TaxTMI 
TaxTMI 
2015 (1) TMI 516
X X X X Extracts X X X X
X X X X Extracts X X X X
....after referred to as the CIT(A)] for the assessment year 1994-95, the appellant begs to file this appeal and raise the following grounds of appeal which are independent of and without prejudice to each other. 1. The learned CIT(A) erred in confirming the disallowance of depreciation amounting to Rs. 36,42,67,385/-, claimed by the appellant under section 32 of the Act in respect of assets given on lease by the appellant by holding them as pure finance transactions. The Hon'ble Tribunal may hold that the appellant is entitled to depreciation as claimed, u/s 32 of the Act in respect of assets given on lease by the appellant. 2. The learned CIT(A) erred in holding that interest amounting to Rs. 14,03,63,220/- on refund for AY 1992-93 received under section 244A of the Act at time of summary assessment u/s 143(1), was liable to tax in AY 1994-95 on receipt basis, although this refund has been withdrawn by the AO at the time of regular assessment u/s 143(3). The Hon'ble Tribunal may hold that the amount of Rs. 14,03,63,220/- arising u/s 244A under summary assessment, is not liable to tax in the hands of the appellant. The appellant craves leave to add to, amend, alter, m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....10. The AR submitted that in so far as items 1 to 4 in the category "cases classified as Finance Transactions" are concerned, the issue of depreciation is squarely covered by the various decisions of the Mumbai ITAT and by other decisions of Hon'ble High Courts as follows: 1. ICICI Ltd. vs JCIT ITAT, Mumbai [2014] ITA No. 1881 & 3708/M/2000; ITA No. 3535/M/2004 and ITA 3827/M/2005 2. ICICI Bank Ltd. vs JCIT ITAT, Mumbai [2014] ITA No. 3643, 3644/M/2001 3. M/s Larsen & Toubro Ltd. vs. JCIT ITAT, Mumbai [2013] ITA No. 2200/M/2000 and ITA 2890/M/2001 4. Development Credit Bank vs DCIT ITAT, Mumbai [2013] 40 taxman.com 532 5. SICOM Limited vs JCIT ITAT, Mumbai [2013] 40 taxman.com 469 6. UTI Bank Ltd vs ACIT ITAT, Ahmadabad ITA No. 2572/AHD/2006, 4386 & 4388/AHD/2008 and 790/AHD/2012 7. ICICI Ltd. vs JCIT ITAT, Mumbai [2008] 115 ITD 25 8. M/s ICDS Ltd. vs CIT, Mysore Supreme Court [2013] 40 taxman.com 129 9. CIT vs Cosmo Films Ltd. Delhi High Court [2011] 12 taxman.com 217 10. First Leasing Company of India Ltd. vs. ACIT Madras High Court [2013] 38 taxman.com 213 11. DCIT vs Gujarat Narmada Valley Fertilizers Co Ltd Gujarat High Court [2013] 33 taxm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....red for a joint inspection of the assets by IT Dept. and IDBI. It is submitted that the transaction is a genuine leasing transaction entered into in the normal course of IDBI's leasing business. The appellant's claim for depreciation be allowed". The AR submitted that similar treatment had been given to the other transactions. 13. The AR submitted that though the case of the assessee was strong enough to substantiate the claim, but it is prepared to go back to the AO, to satisfy its claim, before the AR by having joint inspection and reconciliation of the facts and transactions. 14. The DR on the other hand submitted that there is no infirmity in the orders of the revenue authorities, but if in case part of the transactions are being restored to the AO, then it would be better that all the transactions are restored to the AO. 15. We have heard the arguments and perused the orders of the revenue authorities and that showing distinction drawn by the assessee on the similar transactions, which the DR could not negate. Hence, the chart, read with SOF are considered to be correct. In such a circumstances, we hold that transactions classified as finance transactions i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....acts in not accepting the claim of appellant u/s 80M in the manner in which it was claimed. The learned CIT(A) erred in not giving a finding on this issue and also not following the decision of the ITAT in appellant's case in AY 1992- 93 and 1993-94. The appellant submits that its claim u/s 80M should be accepted in totality. The appellant craves to add to, amend, alter, modify, delete and/or substitute all or any of the above grounds of appeal till the final disposal of the appeal". 