2023 (4) TMI 195

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.... passed by the Income Tax Appellate Tribunal, Hyderabad Bench 'A', Hyderabad (briefly 'Tribunal' hereinafter) in I.T.A.No.937/Hyd/2002 for the assessment year 1998-99. 3. Learned counsel for the appellant submits that by the aforesaid order dated 24.06.2005, Tribunal had disposed of two appeals of the appellant being I.T.A.No.937/Hyd/02 for the assessment year 1998- 99 and I.T.A.No.29/Hyd/04 for the assessment year 2000-2001; in respect of ITA.No.29/Hyd/2004 for the assessment year 2000-2001, assessee had filed I.T.T.A.No.243 of 2006 before this Court, which was allowed vide the judgment and order dated 14.12.2022. He therefore, submits that a similar order may be passed in the present appeal as well. 4. Learned Standing Counsel for the r....

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....ICAI shall prevail until Accounting Standards are prescribed by the Central Government. It has been held as follows: "11. Prior to critically examining the case, it would be appropriate to have an understanding and significance of the Guidance Note issued by the ICAI. The ICAI is an expert body, created by the Parliament under the Chartered Accountants Act, 1949. The ICAI's publication on the subject indicates that the Guidance Note on Accounting for Leases was issued by it for the first time in 1988 which was later on revised in 1995. The Guidance Note reflects the best practices adopted by the accountants throughout the world. The ICAI is a recognized body vested with the authority to recommend accounting standards for ultimate prescri....

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....ehind the accounting standards was to arrive at a computation of real income after adjusting the permissible deprecation. It is not disputed that these accounting standards are made by the body of experts after extensive study and research." 12. After referring to the Guidance Note on Accounting for Leases, revised in the year 1995, Supreme Court held that method of accounting followed as derived from ICAI Guidance Note is a valid method of capturing real income based on the substance of finance lease transaction. The rule of substance over form is a fundamental principle of accounting. Thereafter, Supreme Court held as follows: "17. The bifurcation of the lease rental is, by no stretch of imagination, an artificial calculation and, t....

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....s silent on such deduction. For such calculation, it is obvious that the respondent has to take course of Guidance Note prescribed by the ICAI if it is available. Only after applying such method which is prescribed in the Guidance Note, the respondent can show fair and real income which is liable to tax under the IT Act. Therefore, it is wrong to say that the respondent claimed deduction by virtue of Guidance Note rather it only applied the method of bifurcation as prescribed by the expert team of ICAI. Further, a conjoint reading of Section 145 of the IT Act read with Section 211 (unamended) of the Companies Act makes it clear that the respondent is entitled to do such bifurcation and in our view there is no illegality in such bifurcation ....