ITAT Mumbai: Depreciation on Finance Lease Assets Recalled to Avoid Double Benefits

The Appellate Tribunal ITAT Mumbai addressed issues regarding depreciation on assets given on finance lease, recalling an impugned order based on an apex court decision, and completing assessments in line with the apex court's ruling to avoid double benefits to the assessee. The tribunal emphasized adherence to the apex court's decision as the law of the land, directing the Assessing Officer to prevent any double benefit to the assessee while allowing due relief. The tribunal allowed the assessee's miscellaneous applications, with the order pronounced on July 11, 2014.

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Issues:
1. Applicability of depreciation on assets given on finance lease.
2. Recalling the impugned order based on the decision by the apex court.
3. Completing assessments in light of the apex court decision and avoiding double benefit to the assessee.

Issue 1: Applicability of Depreciation on Assets Given on Finance Lease:
The assessee moved under section 254(2) of the Income Tax Act, 1961, claiming that as per the decision in the case of ICDS Ltd. vs. CIT, the lessor is eligible to claim depreciation under the Act for 'vehicles given on finance lease'. The tribunal, in a similar case for preceding years, directed the Assessing Officer to allow depreciation on assets given on sale and lease back basis. The tribunal emphasized the need to withdraw any corresponding benefit given to the assessee by excluding the value of the capital component of the lease rent from the assessee's income.

Issue 2: Recalling the Impugned Order based on Apex Court Decision:
The tribunal noted that the impugned decision was inconsistent with the apex court's decision in the case of ICDS Ltd., which represented the law of the land. The tribunal, therefore, found a mistake apparent from the record and decided to recall the impugned order. The Assessing Officer was directed to complete assessments in light of the apex court decision regarding the issue of sale and lease back of assets, ensuring no double benefit was extended to the assessee.

Issue 3: Completing Assessments and Avoiding Double Benefit:
After hearing the parties and reviewing the material on record, the tribunal found that the impugned decision needed to be recalled due to its inconsistency with the apex court's decision. The Assessing Officer was directed to complete assessments in accordance with the apex court decision in the ICDS Ltd. case. It was emphasized that while allowing due relief, double benefit should not be extended to the assessee, as cautioned by the tribunal in its earlier case for the preceding years. The tribunal allowed the assessee's miscellaneous applications, and the order was pronounced in the open court on July 11, 2014.

This judgment by the Appellate Tribunal ITAT Mumbai addressed the issues of depreciation on assets given on finance lease, recalling the impugned order based on the apex court decision, and completing assessments in line with the apex court decision to avoid double benefit to the assessee. The tribunal emphasized the need to follow the law of the land as established by the apex court and directed the Assessing Officer to make necessary adjustments to prevent any double benefit to the assessee.

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