21. Ground no. 1 pertains to claim of depreciation in respect of assets given on lease. 22. The assessee Industrial Development Bank of India (IDBI) is a government owned financial institution, engaged in providing long term lease, refinance and lease. The scope of this line of business of the assessee is, "1. Ownership of equipment vests with IDBI.(No lessee has ever claimed that he is the de-facto or de-jure owner of the asset given on lease and therefore, no lessee has claimed depreciation in his income tax assessment in respect of assets given on lease by IDBI. 2. The commencement and termination of leases is specified and the lease period has also been specified. 3. The asset....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isions by the higher fora: 1. ICICI Ltd. vs JCIT ITAT, Mumbai [2014] ITA No. 1881 & 3708/M/2000; ITA No. 3535/M/2004 and ITA 3827/M/2005 2. ICICI Bank Ltd. vs JCIT ITAT, Mumbai [2014] ITA No. 3643, 3644/M/2001 3. M/s Larsen & Toubro Ltd. vs. JCIT ITAT, Mumbai [2013] ITA No. 2200/M/2000 and ITA 2890/M/2001 4. Development Credit Bank vs DCIT ITAT, Mumbai [2013] 40 taxman.com 532 5. SICOM Limited vs JCIT ITAT, Mumbai [2013] 40 taxman.com 469 6. UTI Bank Ltd vs ACIT ITAT, Ahmadabad ITA No. 2572/AHD/2006, 4386 & 4388/AHD/2008 and 790/AHD/2012 7. ICICI Ltd. vs JCIT ITAT, Mumbai [2008] 115 ITD 25 8. M/s ICDS Ltd. vs CIT, Mysore Supreme Court [2013] 40 taxman.com 129 9. CIT vs Cosmo Films Ltd. Delhi High Court [2011] 12 taxman.com 217 10. First Leasing Company of India Ltd. vs. ACIT Madras High Court [2013] 38 taxman.com 213 11. DCIT vs Gujarat Narmada Valley Fertilizers Co Ltd Gujarat High Court [2013] 33 taxman.com 117 12. CIT v Gujarat Gas Co Ltd Gujarat High Court [2009] 308 ITR 243 13. CIT vs Zuari Finance Ltd Bombay High Court [2005] 144 TAXMAN 113 14. CIT vs. Punjab State Electricity Board Punjab & Haryana High Court [2009] 183 TAXMAN 419 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... In so far as the second category of cases, we find that dispute the fact that the assessee had prayed for joint inspection of leased assets and evidences there off, the revenue authorities brushed aside the requests made. This, according to us is against the principals of natural justice, which can only be remedied by restoring the issues/transactions to the file of the AO for fresh adjudication. 33. We, therefore, set aside the order of the CIT(A) and direct the AO to examine the transactions with Kedia Distilleries, Trident Steels, Patheja Bros Forging & Stampings Ltd., and Nathani Steels afresh, for the allowance and claim of depreciation as per law and judicial decisions as mentioned in pre para. 34. Ground no.1 is therefore allowed for statistical purposes. 35. Ground no. 2 relates to deduction under section Deduction u/s 80M. 36. As argued and relied upon by the AR before us in the departmental appeal in the case of DCIT vs M/s Industrial Development Bank of India for AY 1992-93 vide ITAT Mumbai 'I' Bench order dated 24th December, 2002 in ITA No. 3249/Bom/1995 and relevant portion of the order covering the impugned issue reads as under: "The assessee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ough the rival submissions and case laws cited by the AR, in ITA 3429/Bom/1996 (supra), which squarely covers the impugned issue, and accordingly respectfully following the same we set aside the order of the CIT(A) and delete the addition as made by him and allow ground no. 2 in favour of the assessee and against the revenue. 38. In the result, the assessee's appeal in ITA No. 3369/Mum/2004 for AY 1995-96 is treated as allowed. ITA No. 3370/Mum/2004 : AY 1996-97 : 39. The following grounds have been taken: "Aggrieved by the Order u/s 250 of the Income Tax Act, 1961 dated 7.1.2004 passed by the Commissioner of Income Tax (Appeals)-XII, Mumbai hereinafter referred to as the CIT(A)] for the assessment year 1994-95, the appellant begs to file this appeal and raise the following grounds of appeal which are independent of and without prejudice to each other. 