubtful penalization would come into play. The detriment in the present case, as is noticeable, would include initiation of proceedings for imposition of penalty for concealment, as was directed by the Assessing Officer in the present case. The aforesaid principle requires that a person should not be subjected to any sort of detriment unless the obligation is clearly imposed. When the words are equally capable of more than one cons .....

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ment; and in insisting on the strict observance of technical provisions concerning criminal procedure and jurisdiction." 18. Ld. counsel further submitted that computation and charging provision cannot operate de hors the machinery provisions. Ld. counsel submitted that in view of the decision of the Gauhati Bench and Jaipur Bench of the ITAT, wherein it has been held that machinery provisions do not come into play because there was no income which arose to payee from transaction, the provi .....

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ed that since for the instant assessment year assessee has been held to be not an assessee in default u/s 201, therefore, the said decisions will operate as res judicata. 19. Ld. counsel further submitted that any other interpretation will lead to absurd result inasmuch as penalty by way of section 40(a)(ia) would be imposed in an assessment year for a fault, which has been held not being committed in the same very year. He relied on the decision of Hon ble Supreme Court in the case of A-One Cyc .....

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Y 2006-07), both revenue and assessee proceeded on the footing that section 194 H was not applicable. He relied on the decision of Hon ble Delhi High Court in the case of CIT Vs. Kotak Securities Ltd. 340 ITR 333. 21. The third limb of argument was that the provisions of section 40(a)(ia) will apply only to the amount payable at the end of the year. In support of this contention he relied on the decision of ITAT Special Bench in the case of Merilyn Shipping & Transports, Visakhapatnam 16 ITR .....

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anak Singh in ITA no. 5530/Del/2012 for the same proposition. 23. The next limb of argument was that provision of section 40(a)(ia) could not have been applied without determining as to whether distributor has already paid tax on the income earned by him through the purchase and sale of prepaid cards. He pointed out that if the deductee has already paid all taxes no disallowance can be made u/s 40(a)(ia) in view of the decision of Hon ble Supreme Court in the case of Hindustan Coca Cola Beverage .....

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ot be resorted to for deciding whether the provisions of section 40(a)(ia) were attracted or not. In sum and substance ld. DR submitted that TDS provisions contained in chapter XVII-Boperate independent of charging and computation provisions. 25. Ld. DR submitted that decision in the case of JDS Apparels (supra), Hon ble Delhi High Court has not decided any question of law as is evident from para 19 of the said order. He submitted that the provisions of section 40(a)(ia) are not penal in nature. .....

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ted that the words employed in section 40(a)(ia) do not give any scope of travelling to provisions of section 201 or any other section for that matter. 28. He submitted that the provisions of section 201 are related to recovery of the amount which should have been deducted as TDS. It does not have any direct bearing of applicability of section 40(a)(ia). 29. As regards the alternate plea of bona fide belief taken by ld. counsel, he submitted that the assessee is a big company having full fledged .....

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at the operation of order of Special Bench of the ITAT in the case of Merilyn Shipping & Transports, Visakhapatnam (supra), has been stayed by Hon ble Andhra Pradesh & Telangana High Court. As regards the plea based on the decision in the case of Hindustan Coca Cola Beverage Ld. DR submitted that the said judgment has been delivered in regard to sec. 201, which is basically recovery section and section 40(a)(ia) are independent of section 201. 32. As regards applicability of TDS provisio .....

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context is that the service is provided to the telecom operator by virtue of agreements between two telecom operators. 33. He pointed out that a customer is having contract/ agreement with his/ her telecom operator and does not have any contract/ agreement with the telecom operator providing roaming services. He pointed out that fact of determining of charge based on calls made is method of calculation. There is no bar to have clauses in the agreement (between the two telecom operator) to provid .....

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issue, admittedly Hon ble Jurisdictional High Court in the case of Idea Cellular (supra) has held that the said provision is applicable. 36. As far as the issue regarding applicability of provisions of section 194J to roaming charges and interconnect charges, are concerned, Jaipur Bench of the ITAT in AY 2008-09 has held that the said provisions are not applicable. 37. Now we are pitted against the situation where Hon ble Jurisdictional High Court is against the assessee on the issue regarding .....

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ecision of Hon ble Supreme Court in the case of B.C. Srinivasa Setty (supra) and the decision of Eli Lilly (supra), wherein it has been held that the charging and computation provisions cannot operate de hors the machinery provisions. Therefore, we have to first examine whether the assessee s case falls within the law laid down by Hon ble supreme Court or not. 39. It is well settled law that the liability to tax arises by virtue of the charging section alone and it arises no later than the close .....

