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2019 (11) TMI 209

..... . Therefore, the A.O. should not have taken out a different view in the assessment year under appeal, when similar claim of assessee have been allowed as revenue expenditure in earlier years. Nature of infrastructure facilities provided to the assessee on lease rent, it is clear that the same have been provided through Agreement for business purpose of the assessee. Since assessee used these items wholly and exclusively for the purpose of business and was not the owner of the same, therefore, assessee rightly claimed the same as revenue expenditure and rightly claimed the deduction of the same. It is also well settled Law that the liability under the Act is governed by the provisions of the Act and is not depending on the treatment followed for the same in the books of account. It is also well settled that whether the assessee was entitled to a particular deduction or not, would depend upon the provisions of Law relating thereto, and not on the view, which the assessee might take of his right, nor could the existence or absence of entries in the books of account by decisive or conclusive in the matter. No justification to sustain the addition. We, accordingly, set aside the Orders .....

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..... der section 143(1) of the I.T. Act, 1961. The issue in the present appeal is regarding disallowance of ₹ 50,09,835/- towards finance lease. The A.O. noticed that assessee has claimed deduction of ₹ 50,09,835/- in respect of payment of principal amount of finance lease. The A.O. asked the assessee to explain as to how this amount is allowable as revenue expenditure. After considering the reply filed by assessee, A.O. held that though the interest on such finance lease allowable as revenue expenditure, payment of principal amount cannot be allowed as revenue expenditure because it is capital expenditure in nature in respect of the value of leased assets. The A.O. following the Order of ITAT, Delhi Bench in the case of Rio Tinto India Pvt. Ltd., vs. ACIT in ITA.No.363/Del./2012 disallowed the deduction claimed by the assessee on account of principal amount of finance lease. 4.1. The addition was challenged before the Ld. CIT(A). The written submissions of assessee is reproduced in the appellate order in which the assessee has briefly explained that assessee had taken infrastructure/movable assets on lease which were located at the three places i.e., Malleswaram Centre, Ban .....

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..... are allowable as revenue expenditure under section 37 of the I.T. Act. The assessee relied upon Circular No.2 of 2001 Dated 09.02.2001 issued by CBDT wherein it has been clarified that the aforesaid Accounting Standard issued by ICAI creating distinction between finance lease and operating lease will have no implications under the provisions of the Act. The assessee also relied upon FAQ No.82 CBDT s Circular No.8/2005 Dated 29.08.2005, which provides that rent paid or payable for financial lease of a motor car is in the nature of expenditure on running and maintenance of motor car and, therefore, such expenditure would be treated as expenditure, within the scope of clause (1) sub-clause (H) of sub-section (2) of Section 115WB of the I.T. Act. The CBDT has, thus, clarified that treatment of finance lease for the purpose of accounts is not relevant for the purpose of computation of income for tax purpose under the Act. The assessee also relied upon Judgment of the Hon ble Supreme Court in the case of ICDS Ltd., vs. Commissioner of Income Tax 350 ITR 527 (SC) wherein the Court held that lesser is the owner of the leased property in the case of finance lease and is, therefore, entitled .....

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..... e furniture have been taken on lease for running the business of the assessee. Therefore, lease rental is revenue expenditure in nature. He has referred to PB-123 which is details of earlier year as well as assessment year under appeal. PB-124 is Circular No.2/2001 (supra). Learned Counsel for the Assessee is again referring FAQ No.82 of CBDT s Circular No.8/2005 Dated 29.08.2005 [PB-131]. He has also relied upon Judgment of the Hon ble Rajasthan High Court in the case of Rajshree Roadways vs., Union of India [2003] 263 ITR 206 (Raj.) in which it was held that lease rent paid by assessee should be allowed as revenue expenditure . He has relied upon Order of ITAT, Delhi E-Bench in the case of same assessee for A.Ys. 2012-2013 and 2014-2015 in ITA.Nos.6778 & 6779/Del./2018 Dated 26.07.2019, in which, assessee was granted the benefit of finance lease expenses as revenue expenditure. He has also relied upon Judgment of ITAT, Ahmedabad Bench in the case of Axis Bank Ltd., vs. Addl. Commissioner of Income Tax, Range-1, Ahmedabad [2017] 79 taxmann.com 187 (Ahd.-Trib.) in which the Tribunal following the Order of the Coordinate Bench, allowed the claim of assessee for depreciation of w .....

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..... ome tax proceedings. Therefore, the A.O. should not have taken out a different view in the assessment year under appeal, when similar claim of assessee have been allowed as revenue expenditure in earlier years. Considering the totality of the facts and circumstances of the case and nature of infrastructure facilities provided to the assessee on lease rent, it is clear that the same have been provided through Agreement for business purpose of the assessee. Since assessee used these items wholly and exclusively for the purpose of business and was not the owner of the same, therefore, assessee rightly claimed the same as revenue expenditure and rightly claimed the deduction of the same. It is also well settled Law that the liability under the Act is governed by the provisions of the Act and is not depending on the treatment followed for the same in the books of account. It is also well settled that whether the assessee was entitled to a particular deduction or not, would depend upon the provisions of Law relating thereto, and not on the view, which the assessee might take of his right, nor could the existence or absence of entries in the books of account by decisive or conclusive in t .....

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