TaxTMI 
TaxTMI 
TaxTMI 
2016 (3) TMI 1372
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.... to Profit and Loss account. The appellant submits that the said amount is an allowable deduction u/s 37(1) of the Income Tax Act, 1961. The disallowance is made without considering the full facts submitted before the Learned ACIT. 2. On the facts and circumstances of the case the disallowance of lease equalisation charge amounting to Rs. 88,69,66,465/- is not correct and is not justified and be deleted. 3. The Learned Commr. of Income Tax (A) has erred in disallowing the claim of the appellant u/s 35D at Rs. 18,92,153/-. On the facts & circumstances of the case the appellant submits that they are entitled to deduction of Rs. 18,92,153/- u/s 35D of the Income Tax Act, 1961. 4. The Learned Commr. of Income Tax (A) has erred in confirming the allocation of Rs. 32,32,00,000/- as the interest attributable to earning income u/s 10(23G). The appellant submit that the method adopted by the ACIT and CIT (A) in determining interest cost is not justified and the quantification of interest of Rs. 32,32,00,000/- crores attributable to earning u/s 10(23G) is not correct. The appellant submit that on the facts & circumstances of the case the interest allocation of Rs. 32,32,00,000/- sho....
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.... submissions made by both the sides. We find that an identical issue had come up in the earlier years, wherein this issue has been sent back by the Tribunal to the file of the AO vide its order dt. 6.9.2013 in ITA No. 2307 to 2310/Mum/2011 for A.Ys 1994-95 to 1997-98 with the following observations: "7. We have considered the rival submissions and also perused the relevant material available on record. We have also gone through the guidance note issued by ICAI explaining the concept of lease equalization with the illustration. The said guidance note is basically issued for the purpose of accounting and the concept of lease equalization, as mentioned therein, is based on the rationale of matching cost with revenue so that the periodic net income from the finance lease is determined in a true and fair manner. This constitutes the parallel method of accounting followed by the assessee for the purpose of revenue recognition of leasing business and as per this method, the lease rental is split into finance income and balance amount which is called annual lease charge. The annual lease charge represents recovery of investment made in the leased asset over the lease term and when the de....
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....cribed under the Companies Act. For example, the assessee may be entitled to claim depreciation at 100% on the leased assets in the first year itself under the income Tax Act whereas in the books of account, it might have claimed depreciation on the said leased assets under the companies Act @ 10%. In such a case, if the annual leasing charge is equivalent to 30% of the value of leased assets, the assessee would debit its P&L account by lease equalization charges to the extent of 20% of the value of asset as per the guidance note issued by ICAI. If the lease equalization charges so debited are allowed as deduction while computing the total income of the assessee under the Income tax Act in addition to 100% depreciation already allowed, the assessee will get deduction of 120% of the value of asset in the first year itself and the very purpose of adopting the concept of lease equalization based on the rationale of matching cost with the revenue would be defeated. This will result in absurdity and give misleading results. In our opinion, it is therefore necessary that while allowing deduction on account of lease equalization charges for the purpose of computing total income under the ....
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....ever, we find that the issue as to whether or not the activities of the assessee amounted to the assessee being an industrial undertaking has not been examined at all either by the Assessing Officer or the learned CIT(A). The Assessing Officer simply assumed that the assessee was not an industrial undertaking or that there was no extension of an industrial undertaking. The same course has been followed by the learned CIT(A). The assessee has also not relied upon any specific material produced before the authorities below in this context. We are therefore of the view that this issue has to be examined and the facts of the assessee's case have to be brought out by the Assessing Officer in the first instance. We therefore remit this issue to the file of the Assessing Officer with the directions to decide this issue afresh in the light of our order after allowing the assessee reasonable opportunity of being heard in the matter." 4.2 It is further noted by us that in other years also, similar view has been taken by the Tribunal and this issue has been sent back to the file of the AO, therefore, in this year also, we find it appropriate to sent this issue back to the file of the AO and....
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....contentions of the assessee about the availability of own funds. In any case, the assessee is required to prove the nexus between own funds and investments on the date of making investment. Since the claim of the assessee requires verification of factual aspects, we are of the view that this issue also requires examination at the end of the assessing officer. Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the same to the file of the assessing officer with the direction to examine this issue afresh by duly considering the information/explanations that may be furnished by the assessee and take appropriate decision in accordance with the law." 5.2 We find that the issue involved in this year also requires re-look to ascertain the correct facts, and therefore, this issue is sent back to the file of AO. The AO is directed to follow the directions given in the order of the Tribunal of earlier years and he shall give adequate opportunity of hearing to the assessee to bring the correct facts on record. The assessee is directed to submit the required details and evidences, as may be required by the AO or as may be considered appropriate by him as per law and fa....
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.... at "Cost or market value whichever is lower". The Ld A.R submitted that the market value of securities fluctuate every year and hence the assessee has followed the system of making provision every year, instead of writing off the loss arising on account of fall in the market value of securities below the cost. However, we notice that the claim of the assessee that the securities are forming part of stock in trade has not been examined by the tax authorities. Further the claim of the assessee that it was following the system of valuing the securities under the principle, viz., "cost or market value whichever is lower" also requires examination at the end of the assessing officer. Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the same to the file of the assessing officer to examine the claim of the assessee afresh and take appropriate decision in accordance with the law." 8.1 It is noted that no distinction has been made on facts by the parties, and therefore, respectfully following the judgment of the Tribunal in the earlier year, we send this issue back to the file of the AO and direct him to follow the directions of the Tribunal in its order given i....