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sum which is chargeable u/s 4 for levy and calculation of income-tax, the payer should deduct tax thereon at the rate in force. They are meant for tantamount deduction of income-tax subject to regular assessment. In this case one of the argument advanced by Shri Ajay Vohra, counsel appearing on behalf of respondent assessee, inter alia, was as under: According to the learned counsel, the TDS provisions are in the nature of machinery provisions which enable easy calculation and recovery of tax. T .....

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count. Therefore, according to the learned counsel, each employer is required to comply with and deduct tax from out of the salaries paid by such employer. The obligation does not extend to deduction of tax out of salaries paid by any other person, which is not on account of or on behalf of such employer, notwithstanding that such salaries may have nexus with the service of the employee with that employer and may be assessable to tax in India in the hands of the recipient employee. According to .....

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ed that each of the expatriate cemployee(s) had paid directly the taxes due on the home salary by way of advance tax self assessment tax from time to time. They had filed also the return of income, In such circumstances, according to the learned counsel, there was no loss to the Revenue occasioned on account of the alleged default by the assessee herein in not deducting tax from the entire salary or on account of short deduction of tax at source. According to the learned counsel, even if the ass .....

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ovisions and the machinery provisions under the 1961 Act, we may, at the very outset, point out that in the case of crr v. B. C. Srinivasa Setty reported in [1981] 128 ITR 294 this court has held that the charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. We may add that, the 1961 Act is an integrat .....

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e contention herein we need to examine briefly the scheme of the 1961 Act. Section 4 is the charging section. Under section 4(1), total income ear is chargeable to tax. Section 4(2), inter alia, provides that in respect of income chargeable under sub-section (I), income-tax shall be deducted at source whether it is so deductible under any provision of the 1961 Act which, inter alia, brings in the IDS provisions contained in Chapter XVII-B. In fact, if a particular income falls outside section 4( .....

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where income actually accrues in India. Likewise, section 9 does not apply in cases where income is received in India. Therefore, if the income is not received in India, a non-resident would not be chargeable to tax upon it unless it accrues or is deemed to accrue in India. Thus, a general charge of income- tax is imposed by sections 4 and 5, and that general charge is given a particular application in respect of non-residents by section 9 which enlarges the ambit of taxation by deeming income t .....

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ing provisions of this clause (a) apply to residents and non-residents alike; (b) have no application where income actually accrues in India or is received in India. Both these points have been noted above in dealing with this section generally. II. It specifies the categories of income in respect of which a vicarious liability is imposed by sections 160 and 161 on an agent to be assessed in respect of a non-resident's income. In performing his function, the clause (a) applies to the income .....

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a charge which is imposed in general terms elsewhere and yet sections 160 and 161 are sections which like section 201(1) impose a vicarious liability on an agent to be assessed in respect of the income of the principal. The liability is imposed under sections 160 and 161 in respect of the income of a non-resident principal and it is only in respect of the income falling within section 9(1) and not any other income. Therefore, one has to read section 9(1) with section 160 and section 161 which a .....

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the assessee to claim deduction, the same will be disallowed for such non-deduction of tax at source . The above examples show that the 1961 Act is an integrated code in which one cannot segregate the computation machinery from the collection and recovery machinery. 42. Therefore, the provisions contained in Chapter XVIIB have to be given effect to while quantifying the liability of an assessee. The computation of income cannot be effected without having recourse to section 40(a)(ia) and consequ .....

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urce under Chapter XVIIB before 40(a)(ia) could come into play. Admittedly in the case of assessee, it has been held that the provisions of section 194H as well as provisions of section 194J are not attracted and therefore, there was no amount on which tax was deductible. Therefore, section 40(a)(ia) cannot come into play. The machinery provisions cannot operate independently and before the computation provisions contained in section 40(a)(ia) can come into the play, the effect of applicability .....

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urt in the case of Idea Cellular, deduction could not be allowed to assessee. However, in view of the decision of Hon ble Supreme Court, keeping in view the integrated scheme of the Act, we are of the opinion that Non-deduction of tax under Chapter XVIIB leads to consequences contemplated u/s 201 and, therefore, Section 40(a)(ia) and provisions contained in chapter XVII-B constitute an integrated code and, accordingly, effect has to be given to the decisions of Tribunal s Guwhati and Jaipur Benc .....

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sum but is not deemed to be an assessee in default under the first proviso to sub-section (1) of section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee ahs deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso. 46. This proviso, though applicable from 1.4.2013 but primarily deals with procedural aspects and, therefore, will be applicable to all pending proceedings also. 47. F .....

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A) has erred on facts and in law in deleting addition of ₹ 75,82,37,380/- made by the AO on account of amortization of license fee and spectrum charges U/S 35ABB of the IT Act. 2. The Ld. CIT(A) has erred on facts and in law in deleting addition of ₹ 4,94,27,528/- made by the AO on account of lease rent paid to IBM. 3. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appe .....

