TMI Blog2023 (8) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... source to the financer. The customer issues tax deduction at source certificate in the name of the assessee because master rent agreement was between assessee and the customer. On completion of the tenure of the lease, assets are returned. Those assets are sold at the end of the tenure to the respective purchaser of those assets. The assessee offers investment in unguaranteed residuary account upfront. Therefore naturally, the income of the assessee is not the rental income but the income earned in the business of acquiring and dealing in unguaranteed residuary interest in assets rented to the customers. Thus, the income offered by the assessee is such income and not the rental income appearing in form number 26AS. This AY is the only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the mismatch appearing in 26AS? 02. Brief facts of the case shows that assessee is engaged in the business of equipment renting based on Residual management capabilities. It filed its return of income on 11/11/2014 declaring a total income of ₹ 3,71,679/ . This return was picked up for scrutiny by issue of notice. Subsequently the assessment order under section 143 (3) of the act was passed on 30/12/2016 determining total income at ₹ 373,792,940/ . Substantial addition was made on account of mismatch between the income reported under form number 26AS and income recorded in the books of accounts. Form no 26 AS showed huge Rental income on which TDS is made and claimed as tax Credit by assessee and Assessee s financial stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct income. The learned assessing officer disbelieved explanation of assessee and found that receipt stated in form number 26AS and income shown in the profit and loss account has wide variances and therefore he made an addition of ₹ 37,86,70,325/ . 06. Assessee aggrieved with that addition preferred an appeal before the learned CIT A. Assessee explained the business that it is engaged in the business of acquiring and dealing in the guarantee residuary interest in assets rented to the customers. According to the agreement with the customers Master Rental Agreement is entered into. According to that the assets are rented out to the customer for a mutually agreed contract. The agreement only comes into effect if and when the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding correct profit over a period of time and followed consistently and moreover the revenue has accepted the residual method for assessment year 2015 16 and 2016 17 in the assessment order passed under section 143 (3) of the act for those years, the addition deserves to be deleted, accordingly the addition is deleted and therefore the learned assessing officer is aggrieved and is in appeal before us. 07. The learned departmental representative supported the order of the learned AO. 08. The learned authorized representative first explained in detail through a diagrammatic presentation business model of the assessee and respective accounting entries to be passed. He explained the business of the assessee stating that in past assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Financier because the lease rentals receivable by the assessee are already assigned to the financer. Naturally when lease rents are paid, tax is required to be deducted by the customer. If lease rent is paid after deducting tax at source, assessee is supposed to reimburse to the extent of tax deduction at source to the financer. The customer issues tax deduction at source certificate in the name of the assessee because master rent agreement was between assessee and the customer. On completion of the tenure of the lease, assets are returned. Those assets are sold at the end of the tenure to the respective purchaser of those assets. The assessee offers investment in unguaranteed residuary account upfront. Therefore naturally, the income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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