TMI Blog2019 (11) TMI 1806X X X X Extracts X X X X X X X X Extracts X X X X ..... r with taxes applicable from time to time. Sub clause 12.3 of clause 12 specifies that on expiration of the agreement or termination of the lease, the assets can be repossessed by the lessor and if the repossessed assets do not fetch a sale value more than or equal to all moneys due under the agreement including the future payments payable, lessee shall make good the loss by paying the difference between the total of the receivable by the lessor and the sale price. Assessee is required to select the asset and pay the insurance for the asset and has to pay the lease rentals and other charges in accordance with the schedules. In case of failure by the assessee to pay the rentals, the said asset can be taken over by the lessor. It is als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case cited Supra, the lessor continues to be the owner of the property of the assets till the entire payment including the finance charges are paid to the lessor. Admittedly, the assessee had not claimed depreciation on the said assets, and even as per the definition of the lease rentals in the agreement, it is the payment made for the use of the asset. Therefore, we hold that the assessee is eligible to claim the lease rentals as revenue expenditure. - Smt. P. Madhavi Devi, Judicial Member And Shri A. Mohan Alankamony, Accountant Member For the Assessee : Sri Ashik Shah. For the Revenue : Sri Y.V.S.T. Sai, CIT-DR. ORDER PER SMT. P. MADHAVI DEVI, J.M. This is assessee s appeal for the A.Y 2013-14 ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber 30,2017 passed by Learned AO under section 143(3) r.w.s 144C(13) of the Act is erroneous and contrary to law and hence, liable to be quashed. 2. The Learned AO/Hon'ble DRP erred in disallowing the claim of lease rent of Rs. 28,64,684 under the provisions of the Act disregarding the fact that the lease rentals paid are revenue in nature. 3. The Learned AO/Hon'ble DRP erred in bifurcating the lease rental into principal and interest and erred in treating the principal component of lease rentals of Rs. 28,64,684 as capital in nature and disallowing the same. The grounds mentioned herein are without prejudice to one another. The Appellant craves leave to add to and/or to alter, amend, rescind, modify the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al contentions and the material on record, we find that as per the terms of the agreement L T Finance Ltd, is the lessor and the assessee is the lessee. Sub clause 1.10 of clause (i) defines lease rental as the amount of periodical payments made for the use of the assets by the lessee to the lessor as specified under schedule together with taxes applicable from time to time. Clause 1.11 defines other charges to include but not restricted to upfront fees, management fees, registration charges, stamp duty and documentation charges etc., whether paid or payable by the lender. As per the clause 3 of the agreement, the lessee agrees to pay to the lessor lease rentals and other charges as specified, punctually on or before the due date. Sub c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble Supreme Court has held that the lessor is the owner of the property and is eligible for depreciation on the vehicles leased out. We find that it is the assessee, who has stated before the DRP that the lease rentals paid by the assessee included the principal amount of Rs. 28.00 lakhs and finance charges of Rs. 36,096/-. It is also stated that in the books of account of the company, the assets were capitalized and the depreciation was claimed, but, while computing the taxable income, the assessee had added back the depreciation claimed in the books of account and only claimed it as revenue expenditure. As rightly pointed out by the learned DR, depreciation can be allowed only in the hands of one party i.e. the owner of the property. As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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