TMI Blog2019 (4) TMI 1809X X X X Extracts X X X X X X X X Extracts X X X X ..... ot been examined by the authorities below and also there is no finding from the Tribunal in the earlier years. Therefore, the issue may be set-aside to the file of the AO for verification of facts with regard to standard deduction claimed u/s 24(a) of the Act and further if at all the assessee has claimed deduction u/s 24(a) of the Act, it amounts to double deduction and the same may be directed to be disallowed. Therefore, consistent with view taken by the Co-ordinate Bench for earlier years, we direct the AO to allow depreciation as claimed by the assessee on residential premises, but verify the fact with regard to deduction claimed u/s 24(a) in the light of our discussions given hereinabove. In case, the assessee claimed deduction u/s 24(a), then the same needs to be disallowed. Disallowance of the amortization of premium paid on leasehold land - HELD THAT:- e ITAT had considered identical issue and by following certain judicial precedence including the decision of the Hon ble Delhi High Court in case of Rajesh Projects (India) Pvt. Ltd. vs CIT [ 2017 (2) TMI 1109 - DELHI HIGH COURT] held that the amortization of lease premium over the lease period was capital in nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no express bar in the IT Act, 1961 regarding application of such accounting standards. The Hon ble Court further held that only real income i.e. finance income should be taxed for the purpose of Income Tax which can be arrive only after applying such method which is prescribed in the guidance note. Therefore, we are of the considered view that prima-facie, the issue is settled by the decision of the Hon ble Supreme Court, however, consistent with view taken by the Co-ordinate Bench for earlier years, we restore this issue to the file of the AO and direct him to decide computation of lease equalisation reserve in accordance with the direction of Hon ble Supreme Court in the case of Virtual Soft Systems Ltd. [ 2018 (4) TMI 1472 - SUPREME COURT] Disallowance of dividend income earned from Venture Capital Trust u/s 14A - HELD THAT:- Issue requires re-examination / re-adjudication at the level of Ld. AO since the assessee is earning income from two types of Trusts-one exempt u/s 10(23FB) and the other not exempt u/s 10(23FB) and therefore, the provisions of Section 115U and 161 are applicable to them. The assessee is directed to substantiate its claim in this regard includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deduction and added back the same while computing book profit on the ground that it is mere provision, therefore, the same should be added back to book profit - HELD THAT:- We find that this is a recurring issue which is subject matter of discussions by the Tribunal right from AY 2002-03. The Tribunal had considered an identical issue in the light of provisions of section 115JB of the Act, and held that provisions made for non-performing assets needs to be added back while computing book profit u/s 115JB of the Act. Therefore, consistent with view taken by the Tribunal for earlier years, we dismissed ground taken by the assessee. Disallowance u/s 14A - HELD THAT:- Issue is covered in favour of the assessee by the decision of ITAT Delhi Special Bench in the case of ACIT vs Vireet Investment Pvt Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] . But, fact remains that the issue of disallowance contemplated u/s 14A of the Ac read with Rule-8D has already been discussed by us in preceding paras in ground no. 4, 5, 7 and 10 of assessee s appeal, where the matter has been restored back to the file of the AO to recompute disallowance of expenditure by excluding investment which do not yi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, anti-virus expenses and other software expenses for accounting package, therefore, being revenue in nature and allowable as deduction. Expenditure incurred on club facilities is revenue in nature, which is allowable deduction - See OTIS ELEVATOR COMPANY (INDIA) LIMITED VERSUS COMMISSIONER OF INCOME-TAX [ 1991 (4) TMI 53 - BOMBAY HIGH COURT] Disallowance made on account of lease equalisation reserve on of book profit u/s 115JB - HELD THAT:- This issue has been considered by the Tribunal for AY 2004-05, where, in respect of normal provisions of lease equalisation reserve, the issue has been restored back to the file of the AO to re-compute lease equalisation reserve, considering tax depreciation instead of book depreciation. However, in respect of determination of book profit and the relevancy of computation of lease equalisation reserve by taking note of depreciation as per Income Tax may not be appropriate. But fact remains that since the Tribunal has already considered this issue, we do not want to deviate from the findings recorded by the Tribunal for AY 2004-05. Hence, we restore this issue also to the file of the AO and direct him to recompute book profit by takin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts circumstances of the case the appellant submit that the disallowance of the claim of amortisation of land premium amounting to ₹ 22,32,084/- is not justified and the said disallowance may be deleted. 