2023 (8) TMI 812

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....nd in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleing the addition of Rs.37,86,70,325/- without appreciating the fact that the assessee failed to prove and substantiate the mismatch appearing in 26AS not providing party-wise reconciliation of 26AS?. 2. Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) was justified in deleting the addition of Rs. 37,86,70,325/- without appreciating the fact that it is the onus of the assessee to prove and substantiate the mismatch appearing in 26AS?" 02. Brief facts of the case shows that assessee is engaged in the business of equipment renting based on Residual management capabilities. It filed its return of income on 11/11/2014 decla....

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....e equipments. To the lender, assessee sales the outstanding rent receivable on discounted basis. Gross rental receivables are discounted with various lenders on no recourse basis. Customers pay then Rental to the lender. As the master Rental agreement is with the assessee, tax is deducted on such rental income paid to financial lender but TDS is in the name of the Assessee. TDS is either reimbursed. Rental income does not constitute income of the assessee. Therefore assessee has offered correct income. The learned assessing officer disbelieved explanation of assessee and found that receipt stated in form number 26AS and income shown in the profit and loss account has wide variances and therefore he made an addition of Rs. 37,86,70,325/-. 0....

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....count. It was further stated that the practice of accounting the rental income in the books of account is accepted by the assessing officer in earlier years as well as in subsequent assessment years by passing order under section 143 (3) of the act. For this year only this adjustment/addition/disallowance is made. The learned CIT - A after understanding the business of the assessee and consequent accounting entries passed held that the method followed by the appellant is capable of yielding correct profit over a period of time and followed consistently and moreover the revenue has accepted the residual method for assessment year 2015 - 16 and 2016 - 17 in the assessment order passed under section 143 (3) of the act for those years, the addi....

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....g rental schedules. Assessee solicits the financier who can finance the purchase of the assets to be rented out. Such financier subsequently pays to the assessee and in turn assessee assigns the lease rentals receivable from the customer to the financier. From the financier, assessee receives discounted value of lease rentals. Based on this, assessee pays purchase price to the vendor from whom the equipments/assets are purchased. Customer directly makes payment of lease rentals to the Financier because the lease rentals receivable by the assessee are already assigned to the financer. Naturally when lease rents are paid, tax is required to be deducted by the customer. If lease rent is paid after deducting tax at source, assessee is supposed ....