TaxTMI 
TaxTMI 
2017 (3) TMI 1817
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....submits that the order u/s.263 of the Act for modifying the order u/s. 143(3) of the Act is bad in law, illegal, ultravirus, in excess of and /or in want of jurisdiction and otherwise void. (iii) The CIT failed to appreciate that the AO. while passing order u/s 143(3) dated 20.03.2013 has considered the facts of the case and had taken the legally correct view of allowing depreciation to the appellant as per the provisions of the Income Tax Act and hence the order passed by the assessing officer is not erroneous so as to be prejudicial to the interest of the revenue within the meaning and as contemplated u/s 263 of the Income Tax Act. (vi) The CIT further erred in viewing the leased transaction with a jaundiced eye and applying the same view as taken in the case of leasing banks and financial institutions, to the appellant, disregarding the fact that the appellant was not a normal leasing company, but was an industrial company. (v) He failed to appreciate that the appellant was a regular corporate assessee and the assets given on lease were the assets owned by it and the lease rent income was offered as business income. (vi) He further failed to a....
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....ld not have claimed depreciation on plant and machinery given on lease and since the assessee has not reduced the lease value of plant and machinery from block of assets, therefore, the assessee has claimed excess depreciation of Rs. 3,22,55,807/- 3. In response to the show cause notice as to why the following amount should not be considered as underassessment :- Add: Finance lease rentals deduced in computation of income 21,45,45,500 Less: lease rentals including principal from computation of income -37,14,49,991 Add: Depreciation as per IT Act (Plant and machinery) 34,75,58,071 Net under assessment 19,06,53,580 The assessee, after explaining the entire facts and background of the lease agreement, submitted as under: i) The polymer plant which has been leased by the assessee to RIL was an asset which was held for more than five years; ii) The assets could not be utilized at its present location, i.e.. 5, TTC Industrial Area, Ghansoli, Navi Mumbai, Thane that is why, it was decided to lease the said asset to RIL which had needed it for its Dahej Manufacturing Division, PO Dahej, Bharuch, Gujarat. Accordingly all expenditure in a....
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.... contentions of the assessee after assigning various reasons as discussed in the impugned order from pages 8 to 11. The reasons assigned by him by and large were same which has been given in the show cause notice. Finally, he held that the assessment order is erroneous and prejudicial to the interest of revenue and therefore, the same was set aside with a direction to the AO to make fresh assessment after conducting inquiries in details and the submissions as offered by the assessee in the return of income. 7. Before us, Ld. Counsel Shri Arvind Sonde, submitted that, first of all, it is not a case of lack of inquiry or partial inquiry, because precisely on the same issue, a query was raised by the Ld.AO during the course of the assessment proceedings and the assessee vide letter dated 5.2.2013 have explained the entire matter in detail along with a copy of lease agreement and treatment in the books of account; as well as CBDT Circular No. 2/2001 dated 9.2.2001. This reply was filed along with all the relevant annexures which will go to show that the assessee has given the entire details as well as explanation and on examination of such details and explanation, the AO has accepte....
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....8223;ble Supreme Court has explained what constitutes financial lease; and that in the case of financial lease, the borrower becomes the owner of the property inasmuch as it is the borrower who chooses the property to be purchased, takes delivery, enjoys the use and occupation of the property, maintains and operates the machinery, etc., undertakes indemnity and agrees to bear the risk of loss or damage, if any. Thus, the ratio of the Hon‟ble Supreme Court if applied on the present facts, then ostensibly the depreciation has to be allowed in the case of lessee and not the lessor. He also relied upon the various decisions as to the scope of section 263 and under what circumstances the assessment order can be held to be erroneous so far as prejudicial to the interest of the revenue. 9. We have heard the rival submissions and perused the relevant record and impugned orders and the case law as referred by both the parties. The main issue which has been raised in the impugned order by the Ld.PCIT in his revisionary jurisdictional order is that, the assessee has wrongly claimed depreciation on the leased assets as a Lessor and the AO has erroneously allowed such claim of deprecia....
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.... Circle 3(3), Aayakar Bhavan, Mumbai 400 020. Dear Sir, Sub: Assessment proceedings -A Y 2010-11 PAN: AAB CD 7169 H Kindly refer to the hearing attended by our authorized representative on 10.01.2013. As desired by you enclosed herewith please find the following: 1. During the year ended 31.03.2009, RCPTIL (Lessor) had given on lease its polymer plant located at 5, TIC Industrial Area, Ghansoli, Thane Belapur Road, Navi Mumbai - 400 701 to Reliance Industries Ltd. (Lessee) as per lease agreement dt. 31.12.2008 - Annexure 8(1)(i). The entries passed in the books of accounts in the year of leasing plant to Reliance Industries Limited is shown in Annexure 8(1)(ii). We wish to bring to your notice that w.e.f. 01.04.2001, Accounting Standard 19 (AS - 19) issued by Institute of Chartered Accountants of India ( ICAI ) dealing with Treatment of leased assets, has come into effect in respect of assets leased on or after 1.4.2001. Accordingly, when such assets are given on finance lease after 01.04.2001, the lessor, in this case RCPTIL, has reduced the value of such assets from its gross block of fixed assets under the Companies A....