4. On the facts circumstances of the case the Learned Commr. of Income Tax (A) has erred in confirming the disallowance u/s 14A amounting to ₹ 28,76,00,000/attributing the interest relating to the income earned by appellant u/s 10(230), 10(34) and 10(35). On the facts circumstances of the case the appellant submit that the determination of interest attributable to earning interest income which is exempt u/s 10(230), 10(34) and 10(35) is not justified and the said disallowance may be deleted. 5. The Learned A.O. has erred in disallowing the sum of ₹ 1,20,00,000/- being the administrative / establishment expenses attributable to earning exempt income u/s 10(230), 10(34) and 10(35) of Income Tax Act, 1961. On the facts circumstances of the case the appellant submit that the disallowance of ₹ 1,20,00,000/- being the administrative / establishment expenses is not justified and the said disallowance may be deleted. 6. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad and the matter is in dispute. The Learned Commr. of Income Tax (Appeals) has erred in directing the Learned Assessing Officer to estimate the interest income due from MPSIDC. The appellant prays that they are not entitled to and have not received any interest income from MPSIDC and hence the direction of the Learned Conimr. of Income Tax (A) to tax the estimated interest income may be set aside. 13. On the facts and circumstances of the case the Learned Commr. of Income Tax (Appeals) has erred in confirming disallowance of the claim of the appellant in respect of income earned from the loans given to Tamilnadu Road Development Co. Ltd. and Mahendra Industrial Park amounting to ₹ 2,08,09,576/-. On the facts circumstances of the case the appellant submit that they are entitled to deduction of ₹ 2,08,09,576/- being the income exempt from tax u/s 10(23G) of Income Tax Act. 14. Oil facts and circumstances of the case the Learned Commr. of Income Tax (Appeals) has erred in confirming the disallowance of ₹ 2,42,900/- u/s. 35D. The appellant prays that they are entitled to deduction u/s. 35D of Income Tax Act, 1961 and the disallowance of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rores as against the disallowance of ₹ 63.23 crores computed by the Assessing Officer u/s 14A of the Income Tax Act, 1961. 1(ii). On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the disallowance of managerial and administrative expenses attributable to the earning of exempt income to ₹ 1.20 crores as against the disallowance of ₹ 11.45 crores computed by the Assessing Officer u/s 14A of the Income Tax Act, 1961. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of bad debts relating to SPIC LTD and FIDELITY INDUSTRIES LTD without appreciating that the assessee did not file any details relating to the debts written off in respect of the said parties and the Assessing Officer should have been given an opportunity to examine the claim of the assessee that the write off of the debts relating to the said parties fulfilled the conditions laid down in 36(1)(vii) read with section 36(2) of the Income Tax Act, 1961. 3. on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciating that the assessee did not furnish specific details of the expenses for test verification by the Assessing Officer. 11. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the adjustment of ₹ 30,07,25,824/- made by the Assessing Officer on account of lease equalization reserve while computing the book profit u/s 115JB(2). In these appeals, filed by the assessee as well as the Revenue for AY 2005-06 to 2007-08, common issues are involved, therefore, we deem it appropriate to decide the issues involved in these appeals instead of deciding the appeals year-wise. 4. The brief, facts of the case are that the assessee company is engaged in the business of leasing and investment banking services filed its return of income for the impugned assessment years u/s 139(1) of the Income Tax Act, 1961(hereinafter the Act ). The assessment for AY 2005-06 to 2007-08 have been completed u/s 143(3) of the Act, where the AO has made various additions/disallowances. The assessee carried the matter in appeal before the First Appellate Authority. The Ld. CIT(A), for the detailed reasons recorded in his appellate or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the assessee has claimed standard deduction as provided u/s 24(a) of the Act or not in respect of income from house property in addition to depreciation and other maintenance expenses claimed, the Ld. AR for the assessee, fairly accepted that this aspect has not been examined by the authorities below and also there is no finding from the Tribunal in the earlier years. Therefore, the issue may be set-aside to the file of the AO for verification of facts with regard to standard deduction claimed u/s 24(a) of the Act and further if at all the assessee has claimed deduction u/s 24(a) of the Act, it amounts to double deduction and the same may be directed to be disallowed. Therefore, consistent with view taken by the Co-ordinate Bench for earlier years, we direct the AO to allow depreciation as claimed by the assessee on residential premises, but verify the fact with regard to deduction claimed u/s 24(a) in the light of our discussions given hereinabove. In case, the assessee claimed deduction u/s 24(a), then the same needs to be disallowed. 10. The next issue that came up for our consideration is disallowance of the amortization of premium paid on leasehold land. