2013 (3) TMI 457

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....engaged in the business of leasing, bill discounting and inter corporate deposits. The main addition on which the penalty has been levied is the addition of Rs. 1,02,48,840, made on account of lease equalization. The Assessing Officer, at Para-7.1 of the assessment order, states that in Schedule-13 of Profit & Loss account, the assessee had reduced the equalization account from the income earned from the leasing and hire purchase. When asked for an explanation, the assessee relied on the guidance note issued by the Institute of Chartered Accountants of India for the accounting of finance lease transactions. The assessee's reply is extracted below for ready reference:- "The ICAI have issued a guidance note for the accounting of finance le....

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....l recovery effected during the year. As such, the gross lease rental is split into the finance charge calculated on the basis of the implicit rate and capital recover (lease charge). The difference between the capital recovery and minimum stutory depreciation is credited in lease equalization account. The net result is that the finance charge is booked as income and the capital recovery is deducted by way of statutory depreciation and lease equalization. At the end of lease period by way of statutory depreciation and lease equalization. At the end of lease period the total of statutory depreciation and the lease equalization provided would be equal to the cost of the leased asset. The lease equalization therefore is not in nature of income ....

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....nder these circum- stances, it cannot be said that the claim of the assessee is untenable claim. Merely making a claim does not tentamounts to furnishing inaccurate particulars or concealment of income. In fact, in assessee's own case for immediately preceding assessment year 1996-97, the Assessing Officer, in his order dated 31st December 1998, passed under section 143(3), and allowed this claim of the assessee. The Hyderabad Bench of this Tribunal in JCIT v/s Pact Securities and Financial Ltd., (2003) 86 ITD 115 (Hyd.), had considered this issue of allowability of lease equalization and held in favour of the assessee. 8. The Delhi Bench of this Tribunal in Vertual Soft Systems Ltd. v/s ACIT, (2010) 38 SOT 412 (Del.), on similar facts, ....