2016 (10) TMI 48 - HC - Income Tax

Tribunal Justified Depreciation on Assets, Court Upheld Decision

The Commissioner of Income Tax Versus M/s Escorts Finance Ltd.

The Tribunal was justified in allowing depreciation on assets treated as finance transactions by the Assessing Officer. The Court upheld the Tribunal's ... Depreciation on the assets - AO had treated the transactions as that of finance and not of leasing - Held that:- All relevant judgment in issue were considered in ICDS (2013 (1) TMI 344 - SUPREME COURT ), this Court is of the opinion that there is no ground to depart from the reasoning in The Commissioner of Income Tax v. M/s. Escort Finance Ltd [2013 (11) TMI 1667 - DELHI HIGH COURT] . The question of law framed is answered against the revenue. Issues:Whether the Tribunal was justified in allowing depreciation on assets treated as finance transactions by the Assessing Officer.Analysis:The case involved the question of whether the Tribunal rightly allowed depreciation on industrial assets treated as financed assets by the Assessing Officer. The assessee had acquired certain assets and claimed depreciation in the relevant assessment year. The AO denied depreciation, considering the assets as financed rather than leased. This decision was upheld by the CIT(A) but overturned by the Tribunal, citing its previous rulings for other years. The Court noted that a previous appeal involving similar issues had extensively considered relevant judgments, including ICDS Ltd. v. CIT and Asea Brown Boveri Ltd. v. Industrial Finance Corporation of India. The revenue argued for a different line of reasoning based on the Supreme Court's decision in Mysore Minerals Ltd. v. CIT.The Court carefully analyzed the submissions and previous judgments. It highlighted that the ICDS judgment focused on what constitutes a 'discernable asset' in the context of leasing. The Court in ICDS referred to earlier rulings like CIT v. Shaan Finance (P) Ltd. and Mysore Minerals Ltd. The Court found that the Mysore Minerals judgment did not consider the Shaan Finance ruling, leading to a silent approval of the latter. Considering these aspects and the thorough consideration of relevant judgments in the ICDS case, the Court concluded that there was no reason to deviate from the reasoning in the previous appeal. Consequently, the question of law was answered against the revenue, and the appeal was dismissed.