5.1 The learned CIT(A) erred in holding that lease transactions entered into by the appellant are in the nature of loan transactions. He ought to have allowed the depreciation claim made by the appellant in respect of all the lease transactions entered into by the appellant in accordance with the law and circulars ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessee, identified that, transaction conducted with the following parties were loans and not lease. 43. At the time of hearing, the AR submitted that the issue involves two types of indulgence, i.e. transactions held to be loan, after consideration and transactions held to be loan, without any specific reason. 44. The AR provided the break up as follows: Cases classified as Finance Transac "Sr. No. Name of Lessee 1 Videocon Applicance 2 Videocon International Ltd. 3 Aigis Chemicals Ltd. 4 Eastern & Sugar Industries (two) 5 Trichi Distilleries Ltd. (two) 6 Mangalore Refineries and Petro Chemcials 7 Essar Steel Ltd. (three) 8 Alembic Chemicals 9 Delton Cables Limited 10 Karnataka Electricity Board 11 Mesco Airlines Ltd. 12 Unitech Ltd. (two) 13 Simbhaoli Sugar Mills 14 Beta Napthol Ltd. (two) 15 Noida Medicare Centre Ltd. 16 V M Jog Engineering Ltd. 17 Uma Parmeshwari Mills 18 Diwan Steel Ltd. 19 Jay Yushin Ltd. 20 Maruti Udyog Ltd. 21 Shriram Investment Ltd. 22 Shriram Transport Finance 23 Mc. Dowell (two) 24 Selvel Adve....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The AR further submitted that in so far as "cases not classified as transaction Finance Transactions", the revenue authorities did not accord reasonable opportunity to the assessee to substantiate its case on the claim made for allowance of depreciation as submitted by the AR in assessment year 1994-95 and also as referred to in the SOF. The AR submitted that similar treatment had been given to the other transactions. 48. The AR submitted that though the case of the assessee was strong enough to substantiate the claim, but it is prepared to go back to the AO, to satisfy its claim, but it is prepared to go back to the AO, to satisfy its claim before the AR by having joint inspection and reconciliation of the facts and transactions in the current year as well, to the transactions falling in "cases not classified as finance transactions". 49. The DR on the other hand submitted that there is no infirmity in the orders of the revenue authorities, but if in case part of the transactions are being restored to the AO, then it would be better that all the transactions are restored to the AO. 50. We have heard the arguments and perused the orders of the revenue authorities and tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eld that the assessee must have incurred expenditure for earning dividend, but the proportionate expenses disallowed by the Assessing Officer were on the high side. Following the decision of the Tribunal in the case of ICICI Ltd. in which 1% dividend income is deductible while determining the deduction u/s 80M of the Act, the learned CIT(A) directed the Assessing Officer to restrict the disallowance to 1% only. 7. The learned departmental representative submitted that the assessee earned substantial dividend income, it did incur expenditure on staff, stationery etc. for earning such dividend and while the learned CIT(A) has upheld in principle the incurrence of such expenses, his direction for disallowance of only 1% gross dividend income as expenses is not justified as it is on the lower side. 8. The learned counsel for the assessee submitted that even 1% disallowance upheld by the learned CIT(A) is on the higher side because the assessee's business was not to earn dividend income and the main activity is to give loans and as the name itself suggests, the bank is engaged in the industrial development of the country by advancing thousands of crores to the entrepreneurs. T....