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yments were towards acquisition of land on which no depreciation was allowable, the said expenditure, being capital expenditure was clearly disallowable in the hands of the assessee. However, here is the case of lease premium paid towards acquisition of certain leasehold rights in the land which upon expiry of lease period, was to revert back to the authority. We find that the assessee entered into agreement to lease dated 15/03/1994 with the authority and executed a Lease deed dated 28/03/2003 to acquire certain leasehold rights in the land. A conjoint reading of various clauses of the lease deed dated 28/03/2003 entered into between the assessee and Mumbai Metropolitan Region Development Authority (MMRDA) reveals that against consideration of ₹ 42 Crores, the assessee acquired certain rights in land situated at C-22, G-Block, CTS No. 4207, Village Kolekalyan, Taluka Andheri Mumbai Suburban District approx. Area 12652 square meters on Lease basis for 80 years starting from 15/03/1994. The assessee was required to pay the ground rent from time to time at the prescribed rates which ranged from Nil to 3% of the lease premium over the lease period. The assessee was also requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make the deductions due to the insistence of GNOIDA, a direction is issued to the said authority (GNOIDA) to comply with the provisions of law and make all payments, which would have been otherwise part of the deductions, for the periods, in question, till end of the date of this judgment. All payments to be made to it, henceforth, shall be subject to TDS. 4.6 The Ld. AR contended that the same was revenue in nature and no TDS was deducted there-from since the land was acquired long ago when there was no requirement to deduct the TDS against the said payment. However, we find that the issue before us is regarding the nature of the impugned expenditure and since we have already noted that the said expenditure was capital in nature, the same was not allowable to the assessee. Therefore, after considering the factual position and various judicial pronouncements, we are of the considered opinion that the amortization of lease premium over the lease period was capital in nature and hence, not allowable to the assessee. The ground of assessee s appeal stands dismissed. 14. In this view of the matter and consistent with view taken by the Co-ordinate Bench, we are of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to strategic and long term investments earning exempt income irrespective of dominant purpose of making investment. However, the Hon ble Supreme Court has not accepted the concept of Commercial Expediency and consideration of disallowance on actual dividend yielding investments only. The Ld. AR further submitted that the Hon ble Supreme Court in the case of Pr. CIT vs Sintex Industries Ltd. (2017) 82 taxmann.com 171(Gujarat) held that if assessee had its surplus fund against which minor investment was made, no question of making any disallowance of expenditure in respect of interest and administrative expenses u/s 14A of the Act, therefore, in order to ascertain correct amount of investment which yielded exempt income, the issue needs to be set-aside to the file of the AO and hence a direction may be given to the AO to determine disallowance in light of decision of the Hon ble Supreme Court in the case of Maxopp Investments Ltd. vs CIT (supra) . 18. The Ld. DR, on the other hand, fairly accepted that the issue may be set-aside to the file of the AO to determine correct amount of disallowances keeping in mind the decision of the Hon ble Supreme Court in the case of Maxop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und no.6 of assessee s appeal is disallowance of lease equalisation reserve. The facts with regard to the impugned dispute are that the assessee is giving assets on lease and collects lease rentals from the clients, which comprises recovery of cost of asset and finance charges. Recovery of cost was further bifurcated into depreciation as per the Companies Act and lease equalisation reserve ( LER ) as prescribed in the guidance note on accounting for leases issued by ICAI. Gross rental was credited to P L Account and LER was debited to Profit Loss Account to derive at real income. The AO disallowed lease equalisation debited into Profit Loss Account on the ground that the statutory provisions did not provide for any such deduction and by mixing the accounting standard and income tax depreciation, the assessee has claimed higher deduction. 22. At the time of hearing, the Ld. AR for the assessee submitted that this issue is covered in favour of the assessee by the decision of the ITAT, Mumbai, Bench is in assessee s own case For AY 2004-05 in ITA No.3203/Mum/2008, where under identical set of facts, the Tribunal held that lease equalisation reserve is an allowable dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards capital recovery is not equivalent to the depreciation claimed by the assessee. Lease equalization charges is a method of recalibrating the depreciation claimed by the assessee in a given accounting period. If the depreciation claimed is less than the capital recovery, the difference is debited in the profit loss account in the form of lease equalization charge and similarly if, for any reason the depreciation claimed is more than the capital recovery, then the difference is credited, once again, in the form of lease equalization charge to the Profit Loss Account. Therefore, the assessee in effect debits are credits its profit loss account with a lease equalization charge depending on whether or not the depreciation claimed is less or more than the capital recovery. The method employed by the assessee, therefore, over the full term of the lease period would result in the lease equalization amount being reduced to naught, as the credits and debits in the profit loss account would square off with each other. 