TMI Blog2021 (2) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... d the matter to the Assessing Officer for verification of facts of lease charges. - Decided in favour of the assessee. - ITA No. 5577/Del/2017 - - - Dated:- 9-2-2021 - G.S. Pannu, Vice President and K. Narasimha Chary, Member (J) For the Appellant : Rakhi Vimal, Sr. DR For the Respondents : S. Krishnan, Advocate ORDER K. Narasimha Chary, Member (J) Aggrieved by the order dated 6/6/2017 passed in appeal No. 178/16-17/CIT(A)-22, New Delhi passed by the learned Commissioner of Income Tax (Appeals)-22, New Delhi ( Ld. CIT(A) ) in the case of M/s. Indian railway finance Corporation ( the assessee ) for the assessment year 2014-15, Revenue preferred this appeal. 2. Briefly stated relevant facts of the case, as could b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assets to lease income, treating it as on operating lease. The Ld. CIT-(A) followed the orders of his predecessor and also the Tribunal for the assessment year 2010-11 and held that lease transaction as finance lease and allowed the appeal of the assessee. 5. At the outset, the Ld. counsel of the assessee submitted that issue in dispute has already been decided in favour of the assessee by the Hon'ble Delhi High Court for assessment year 2001-02, 2007-08, 2008-09 and 2009-10. On the other hand, the Ld. CIT DR, though relied on the order of the Assessing Officer, however, could not controvert the submission of the Ld. counsel of the assessee. 6. We have gone through the record in the light of the submissions made on either side ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alance of leased assets is ₹ 126,256.37 lacs, rate of depreciation as per Companies Act is 4.75%, and rate of interest is 14.97%. The total for 30 years of depreciation is ₹ 126,256.42 lacs and Finance income is ₹ 157,820.46 lacs. Total of capital recovery is ₹ 126,256.37 lakhs and total of Lease Equalization is NIL. Since, in the present case also, as per this chart, even after deduction of finance income 14.97% pa., the full value of the cost of assets i.e., ₹ 162,256.37 lacs is fully recovered in lease period of 30 years and hence, it is a case of Finance Lease as per the guidelines issued by ICAI. In the light of various judicial pronouncements cited by Ld. A.R. of the assessee, we find no reason for not ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the contentions, certain undisputed facts and the legal position may be noticed. As notices in Virtual Soft Systems Ltd. (supra), lease transactions may take various hues and colours. In the present case, we are concerned only with financial leases and not with an operational lease. In such cases, the lease rent includes the capital as well as purchase price and at the end of the lease tenure the lessee acquires/takes the asset as the owner. The income earned by way of lease rental was the interest (revenue earning) and the amount financed (capital financed) but during the terms of the lease, as the respondent continued to be the owner he also enjoyed and claimed the benefit of depreciation (an undisputed position as the claim of deprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge in any manipulation of the figures and the capital cost, IRR, etc., are computed in accordance with the accountancy standards and no error or can be found, lease equalization charge should not be disallowed. 11. Respectfully, following the above decision of the Hon'ble High Court and the decision of the Tribunal in the case of the assessee, we are of the considered opinion that there is no error in the order of the Ld. CIT-(A). We order accordingly. Thus, the grounds of the appeal of the Revenue are dismissed and the grounds of the cross objection of the assessee are allowed. 7. It is, therefore, beyond dispute that the issue involved in this appeal is no longer res Integra and covered by the decisions of the Tribunal as we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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