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L&T Finance Limited Versus DCIT Circle 2 (2) Mumbai

2015 (5) TMI 1068 - ITAT MUMBAI

Depreciation on assets given under 'sale and lease back basis' - Held that:- As in assessee’s own case for earlier assessment years i.e. A.Ys.1995-96 to 1999-2000 wherein the Tribunal directed the Assessing Officer to allow claim of depreciation on the assets given under sale and lease back basis and the Assessing Officer was also directed to withdraw any corresponding benefit given to the assessee by excluding the value of capital component of the lease rent from the income of the assessee. In .....

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verified the reasonableness of interest referable to exempt income. Thus we hereby set aside the order of learned CIT(A) and restore the matter back to the file of the Assessing Officer with a direction to the Assessing Officer to re-examine the matter in the light of the provisions of section 14A of the Act. - I.T.A. No. 6991/Mum/2011 ,I.T.A. No. 6992/Mum/2011 ,I.T.A. No. 6993/Mum/2011 ,I.T.A. No. 6994/Mum/2011 - Dated:- 5-5-2015 - Shri D.Manmohan (VP) & Shri Sanjay Arora (AM) Assessee by .....

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n law, the learned Commissioner of Income-tax (Appeals) erred in upholding the disallowance of depreciation made by the Assessing Officer in respect of certain assets given under 'sale and lease back basis' by treating the lease transactions as finance transactions 2. On the facts and in the circumstances of the case and III the learned Commissioner of Income tax (Appeals) erred in confirming the disallowance of depreciation on motor cars given on finance lease by treating the lease tran .....

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ansaction as finance transaction. 2. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in confirming the disallowance of depreciation in respect of assets given on lease by the appellant in earlier years. 3. The assessee admittedly is a finance company. The assessee claimed depreciation in respect of leased assets in the original assessment proceedings. On an appeal filed by the assessee, ITAT set aside the assessment with a dire .....

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reciation on leased assets. The assessee contended that the assessee having purchased assets from various suppliers, it has to be treated as owner of the assets and hence it is entitled to claim depreciation. 5. The Assessing Officer observed that the transactions styled as sale and lease back were, in reality, pure finance transactions and the interest of the parties was not that the property in the equipment should pass on to the assessee by way of sale. It is a specie of finance lease; what i .....

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case for earlier assessment years i.e. A.Ys.1995-96 to 1999-2000 wherein the Tribunal directed the Assessing Officer to allow claim of depreciation on the assets given under sale and lease back basis and the Assessing Officer was also directed to withdraw any corresponding benefit given to the assessee by excluding the value of capital component of the lease rent from the income of the assessee. In arriving at such conclusion the ITAT, in the following orders, followed the decision of Hon'b .....

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e assessee is entitled to claim depreciation in respect of the assets given under sale and lease back basis . The Assessing Officer is also directed to withdraw the corresponding benefit given to the assessee by excluding the value of the capital component of the lease rent from the income of the assessee. 10. With these observations, the appeals filed by the assessee for A.Y. 2000- 01 & 2001-02 are allowed. 11. In so far as A.Ys. 2002-03 & 2003-04 are concerned, the assessee vide ground .....

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:- On the facts and in the circumstances of the case and in law, learned CIT(A) erred in confirming the action of the Assessing Officer to treat the notional gain arising on securitization of lease receivables as taxable receipts. 14. As could be noticed from the para 8 of the learned CIT(A) s order the assessee accounted for receipt as income in its books whereas it is contended that it was notional income. Learned CIT(A) observed that the approach of the assessee is self contradictory. The com .....

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nce it is not the case of the assessee that the said sum represents capital receipt, learned CIT(A) concluded that the said sum should be treated as having been earned in the course of business activities carried on by the assessee and it is therefore revenue in nature. 15. Learned counsel merely relied upon the arguments advanced before the tax authorities and did not place any material to contradict the findings of learned CIT(A). 16. Having regard to the circumstances of the case, we do not f .....

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