7.3 Further a perusal of earlier orders of Tribunal, we find that while prima facie allowing the claim of lease equalization charges, it has been held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation given by Venture Capital Funder under Form 64. In other words, the assessee reflected gross dividend income from trust in the Profit Loss Account and claimed the same as exempted, whereas, the set off of share of loss from the said funds/trust were claimed under the head income from the other sources which led the AO to make the impugned additions. 27. The Ld. AR for the assessee, at the time of hearing, submitted that this issue covered by the decision of ITAT, Mumbai Bench for AY 2004-05 in ITA No.3203/Mum/2008, where under identical set of facts, the Tribunal has restored this issue to the file of Ld. AO to re-examine the claim of the assessee that since the assessee is earning income from two types of Trusts-one exempt u/s 10(23FB) and the other not exempt u/s 10(23FB) and therefore, the provisions of Section 115U and 161 are applicable to them. The relevant observations of the Tribunal are as under:- 10. Ground Numbers 17 to 20 are related with income from venture capital trusts. It was noted that the assessee earned dividend and units income of ₹ 43.31 crores claimed exempted u/s 10(34) 10(35) which included dividend of ₹ 48.38 Lac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure to earn the same and therefore, no disallowance thereof could be made by the Ld. AO. 10.2 The Ld. CIT(A) after examination, found the proportion of total expenses to the interest income of the fund to be lopsided and directed the assessee to justify the admissibility of expenses u/s 57(iii) against interest income. Not convinced with the explanation of the assessee, the Ld. CIT(A) came to conclusion that majority of the expenses of these funds were incurred to earn the exempt dividend income and therefore, the same could not be allowed to the assessee. Finally, the matter was restored to the file of Ld. AO for redetermination of total disallowance after segregating the indirect expenses on proportionate basis. 10.3 The assessee also pointed out mistake in calculations made by Ld. AO in arriving at disallowance of ₹ 1.61 crores and explained that the correct figures of disallowance, even as per the AO s proposition, would be worked out to ₹ 79.28 Lacs which was agreed in principle by the Ld. CIT(A). Aggrieved, the assessee has raised ground nos. 17 to 20 against the same. 10.4 The Ld. AR drew our attention to the reconciliation stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restore this issue to the file of the AO and direct him to decide in accordance with direction given by the Tribunal for AY 2004-05. 29. The next issue that came up for our consideration from ground no.11 and additional ground no 1 and 12 is disallowance of depreciation on toll road. The brief, facts of the impugned dispute are that the assessee had constructed toll road in Rau-Pithampur in joint venture with Madhya Pradesh [MP] state government in the year 1995. The assessee was given a right to collect the tolls for a specified period to recover the cost of investment and desired yield as per agreement between the parties. The assessee has collected toll for initial year but later on government has stopped collection of toll. The assessee has capitalised expenditure incurred for construction of road under the head Plant Machinery . The assessee has claimed depreciation @ 25% on toll roads. The AO disallowed depreciation claimed on toll road on the ground that the assessee is neither owner of the asset nor said asset is in the nature of plant and machinery, therefore, depreciation on said asset is not allowable as per provisions of act. Similarly, in respect of revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has certain right to claim the same particularly when the payment is backed by the guarantee of the state government. There is no dispute as to the fact that the assessee has unfettered right to claim the same from the government agency and only the quantification thereof is in dispute. The contention of the Ld. AR is that since the government agency has agitated the same before higher authorities, the same has not yet attained finality. However, whatever the case may be, the assessee following mercantile system of accounting is obliged to offer the same to tax in view of crystallization thereof by Appellate Tribunal. 11.11 Therefore, on the facts and circumstances, we restore the matter back to the file of Ld. AO with a direction to estimate the income on the basis of latest decision of the Appellate Tribunal or any higher authority, as the case may be. The assessee is directed to substantiate his claim in this regard forthwith failing which the Ld. AO shall be at liberty to decide the same on the basis of material available on record. 