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ritten submissions dated 16.12.2010 gave the following explanation: 3.2 The assessee vide written submission dated 16.12.2010, gave the following explanation: "The license fee is paid on the basis of certain percentage of annual gross revenue (AGR). The license fee paid under section 35ABB conferred a light on the telecom operators to operate telephony services for a number of years. U/s 35ABB the fee was held to be capital and allowable in an appropriate proportion over the number of years .....

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ided in favour of the assessee company by the Hon'ble ITAT, New Delhi. Accordingly, the variable licence fees not to be amortized as per section 35ABB and to be allowed as revenue expenditure in the year in which it is incurred. " 51. The assessee had also relied on the decision of Tribunal in its favour on this issue for AY 2003-04 and 2004-05. The AO, however, did not accept the assessee s claim, inter alia, observing that the decision of Tribunal had not been accepted by the departme .....

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y. 53. Ld. CIT(A) has noted the findings of the ITAT at page 4 of his order which are reproduced hereunder: "We have considered the facts of the case and rival submissions. The operative portion of the order of the Tribunal is contained in paragraphs 9 and 10, which are reproduced below for ready reference:- Quote 9. We have heard the rival submissions. We have perused the order of this Tribunal in the case of to supra. It is noticed that the Bombay Bench of this Tribunal in the case of MTN .....

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t of payment of any consideration payable there under." From perusal of S. 8 of that Act, it is now evident that under the circumstances the licence is revoked, the appellant shall not be able to carry on its business of telephone services, unless it had paid such a licence fee to the Government. The irresistible conclusion, therefore, would be that payment of licence fee is wholly and exclusively incurred for the purpose of the business' carried on by it. The same is, therefore, an all .....

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circumstances, AD is directed to delete the addition made by holding the variable revenue share fee paid to be capital expenditure. In the circumstances, ground no. 3 in assessee's appeal stands allowed." 54. In view of the findings recorded by the Tribunal, ld. CIT(A) following the same allowed the assessee s appeal. 55. Being aggrieved, the department is in appeal before the Tribunal. 56. At the time of hearing ld. counsel for the assessee referred to of the decision of the Hon ble D .....

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asis after 15t August, 1999 should be treated as revenue expenditure. (ii) Capital expenditure will qualify for deduction as per Section 35ABB of the Act. 48. The appeal ITA No. 417/2013 by the Revenue in the case of Hutchison Essar Pvt. Ltd., pertains to the assessment year 1999- 2000 i.e. year ending 315t March, 1999. It is for the period prior to the period 315t July, 1999. As per the discussion above, the licence fee payable on or before 31st July, 1999 should be treated as capital expenditu .....

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d of the case. We find that the question of law on this issue, framed by the Hon ble Delhi High Court reads as under:- "1. Did the Tribunal fall into error in holding that the variable licence fee paid by the assessees was properly deductible as revenue expenditure? 59. Hon ble Delhi High Court in para 4 of its decision observed as under: 4. As is apparent from the substantial question of law quoted above, the issue raised is whether the variable licence fee paid by the respondents under In .....

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substantial question mentioned above in item Nos. l to 9 is answered in the following manner: (i) The expenditure incurred towards licence fee is partly revenue and partly capital. Licence fee payable upto 31 5t July, 1999 should be treated as capital expenditure and licence fee on revenue sharing basis after 15t August, 1999 should be treated as revenue expenditure. (ii) Capital expenditure will qualify for deduction as per Section 35ABB of the Act. 48. The appeal ITA No. 417/2013 by the Revenu .....

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dated 21st August, 2013, has to be answered in favour of the revenue and against the respondent assessee. 61. Respectfully following the decision of Hon ble Delhi High court, the revenue s ground is dismissed. 62. Brief facts apropos ground no. 2 are that the AO noticed from notes to return of income, note no. 1, which reads as under: "The company has entered into a composite agreement for services and equipment with IBM India for provision of Information Technology (IT). The company has ac .....

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preciation on leased assets as per books of accounts ₹ 50,26, 726/- and II. ₹ 20,98,38,684/- debited to Legal and professional charges has been added back while computing the income under normal provisions of the Income. Tax Act 1961 (the Act) Consequently, the amount paid during the previous year to the vendor as lease rental amounting to ₹ 26,42,92,938/- has been claimed as an admissible deduction. Further no depreciation has been claimed under the Act on aforesaid assets.&qu .....

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essee was actually a disguised purchase of assets. He further observed that the case was agitated u/s 144C by the assessee before ld. DRP, New Delhi. However, ld. DRP upheld the treatment given by AO. The assessee in its written submissions submitted before AO as under: 'The Assessee Company has taken the assets on lease from IBM and has accordingly done the treatment in the books of accounts. There are following expenditure charged to profit and loss account in respect of the aforesaid leas .....

