TMI Blog2018 (1) TMI 1355X X X X Extracts X X X X X X X X Extracts X X X X ..... Mumbai, for the assessment year 1999 2000. 2. In ground no.1, assessee has challenged disallowance of depreciation amounting to ₹ 55,02,27,227, on leased assets. 3. Brief facts are, the assessee earlier known as Tata Finance Limited was engaged in financing and related activity. For the assessment year under dispute, the assessee filed its return of income on 30th December 1999, declaring loss of ₹ 1,14,86,748 under normal provisions and book profit of ₹ 13,18,79,252, on which assessee paid taxes. In course of the assessment proceedings, the Assessing Officer noticed that the assessee has claimed depreciation of ₹ 55,02,27,226, on assets leased by it which includes depreciation @ 50% amounting to ₹ 16,04,71,679, on leased assets depreciation on which was disallowed in assessment year 1998 99. The Assessing Officer being of the view that allowability of depreciation is based on fulfillment of twin condition of ownership of assets by the claiment and its user for the purpose of business, called upon the assessee justify its claim. Though, the assessee made elaborate submissions justifying its claim of depreciation, however, the Assessing Officer d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017, allowed assessee s claim with the following observations: 5. We have considered the rival submission of the parties and perused the material available on record carefully. Besides the year under consideration, the ld. CIT(A) sustained the similar disallowance of depreciation of leased asset for AYs 1995 96, 1996 97,1997 98 and 1998 99. The assessee has filed appeal before the ITAT vide ITA No. 6214/Mum/2003 for AY 1997 98 and ITA No. 7148/Mum/2004 for AY 1998 99 and the Tribunal passed the following order: 18.15. We have heard the rival submissions and perused the material before us. We find that impugned assets underlying lease agreements were very much in existence, that purchase consideration of assets was discharged by the assessee through banking channels, that copies of the cheques were also produced, that the lease transactions were completed as per all legally prescribed procedures, that it was a rightful owner of leased assets that the leassees had confirmed the ownership of assets, that lease rentals earned by the assessee was offered to tax and same was assets by the AO.s in the year under consideration as well as in the subsequent AY.s. Here, we would li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of assessee and against the revenue. The coordinate bench decided the identical ground of appeal on the basis of decision of Apex Court in case of ICDS Ltd (supra). Thus, respectfully following the decision of Tribunal the ground No.1 of appeal raised by assessee is allowed. 8. There being no difference in facts nor any contrary decision brought to our notice by the learned Departmental Representative, respectfully following the decisions of the Co ordinate Bench in assessee s own case, as referred to above, wherein, the principle laid down by the Hon'ble Supreme Court in ICDS Ltd. (supra), were applied we allow depreciation claimed by the assessee. This ground is allowed. 9. In ground no.2, assessee has challenged the disallowance of an amount of ₹ 89,10,830, being expenses incurred for increase in authorised share capital. 10. Brief facts are, the Assessing Officer while examining the nature of the expenditure claimed found that it was related to increase of authorised share capital of the company. Therefore, treating the expenditure incurred as capital nature, he disallowed the claim. 11. The learned Commissioner (Appeals) also sustained the dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 681 (Bom.); iii) CIT v/s ExxonMobil Lubricants Pvt. Ltd., 328 ITR 17 (Del.); iv) CIT v/s Mahanagar Gas Ltd., 221 Taxman 80 (Bom.); and v) CIT v/s Jagatjit Industries Ltd., 339 ITR 382 (Del.). 17. Finally, learned Sr. Counsel submitted, though, the assessee is following similar method of accounting with regard to prior period income and expenditure, no such disallowance has been made either in the preceding or succeeding assessment years. Therefore, applying the rule of consistency also, the expenditure has to be allowed. 18. The learned Departmental Representative relied upon the observations of the Assessing Officer and the learned Commissioner (Appeals). 19. We have considered rival contentions and perused material on record. We have also applied our mind to the decisions relied upon. In so far as the factual aspect of the issue is concerned, there is no dispute that in the relevant previous year the assessee has offered prior period income of ₹ 76,06,741=23 and claimed prior period expenditure of ₹ 9,87,760=54. Before the Assessing Officer, the assessee also justified its claim by stating that such expenditure did crystallize in the impugned asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer held that the assessee must have incurred other expenses like salary, travelling, conveyance, telephone, office maintenance, general expenditure for earning dividend income which cannot be quantified on exact basis. Therefore, he disallowed 10% of the dividend income towards expenditure incurred for earning such income. Against the disallowance made under section 14A of the Act, the assessee preferred appeal before the first appellate authority. 22. The learned Commissioner (Appeals) after considering the submissions of the assessee upheld disallowance of interest expenditure, however, insofar as ad hoc disallowance of 10% out of other expenditure is concerned, the first appellate authority deleted the disallowance on the reasoning that there is nothing on record to suggest that the assessee has incurred any other expenditure for earning the dividend income. While the assessee is challenging disallowance of interest expenditure, the Department is aggrieved with the decision of the learned Commissioner (Appeals) in deleting disallowance of other expenditure. 23. The learned Sr. Counsel for the assessee reiterating the stand taken before the Departmental Author ..... X X X X Extracts X X X X X X X X Extracts X X X X
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