11.12 Since, we have already directed the Ld. AO to tax the estimated income from the toll road, as a logical consequence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own case for AY -2004-05 in ITA No.3203/Mum/2008, where the issue has been restored back to the file of the AO. For the year under consideration, facts being identical, by following the decision of ITAT for earlier year, we restore this issue back to the file of AO with a direction to examine whether the assessee is an industrial undertaking within the meaning of section 35D of the Act, which makes it eligible to claim expenditure. The AO is also directed to consider the issue in light of findings recorded by the Tribunal for AY 2004-05. 37. The next issue that came up for our consideration from ground No.15 is levy of interest u/s 234B of the Act. This issue is consequential and mandatory in nature. The AO shall compute interest as applicable for the relevant period as per provisions of section 234B of the Act after determining total income of the assessee. Accordingly, the ground taken by the assessee is dismissed. 38. The next issue that came up for our consideration from ground no.16 is addition made on account of provision for non-performing assets while computing book profit u/s 115JB of the Act. The assessee has claimed deduction on account of provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng heard both the sides and considering the material available on record, we find that the Tribunal has considered similar issue for AY 2004-05 in ITA No.3203/Mum/2008, where under identical set of facts has restored issue back to the file of the AO with following observations:- 5.2 We have heard the rival contentions. We note that the assessee has made provision of ₹ 1,70,58,371/- in the Profit Loss Account towards investment valuation and cumulative figures of these provisions in Balance Sheet Schedule F stood at ₹ 2,53,91,613/-. Further As per Note no. 34 in Schedule N-Notes forming part of the accounts, it has been stated that income from investments included in income from operations under Schedule I includes net profit on sale of securities ₹ 86,82,62,292/-. Further, the assessee in computation of income made suo-moto disallowance of ₹ 31,77,056/- towards provision for diminution in value of investments and shown certain profit on sale of strategic / long term investments. All these facts and figures lend strength to the argument of Ld. AR. It is well settled that closing stock has to be valued at cost or market price whichever is less a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-8D has already been discussed by us in preceding paras in ground no. 4, 5, 7 and 10 of assessee s appeal, where the matter has been restored back to the file of the AO to recompute disallowance of expenditure by excluding investment which do not yield exempt income. The issue of computation of book profit with reference to 14A disallowance is bearing on the outcome of computation of disallowance u/s 14A of the Act in light of our discussions given in the grounds of appeal taken for the assessee s in its appeal. Therefore, we restore this issue back to the file of the AO and direct him to first re-compute disallowance contemplated u/s 14A and then decide this issue in accordance with findings of the Special Bench of ITAT, Delhi in the case of ACIT vs Vireet Infest Pvt. Ltd. (supra) and also the Hon ble Bombay High Court in the case of CIT vs Ms/ Bengal Finance Investment Pvt. Ltd. in Income Tax Appeal No.337 of 2013. 50. The next issue that came up for our consideration from Ground no.13 of assessee s appeal is addition towards income earned from loan given to Tamilnadu Road Development Co. Ltd. and Mahendra Industrial Park u/s 10(23G) of the Act. The assessee have given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, any company which is fulfilled the condition u/s 10(23G) and the investments are made before 01/06/1998, then any income received from such investment is exempted u/s 10(23G) of the Act. In this regard, he relied upon the decision of ITAT, Hyderabad in the case of VBC Ferro Alloys Ltd. vs ACIT (2007) 107 TTJ 925. The assessee also relied upon the decision of ITAT Ahmedabad Bench in the case of Gujarat Power Corporation Ltd. vs ACIT in ITA No.1663/Ahd/2008. 52. The Ld. DR on the other hand, submitted that unless the assessee to whom loans have been given is approved u/s 10(23G) by the CBDT as per prescribed procedure, the assessee would not get the benefit of exemption u/s 10(23G) of the Act, towards any income received from such investments/loans, therefore, the AO was right in making addition towards interest income earned from long term finance given to Tamilnadu Road Development Co. Ltd. and Mahendra Industrial Park because the required approval u/s 10(23G) has not been obtained by those companies for the relevant financial year. 53. We have heard both the parties, perused the material available on record and gone through the orders of authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund is exempted u/s 10(23G) of the Act, because as per provisions of statute existing in 1997 read with explanation 2 introduced by the Finance Act 1997 mandates that income by way of long term capital gain of an infrastructure capital company from investment made before 01/04/1998 by way of any shares, any enterprise which is infrastructure facilities shall not be included in the total income. Similarly, the Co-ordinate Bench of ITAT, Ahmedabad in the case of Gujarat Power Corporation Ltd. (supra) has considered an identical issue and by following the decision of ITAT, Hyderabad in the case of VBC Ferro Alloys Ltd. vs ACIT (supra) held that assessee is entitled to exemption u/s 10(23G) of the