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.... III of Schedule VI of the Companies Act, 1956 as increased by amount shown as provision, reserve, payments, expenditure relatable to any income to which any of the provisions of Schedule III applies. 5. On the facts and in the circumstances of the case as well as in law, the Learned CIT(A) has erred in deleting the addition made on account of provision for non performing assets amounting to Rs. 9,36,22,902/- to the book profit u/s. 115JA of the I.T. Act by ignoring the fact that the decision given on the same issue by the Ld.CIT (A) CIT(A) for Assessment Years 1999-2000 and 2001-02 has not been accepted, appeal filed to the Hon'ble ITAT is still pending and the issue has not reached its finality. 6. On the facts and in the circumstances of the case as well as in law, the Learned CIT(A) has erred in deleting the addition made on account of lease equalization reserve of Rs. 88,69,66,465/- to book profit u/s. 115JA of the I.T. Act, 1961 relying on the decision given by the Hon'ble Supreme Court in the case of Apollo Tyres Ltd. 255 ITR 273 and also the decision of Bombay High Court in the case of CIT Vs. Kinetic Motors Company Ltd. 262 ITR 330 and CIT Vs. Ichiji Forgings....
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....f the relevant facts with the following observations: "14. In ground no. 1 the revenue has challenged the deletion of disallowance of club expenses of the executives of Rs. 15,30,456/-. It has been admitted by both the parties and this issue had come up for consideration in assessee's own case for the earlier years wherein it stands decided in favour of the assessee by the Tribunal in A.Ys. 1993-94, 1994-95 and 1996-97. Learned counsel also submitted that this issue also stands covered by the decision of Hon'ble Supreme Court in the case of CIT Vs. United Glass Mgf. Co. Ltd. in Civil Appeal No. 6447 of 2012 order dated 12th September 2012. 15. After considering the rival submissions, we find that this issue too has been decided in favour of the assessee by the Tribunal after relying upon the decision of Hon'ble Bombay High Court in the case of OTIS Elevator reported in 195 JTR 682. In the A.Y 2002-03, the Tribunal following the decision of Hon'ble Supreme Court in the United Glass Mgf. has held that, club membership fee for employees incurred by the assessee is allowable u/s 37(1). Accordingly, we hold that such expenses are allowable as business expenditure, w....
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....efits. The Assessing Officer finally came to the conclusion that the assessee is not entitled to depreciation of equipment leased out during the year including the depreciation on sale of leased back transaction and disallowed the total depreciation of all the assets at Rs. 37,04,84,925/-. However, the Assessing Officer reduced the capital component at Rs. 4,61,94,437/- The assessee carried the matter before the CIT(A). The CIT(A) has discussed this grievance of the assessee at para 37 onwards. It was claimed before the CIT(A) that if the depreciation on the leased assets are not allowed, the concept of general leasing transactions will be rendered meaningless. After considering the facts and submissions of the assessee, the CIT(A) observed that the assessee company has been in the business of leasing and has been allowed the depreciation on the leased assets in the past. The CIT(A) went on to exhibit the claim of the assessee from A Y 1989-90 to A Y 1995-96 at page 17 para 42 of his order. The CIT(A) observed that from A.Y 1989-90 to A.Y. 1995-96 depreciation on leased assets was allowed at the assessment stage itself and depreciation on sale of leased back transaction was also al....
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....n decided against the assessee by the Tribunal vide its order dt. 17.12.2014 in ITA No. 978/Mum/2006 with the following observations: "5. The next issue relates to the addition of "Provision for Non-Performing Assets" while computing the book profit u/s 115JB of the Act. The assessing officer added the same by treating as "unascertained liability". The Ld A.R submitted that it was a diminution in the value of assets and hence the same cannot be considered as unascertained liability. However, we notice that the Finance Act, 2009 has made amendment in sec. 115JB of the Act with retrospective effect from 1.4.2001 by inserting the following item to be added to the book profit:- "(i) the amount or amounts set aside as provision for diminution in the value of any asset." Hence, the provision for non-performing assets", being a provision for diminution in the value of asset, the same is required to be added to the book profits. Accordingly, we confirm the order of Ld CIT(A) on this issue." Thus, respectfully following the judgment of the Tribunal we decide this issue against the assessee and in favour of the revenue and hold that the provision for non-performing assets, being a ....
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....ding the lease equalization reserve while computing the book profit. Thus, ground no. 9 and 10 are allowed." Since the facts of this year are similar to the facts of A.Y 1997-98, therefore relying on findings of my predecessor and my own findings, the AO is directed to not to add equalisation reserve while computing the book profit. Thus, this ground of appeal is allowed." 13.1 The ld. DR has relied upon the order of the AO and the assessee has relied upon the order of the ld. CIT(A) as well as the following judgments : ICICI Venture Funds (Karnataka High Court) IRCTC (Delhi High Court) ITO v. PAL Credit and Capital Ltd. (Mumbai ITAT) 13.2 We have gone through the order of the ld. CIT(A) as well as the submissions made by both the sides. It is noted that in the first paragraph, the ld. CIT(A) has relied upon his order for A.Y 1999-2000 but in the last paragraph he has made a mention about his order for A.Y 1997-98. There appears to be some contradiction in this regard. Further, nothing has been submitted before us by the ld. Counsel of the assessee during the course of the submission or in a chart containing the brief synopsis as to what happened with regard to this issue ....