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harges) ₹ 2,09,38,864/- Total amount added back in computation of taxable income ₹ 21,48,65,410/- and has finally claimed ₹ 26,42,92,938 as a deductible expenditure which is lease rental paid by the Assessee Company to IBM In view of above the payment made towards lease rentals must be allowed Without prejudice to the above submission we further submit that in any case the depreciation on these assets should be allowed at the rate of 60% to the Assessee Company. Should your goo .....

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ere also allowed. The AO made addition of ₹ 4,94,27,528/- on this count. 65. Before ld. CIT(A) the assessee had pointed out that assessee had accounted for IBM composite outsourcing agreement as finance lease following AS-19. Similarly, the assessee had entered into a contract with Nortel Networks India Pvt. Ltd. to outsource its call center service. The accounting of this outsource agreement was done as Finance Lease following AS-19. The assessee submitted that the AO disregarded service .....

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the Institute of Chartered Accountants of India, which required that lease contracts had to be broken up to be disclosed in a manner which reflects interest, depreciation on the fixed assets and other service charges separately. Thus, as required by the Accounting Standard, the cost of the fixed assets was debited to the fixed asset account. However, while computing the income, the assessee added back depreciation and amount paid towards legal and professional charges to their total income and t .....

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y the AO. After explaining the above methodology the assessee pointed out that the action of the company to prepare the balance-sheet, P&L a/c, in accordance with the accounting standard 19, was only for the purpose of preparation of account under the Companies Act. Therefore, the depreciation will continue to be allowed only in the hands of lessor. In alternate, the assessee submitted that if AO s stand is to be accepted then 60% depreciation is to be allowed as the assets were computers on .....

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arti Tele-Ventures Ltd. and IBM Global Services India Pvt. Ltd. is contained, wherein it had been agreed between IBM and Bharti that Bharti will outsource to IBM and IBM will provide to Bharti information technology services, processes, applications, software, hardware, packages and products, as specified in the agreement ( S1 ITO ). He referred to page 315, wherein clause 6.9 Asset Management, outsource agreement reads as under: 6.9 Asset Management Asset Register IBM will maintain lists of har .....

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leased Assets which IBM will manage and maintain during the Term. b. IBM owned Assets for the internal use of IBM that will not be transferred to Bharti upon exit. These assets are expected to consist of PC s, PC Software, Peripherals, servers required for IBM employees to perform their responsibilities. c. IBM owned Assets used to provide SI ITO to Bharti under the Agreement and which shall be transferred to Bharti upon exit. d. Assets listed as set forth in a) and c) above will be used solely .....

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e PB wherein effect of publication of accounting standard on allowability of depreciation in case of finance lease agreement has been clarified. He submitted that substance of the transaction has to be taken into consideration. 72. Ld. counsel for the assessee submitted that payments have been made to IBM from 2005-06 onwards and no disallowance has been made., In the books of a/c the assessee had charged the depreciation because as per AS 19 it had to capitalize the asset but the amount was add .....

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ed effectively with IBM only. 74. Ld. counsel referred to para 6.9 of SI ITO out source agreement, reproduced earlier, and pointed out that the main issue is regarding clause (c) of the said clause, which reads as under: c. IBM owned Assets used to provide SI ITO to Bharti under the Agreement and which shall be transferred to Bharti upon exit. 75. In this regard ld. counsel referred to page 304 of PB, wherein clause relating to warranty are contained and pointed out that clause e. reads as under .....

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r all the assets initial and on-going charges like license fees, AMC, upgrades, updates, subscription will be to IBM account. 78. Ld. counsel further referred to page 344 of PB, wherein the covenant relating to Insurance and Risk of loans is contained, which reads as under: IBM will comprehensively insure all insurable assets contained in the Asset Register, except BHARTI Machines. Against loss or damage, including loss or damage by fire, floods, riots and other natural calamities Bharti will in .....

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no payments were made with respect to assets. 80. Ld. counsel relied on following decisions: - ICDS Ltd. Vs. CIT 350 ITR 527; - CIT Vs. Shaan Finance (I) Ltd. 231 ITR 308 (SC) - CIT Vs. Reetu Finlease P. Ltd. 286 ITR 652 (Del.). 81. Ld. counsel submitted that in the case of ICDS Ltd. (supra), the company in course of its business had given on lease plant & machinery to its customers for the use by the customer for its business. It was held that such company was for the purpose of section 32, .....

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ely because assessee in its books of a/c had given some treatment to the transaction, has to be taken as sacrosanct or the substance of the transaction is to be considered. In our opinion, there cannot be any quarrel with the proposition that the substance of the transaction has to be taken into consideration and merely because in books of a/c, the assessee had complied with the requirement of AS 19 and, accordingly, charged depreciation on the asset treating the whole transaction as capital in .....

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