Act, even though, investments in those companies are made prior to 01/04/1998. In this case, on perusal of facts available on record, there is no dispute with regard to the fact that the assessee is an infrastructure capital company, It is also not dispute that the assessee had given long term finance given to a company which is engaged in the business of development of infrastructure facilities as defined u/s 80IA of the Act. The said company has been approved by the CBDT u/s 10(23G) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd taken by the assessee in respect of disallowance of expenditure u/s 14A of the Act, where applicability of the decision of the Hon ble Supreme Court in the case of Maxopp Investment Ltd. vs CIT has been considered, therefore, this ground may also be sent back to the file of the AO with similar directions to re-compute disallowances contemplated u/s 14A of the Act. 57. Having heard both the sides and perused the material available on record. We find that we have already discussed this issue in assessee s appeal where the applicability of Hon ble Supreme Court in the case of Maxopp Investment Ltd. vs CIT (supra) has been thoroughly discussed. Further, in assessee s appeal ground relating disallowance of expenditure u/s 14A has been restored back to the file of the AO. Therefore, we are of the considered view that this ground taken by the Revenue also needs to go back to the file of the AO to decide the issue in accordance with our findings given in assessee s appeal and also the decision of Hon ble Supreme Court in the case of Maxopp Investment Ltd. vs CIT (Supra) hence, we set-aside the issue to the file of the AO. 58. The next issue that came up for our consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. AR placed reliance on the findings of Ld. CIT(A) and drew our attention to details of expenses as placed in Page No. 543 of the paper-book to support the contention that impugned expense, being revenue in nature, were allowable to the assessee and the Ld. CIT(A) provided relief to the assessee after due appreciation of the material facts. 20.2 We have considered the rival contentions and inclined to agree with the findings of Ld. CIT(A) who after appreciating the relevant material came to the right conclusion that the impugned expenditure being revenue in nature, were allowable to the assessee. A bare perusal of the said expenses reveals that the said expenditure are primarily revenue in nature and the Ld. AO disallowed the same on mere presumption. However, Ld. CIT(A) examined the same and provided relief to the assessee after appreciating the material and therefore, we find no reason to interfere with the same. The revenue s ground of appeal stands dismissed. 61. In view of the matter and consistent with view taken by the Co-ordinate Bench, we do not find any infirmity in the findings of the Ld. CIT(A) and hence, we are inclined to upheld the findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes to estimation of income, the same is also restored back to the file of the AO to decide in accordance with our findings given in assessee s appeal for ground no.11 and additional ground. 1. 65. The next issue that came up for our consideration from ground no.5 of revenue s appeal is depreciation on leased assets. The assessee has claimed a sum of ₹ 6,42,53,527/- depreciation on leased assets. The AO has disallowed depreciation on leased assets on the ground that leases transaction of the assessee are in the nature of finance transaction, therefore, depreciation claimed on those leased assets is not allowable. 66. The Ld. AR for the assessee, at the time of hearing, submitted that this issue is covered in favour of the assessee by the decision of the ITAT for AY 2004-05, where, the Tribunal, by following its earlier order for AYs 1996-97 to 2003-04, allowed the claim of the assessee. The Ld. AR further submitted that now this issue has been settled by Hon ble Supreme Court in the case of ICDS Ltd. 350 ITR 527(SC), where the Hon ble Supreme Court held that depreciation on leased assets is allowable irrespective of fact that such leased transactions are i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r AY 1997-98 in Income Tax Appeal No.2402 of 2013 where under identical set of facts, the Hon ble High Court by following its earlier decision in the case of Otis Elevator Co. (India) Ltd. vs CIT (1992) 195 ITR 682 (Bom.) held that Club membership fee paid to the club is in the nature of revenue expenditure, which is allowable as deduction. 70. Having heard both sides and considered the material available on record, we find that Hon ble Bombay High Court has considered an identical question of law in assessee s own case for AY 1997-98 and by following its earlier order in case of of Otis Elevator Co. (India) Ltd. vs CIT (1992) 195 ITR 682 (Bom.) held that expenditure incurred on club facilities is revenue in nature, which is allowable deduction. Therefore, respectfully following the decision of the Hon ble Bombay High Court in assesseee s own case, we direct the AO to delete the additions made towards disallowance of payments to Clubs. 71. The next issue that came up for our consideration from ground no.7 of Revenue s appeal is deletion of disallowance made on account of lease equalisation reserve on of book profit u/s 115JB of the Act. 72. The Ld. AR ..... X X X X Extracts X X X X X X X X Extracts X X X X
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