Tribunal rectifies order to allow depreciation claim on assets in sale & lease back agreements.

The tribunal rectified its order to allow the depreciation claim on assets given under sale and lease back agreements, aligning with a Supreme Court ruling that lessors are eligible to claim depreciation even in finance leases. The tribunal acknowledged the inconsistency in its previous decision and directed the Assessing Officer to grant the depreciation claim while withdrawing any corresponding benefit given to the assessee. This decision was based on legal precedent set by the Supreme Court and the tribunal's recognition of the lessor's entitlement to claim depreciation.

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Issues:
Rectification of disallowance of depreciation on assets purchased and given back on lease basis.

Analysis:
The applicant sought rectification of a tribunal order confirming the disallowance of depreciation on assets purchased and leased back. The tribunal had upheld the disallowance based on a previous Special Bench decision. However, a subsequent Supreme Court decision in the case of I.C.D.S Ltd. held that even in finance leases, the lessor is eligible to claim depreciation. The tribunal acknowledged the inconsistency between its previous decision and the Supreme Court ruling, noting that the lessor should be allowed to claim depreciation. Citing the precedent set by the Supreme Court in ACIT vs. Saurashtra Kutch Stock Exchange Ltd., the tribunal rectified its order and directed the Assessing Officer to allow the depreciation claim on assets given under sale and lease back arrangements, while also withdrawing any corresponding benefit granted to the assessee.

In conclusion, the tribunal allowed the Miscellaneous Applications filed by the assessee, rectifying the order to permit the depreciation claim on assets given under sale and lease back agreements. The decision was made in light of the Supreme Court ruling, aligning the tribunal's decision with the legal precedent established by the higher court.

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