2016 (9) TMI 1277 - HC - Income Tax

Deprecation on transactions relating to lease of assets - Held that - As decided in assessee s own case 2016 (8) TMI 610 - BOMBAY HIGH COURT Tribunal allowed the Respondent-Assessee s appeal by following the decision of the Apex Court in ICDS Ltd. v/s. CIT 2013 (1) TMI 344 - SUPREME COURT . - Decided against revenue Deprecation claimed on assets covered by sale and lease back agreements - Held that - As decided in assessee s own case 2016 (8) TMI 610 - BOMBAY HIGH COURT the impugned order of the Tribunal restored the issue to the Assessing Officer to decide the nature of transactions on examination of the sale and lease agreement entered into by the Respondent-Assessee with its lessees. This remand was with a specific direction that the Assessing Officer would examine the sale and lease back transactions entered into by the Respondent-Assessee with the three parties and decide the issue afresh keeping in view the decision of the Delhi High Court in CIT v/s. Cosmo Films Ltd. 2011 (7) TMI 32 - DELHI HIGH COURT - Decided against revenue

Summary

Issues Involved:
1. Appeal challenging order of Income Tax Appellate Tribunal for Assessment Year 1998-99.
2. Questions of law regarding disallowance of depreciation in lease transactions.
3. Setting aside issue of depreciation in sale & lease back transactions.
4. Appeal challenging order of Tribunal under Interest Tax Act for Assessment Year 1998-99.
5. Question of law regarding lease transactions being treated as finance/loan.
6. Restoration of issue of sale and lease back transactions to Assessing Officer.

Analysis:

1. The first issue involves an appeal challenging an order passed by the Income Tax Appellate Tribunal for the Assessment Year 1998-99. The appeal raised questions of law regarding the disallowance of depreciation in lease transactions. The appellant contended that the ITAT was not justified in confirming the decision of the CIT(A) in deleting the disallowance of depreciation without considering that the lease transactions were essentially finance or loan transactions. The appellant also argued about the justification of setting aside the issue of depreciation claimed in sale & lease back transactions to the file of the Assessing Officer, referencing a decision of the Delhi High Court. However, the High Court refused to entertain the appeal as the questions raised did not give rise to any substantial question of law.

2. The second issue pertains to an appeal challenging an order of the Tribunal under the Interest Tax Act for the Assessment Year 1998-99. The question of law raised in this appeal was whether the Tribunal was justified in setting aside the issue to the Assessing Officer for fresh adjudication without appreciating that the lease transactions were essentially finance or loan transactions. The Tribunal had restored the issue of sale and lease back transactions to the Assessing Officer based on a previous order. However, the High Court, considering a previous judgment, concluded that the question raised did not give rise to any substantial question of law and hence dismissed the appeal.

3. In summary, both appeals were dismissed by the High Court, and no costs were awarded. The issues raised in both appeals regarding the treatment of lease transactions and sale & lease back transactions were thoroughly analyzed, and the Court found no substantial question of law warranting further consideration. The decisions of the Tribunal and the CIT(A) were upheld based on the specific legal arguments presented by the parties.