TaxTMI 
TaxTMI 
2013 (9) TMI 642
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....owance of depreciation claimed on leased cars Rs. 2,69,60,383/-; 2) Provision for doubtful debts Rs. 1,40,98,650/-; 3) Interest on sticky loans Rs. 41,69,332/-. 3. Ld. CIT(A), while partly allowing the assessee's appeal, confirmed the disallowances in respect of depreciation on leased vehicles and also towards provision for doubtful assets but deleted the disallowances in regard to interest on sticky loans. Being aggrieved with the order of ld. CIT(A) both assessee and department are in appeal before us. 4. First we take up the assessee's appeal vide ITA No. 3192/Del/2007 for AY 2000-01. 5. Grounds of appeal reads as under: 1. "That on the facts and circumstances of the case and in law, the order passed by the ld. Commissioner of Income Tax (Appeals)-XV, New Delhi in relation to the grounds stated herein below, is erroneous and bad in law; 2. That on the facts and circumstances of the case and in law, the ld. Commissioner of Income Tax (Appeals)-XV, New Delhi erred in confirming the disallowance of depreciation on leased vehicles amounting to Rs. 2,69,60,383/- by treating the lease transaction as a loan transaction thus ign....
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....preme Court in the case of ICDS Ltd. vs. CIT in Civil No. 3282/2008, wherein the Hon'ble Supreme Court after examining relevant clauses of the lease agreement held that ownership remained with the lessor and, therefore, it was entitled to depreciation. Ld. Counsel has filed a detailed analysis of the decision in the case of ICDS Ltd. and its applicability to assessee's case. 8.1 We have considered the rival submissions and have perused the record of the case. 8.2 Hon'ble Supreme Court in the case of ICDS Ltd., after examining various covenants of agreement, concluded that ownership belonged to the lessor. We have gone through the analysis furnished by assessee and also through the lease agreement entered into by assessee with various borrowers. We find that the covenants are not identical to the agreement as was under consideration in ICDS Ltd. by Hon'ble Supreme Court. Further, we find that Hon'ble Supreme Court also took into consideration the fact recorded by Tribunal that lessee had not claimed any depreciation which finding is not recorded by AO in the present case. Therefore, it is necessary that the terms of lease agreement be examined afresh in the light of decision of Ho....
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....panies u/s 36(1)(vii) of the Act." 10.2 Respectfully following the decision of Hon'ble Supreme Court, this ground is dismissed. 11. Brief facts apropos ground no. 4 are that AO had levied interest u/s 234D which was confirmed by ld. CIT(A). 11.1 Having heard both the parties, we confirm the order of ld. CIT(A) in view of the insertion of Explanation 2 to sec. 234D by Finance Act, 2012 with retrospective effect from 01/06/2003 which reads as under: "Explanation 2 - For the removal of doubts, it is hereby declared that the provisions of this section shall also apply to an assessment year commencing before the 1st day of June, 2003 if the proceedings in respect of such assessment year is completed after the said date." 11.2 In view of above explanation this ground is dismissed. 12. In the result, the assessee's appeal is partly allowed for statistical purposes. 13. Now, we take up the appeal of Department vide ITA No. 3476 for A.Y. 2000-01. 14. The Department has taken following ground of appeal: "On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the addition of Rs. 41,69,332/- made on account of interest accr....
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....This is done by providing that non-receipt of interest for the first three years will not be treated s interest on a doubtful loan. But if after three years the payment of interest is not received, from the fourth year onwards it will be treated as interest on a doubtful loan and will be added to the income only when it is actually received. There is no inconsisteny or contradiction between the circular so issued and section 145 of the Income-tax Act. In fact, the circular clarifies the way in which these amounts are to be treated under the accounting practice followed by the lender. The circular, therefore, cannot be treated as contrary to sec. 145 of the Incometax Act or illegal in any form. It is meant for a uniform administration of law by all the income-tax authorities in a specific situation and is, therefore, validly issued u/s119 of the Income-tax Act. As such, the circular would be binding on the Department." 17.1 Respectfully following the decision of Hon'ble Supreme Court we confirm the order of ld. CIT(A). 18. In the result, the Department's appeal is dismissed. 19. Now, we take up the assessee's appeal vide ITA No. 2445 for AY 2002-03. Grounds of appeal read as unde....
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.... case and in law, the CIT(A) erred in directing the Assessing Officer to allow deduction for provision for doubtful debts at Rs. 3,61,30,709/- and the provision for servicing the securitized assets at Rs. 69,52,582/- in calculating the book profit u/s 115JB, ignoring the fact these liabilities were merely in the nature of contingent liabilities and, therefore, the provisions made therefore are not deductible in calculating the book profit u/s 115JB in view of the clear provisions of the clause (c) of the Explanation below sub-section (2) of section 115JB." 25. Ground no. 1 is identical to ground no. 1 vide ITA No. 3476 for AY 2000-01 and, therefore, for the reasons given therein, this ground is dismissed. 25.1 In the result, this ground is dismissed. 26. Brief facts apropos ground no. 2 are that AO noticed that assessee had claimed deduction of Rs. 3,61,30,709/- towards provision for doubtful debts, and Rs. 69,52,582/- towards provision for servicing securitized assets while computing book profits u/s 115JB. The Assessing Officer denied the assessee's claim treating both as un-ascertained liabilities. 27. Ld. CIT(A) allowed the assessee's appeal following the decision in the ca....