2014 (7) TMI 1173 - AT - Income Tax

Appellate Tribunal ITAT Mumbai rules on depreciation & interest under Income Tax Act

ICICI Ltd., (erstwhile SCICI Ltd.) Versus The JCIT, Special Range-28 Mumbai

The Appellate Tribunal ITAT Mumbai partially allowed the appeal filed by a non-banking financial institution concerning the disallowance of depreciation ... Disallowance of depreciation in respect of sale and leaseback transactions - Held that:- The Tribunal, Mumbai Bench, in the case of L&T (2013 (5) TMI 720 - ITAT MUMBAI) has considered a similar issue followed the findings of the Hon’ble Supreme Court in the case of ICDS (2013 (1) TMI 344 - SUPREME COURT ) and also of the co-ordinate Bench in the case of Development Credit Bank Ltd. (2013 (5) TMI 131 - ITAT MUMBAI ) and allowed the claim of depreciation on sale of lease back assets.Respectfully following the decisions mentioned hereinabove, we direct the AO to allow depreciation. - Decided in favour of assessee Charging of interest u/s. 234B and 234C - Held that:- Levy of interest u/s. 234B of the Act would be consequential to our findings given for ground No. 1 and in so far as levy of interest u/s. 234C is concerned, we direct the AO to charge interest as per the provisions of law on the returned income of the assessee. Disallowance of deduction u/s. 35D - Held that:- This issue has been decided against the assessee in A.Y. 1992-93 to 1994-95 No disallowance can be made u/s. 80M Disallowance of expenses for earning dividend income to be allowed Issues involved:1. Disallowance of depreciation on sale and leaseback transactions2. Charging of interest under sections 234B and 234C of the Income Tax ActIssue 1: Disallowance of depreciation on sale and leaseback transactionsIn the case, the assessee, a non-banking financial institution, claimed depreciation on leased assets involving sale and leaseback transactions. The Assessing Officer disallowed depreciation claimed by the assessee. The matter was taken to the Ld. CIT(A) but without success. The Ld. Counsel for the assessee argued that previous tribunal decisions favored the assessee's claim, citing various legal precedents. The ITAT Mumbai Bench analyzed relevant legal precedents, including decisions by the Hon'ble Supreme Court and High Courts, and allowed the claim of depreciation on sale and leaseback assets. The ITAT directed the Assessing Officer to allow depreciation, thereby partly allowing the appeal filed by the assessee.Issue 2: Charging of interest under sections 234B and 234C of the Income Tax ActThe second issue in the judgment pertains to the charging of interest under sections 234B and 234C of the Income Tax Act. The ITAT's decision on charging interest under section 234B was consequential to the findings on the first issue. Regarding interest under section 234C, the ITAT directed the Assessing Officer to charge interest as per the provisions of the law on the returned income of the assessee. Consequently, the ITAT partly allowed the appeal filed by the assessee in this regard.The judgment, delivered by the Appellate Tribunal ITAT Mumbai, addressed the disallowance of depreciation on sale and leaseback transactions and the charging of interest under sections 234B and 234C of the Income Tax Act. The ITAT allowed the depreciation claim on sale and leaseback assets based on legal precedents and directed the Assessing Officer to allow depreciation. Additionally, the ITAT directed the charging of interest under sections 234B and 234C as per the provisions of the law, partly allowing the appeal filed by the assessee in this matter.