2018 (12) TMI 1521

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....; Bench, dated 29.03.2017 in ITA Nos.937 to 942/Mds/2016, for the Assessment years 2007-08 to 2012-13. 2.These Appeals have been filed raising the following Substantial Questions of Law: "(i)Whether or not lease rentals paid by the appellant under the Lease Agreement constitute revenue expenditure an therefore an allowable expenditure under the Income Tax Act, 1961? (ii)Whether or not the findings rendered by the Tribunal on the treatment of accounts relating to containers and lease expenditure contrary to materials made available before the Tribunal?" 3.The assessee filed the return of income for the relevant years, and by way of illustration, we take up the facts relating to the return of income for the assessment ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....differentiate leases as Finance and Operating and in all cases of lease, the lease rentals are considered as revenue both in the hands of Lessor and Lessee. 6. Further, it was submitted that CIT(A) failed to note that the resident lessors have offered lease rental as income for income tax purpose and have been accordingly assesssed in their tax assessments. Further, it was contended that the CIT(A) failed to note that the direction given by him in his order would result in double taxation in respect of lease rental in question. The Tribunal by the impugned order, dismissed the assessee's appeal. The finding rendered by the Tribunal in paragraph 7 reads as follows:- "We have considered the rival submissions on either side and....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....en even for accounting purpose all the lease rentals were charged as revenue expenditure and the question of capitalising the assets does not arise. It was further contended that for income tax purposes, the assessee has claimed the whole lease rentals as revenue expenditure. 10. The learned counsel on the either side referred to the relevant conditions in the agreement. The learned counsel for the assessee referred to the business conditions dated 15.08.2001, more particularly, Clause 3(b), which deals with the lessee's liability to the lessor for all damage to or loss or destruction of the containers. Reference was made to Clause 6(b), which deals with default remedies and Clause 10, which deals with subleasing and assignment. Thes....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e claim for depreciation was an alternate plea and it is settled legal position that the assessee under the Provisions of Income Tax Act can raise alternate plea despite the fact, the alternative pleas may be in conflict with each other. 13.We may refer to Accounting Standard 19 issued in the year 2001 and in particular, the Chapter relating to classification of leases and in Clause 8 of the said Chapter, it has been stated that whether a lease is a finance lease or an operating lease depends on the substance of the transaction rather than its form. Illustrations have been given pointing out the examples of situation which would normally lead to a lease being classified as finance lease. However, the Tribunal did not make any endeavour t....