9911796707
TMI Blog2025 (2) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the record that the last date of filing the appeal in this case was 08.08.2023. However due to the following circumstances the further appeal could not be filed within the due date. (i) Since, this office having jurisdiction over very large cases like ICICI Bank, Kotak Mahindra Bank, HDFC Bank, Tech Mahindra, Tata Steel and other Tata Group of Companies, Proctor and gamble and several such other cases. Therefore, the appellate orders in such cases have multiple complex issues and usually very high revenue involved which needs to be extra caution and time to taking view on that and to proceed further. (ii) Further, this office has to file appeal before Hon'ble High Court in 34 cases wherein approvals from the CCIT/CIT have also been obtained. Simultaneously, this office was also dealing with pending removal of objection, the appointment of Sr. Counsel, Effective Service of notice on the assessee. Beside this, Work related to filing of Affidavit-in Reply in response to the writ petitions filed before Hon'ble Bombay High Court by the assessee was also pending with this charge. Resulting, this office was overburden with workload in the month of June and July. In view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der consideration, the assessee filed its return of income on 29/11/2015, declaring a total loss of Rs. 90,08,075. Subsequently, the assessee filed its revised return of income on 30/03/2017, declaring a total loss of Rs. 95,75,594. The return filed by the assessee was selected for scrutiny, and statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. During the assessment proceedings, inter-alia, upon perusal of the details filed by the assessee, it was noticed that the assessee has reduced a sum of Rs. 6,47,09,747 in the computation of income, claiming it to be 'Finance Lease Rental Payment' capitalised in the books of accounts as per AS-19. Accordingly, the assessee was asked to justify the claim with supporting. In response, the assessee submitted that as per AS-19 and CBDT Circular No.2 of 2001, dated 09/02/2001, the assessee has claimed the entire lease rental as an expenditure allowable under section 37(1) of the Act. Further, as per the Act, the assessee has added back the depreciation claimed on the leased asset as per the Companies Act, 1956, since the assessee is not the owner of the leased asset for tax purposes. It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntative, at the outset, submitted that the coordinate bench of the Tribunal in the assessee's appeal allowed the main plea of the assessee allowing the Finance Lease Rental Payment as expenditure under section 37(1) of the Act. 12. We have considered the submissions of both sides and perused the material available on record. We find that the coordinate bench of the Tribunal in the assessee's own case in NTT Global Data Centres and Cloud Infrastructure India Private Limited v/s NeAC, in ITA No. 2784/Mum./2023, for the assessment year 2015-16, vide order dated 07/02/2024, inter-alia, after considering the decision of the Hon'ble Karnataka High Court, wherein the claim of deduction of depreciation in case of lessor, i.e. Cisco Systems (India) Private Ltd, was allowed, accepted the main plea of the assessee and allowed the claim of deduction of Finance Lease Rental Payment under section 37(1) of the Act. The relevant findings of the Tribunal, in the aforesaid decision, are reproduced as follows: - "12. Considered the rival submissions and material placed on record, we observe from the record that assessee has acquired certain assets through Finance Lease and paid a rental payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the Income Tax Department has vehemently relied upon the judgments delivered in the case of Malabar Industrial Co.Ltd., (supra) as well as in the case of Amitabh Bachchan (supra) on the issue that the order passed by the assessing officer is prejudicial to the interests of the revenue. In the considered opinion of this Court as rightly held by the Income Tax Appellate Tribunal every loss of revenue as a consequence of an order of the assessing officer cannot be treated as prejudicial to the interests of the revenue and in case two views are possible and the assessing officer has taken one view with which the Commissioner of Income Tax did not agree cannot be treated as an erroneous order and prejudicial to the interests of the revenue. 16. The Division Bench of this Court in similar circumstances while dealing with similar type of lease in the case of Hewlett Packard India Sales Pvt. Ltd., (supra) in paragraphs 6, 7 and 8 has held as under; "6. We have considered the submissions made by learned counsel for the parties and have perused the record. The clauses of the agreement in the case before the Supreme Court in I.C.D.S Ltd. supra and in the case of the assessee wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a), wherein again the same issue was involved. Paragraphs 26 to 32 of the judgment delivered by the Hon'ble Supreme Court in M/s ICDS Ltd's case are reproduced as under; "26. We do not find merit in the Revenue's argument for more than one reason: (i) Section 2(30) is a deeming provision that creates a legal fiction of ownership in favour of lessee only for the purpose of the MV Act. It defines ownership for the subsequent provisions of the MV Act, not for the purpose of law in general. It serves more as a guide to what terms in the MV Act mean. Therefore, if the MV Act at any point uses the term owner in any Section, it means the one in whose name the vehicle is registered and in the case of a lease agreement, the lessee. That is all. It is not a statement of law on ownership in general. Perhaps, the repository of a general statement of law on ownership may be the Sale of Goods Act; Section 2(30) of the MV Act must be read in consonance with sub-sections (4) and (5) of Section 51 of the MV Act, which were referred to by Mr. S. Ganesh, learned senior counsel for the assessee. The provisions read as follows: - "(4) No entry regarding the transfer of ownership of any motor vehicl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable asset due to a vacuum of ownership. As afore- noted, the entire lease rent received by the assessee is assessed as business income in its hands and the entire lease rent paid by the lessee has been treated as deductible revenue expenditure in the hands of the lessee. This reaffirms the position that the assessee is in fact the owner of the vehicle, in so far as Section 32 of the Act is concerned. 27. Finally, learned senior counsel appearing on behalf of the assessee also pointed out a large number of cases, accepted and unchallenged by the Revenue, wherein the lessor has been held as the owner of an asset in a lease agreement. [Commissioner of Income-Tax Vs. A.M. Constructions, reported in (1999) 238 ITR 775 (AP); Commissioner of Income- Tax Vs. Bansal Credits Ltd., reported in (2003) 259 ITR 69 (Del); COMMISSIONER of Income-Tax Vs. M.G.F. (India) Ltd. reported in (2006) 285 ITR 142 (Del); Commissioner of Income-Tax Vs. Annamalai Finance Ltd., reported in (2005) 275 ITR 451 (Mad)]. In each of these cases, the leasing company was held to be the owner of the asset, and accordingly held entitled to claim depreciation and also at the higher rate applicable on the asset hired o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of business. 40 In the present case, the business of the assessee consists of hiring out machinery and trucks where the income derived by the assessee from hiring of such machinery is business income. Therefore, the assessee- appellant viz. ICDS should be considered as having used the trucks for the purpose of business. 41 It was further brought to our notice that the Hon'ble Karnataka High Court in its judgment in ITRC No. 789 of 1998 for the asst. year 1986- 87 in the case of the assessee- appellant itself (viz. ICDS) has already decided the issue in question in favour of the assessee, confirming the decision of the CIT (A) and the ITAT holding that the assessee company is entitled to the investment allowance and additional depreciation. In this judgment of the Karnataka High Court the decision of the Supreme Court reported in 231 ITR 308 was relied upon. Therefore we have no hesitation to hold that the appellant- company is entitled to a higher rate of depreciation at 50% on the trucks leased out by it. We therefore, reverse the orders of the CIT (Appeals) on this issue." For the foregoing reasons, in our opinion, the High Court erred in law in reversing the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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