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2015 (3) TMI 1266 - AT - Income TaxDisallowance of lease payment - Held that - The ld. Counsel submitted that the lease agreement specifically provides that the computer would be returned back to M/s IBM. He further submitted that the assessee has also obtained a certificate to that effect from M/s IBM. Thus, in our view, the present dispute could be resolved only if a definite finding about the nature of lease is given. We have already noticed that both the authorities have failed to examine the lease agreement which, in our view, is essential. Accordingly, we are of the view that this issue requires fresh examination at the end of the AO. Accordingly, we set aside the order of the AO and restore this issue to the file of the AO/DRP with a direction to decide the same afresh by duly considering the lease agreement, certificate given by the M/s IBM and any other information/explanations that may be furnished by the assessee. Disallowance of employees contribution to Provident Fund - Held that - As the assessee has paid the amount before the end of the relevant financial year and hence the AO was not justified in disallowing the claim in view of the decisions rendered in the case of CIT V/s Ghatge Patil Transport Ltd 2014 (10) TMI 402 - BOMBAY HIGH COURT and CIT V/s Hindustan Organics Chemicals Ltd reported in (2014 (7) TMI 477 - BOMBAY HIGH COURT). Rejection of claim for deduction of expenditure relating to reimbursement of deputed staff cost - additional claim by filing revised return of income - Held that - As in the case of CIT V/s Pruthvi Brokers and Shareholders (P) Ltd (2012 (7) TMI 158 - BOMBAY HIGH COURT ) that appellate authority is entitled to consider the additional claim, if any and adjudicate the same. Accordingly, we are of the view that the claim for deduction put forth by the assessee should be admitted. Further, since the same needs to be examined, we think it fit and proper to restore this issue to the file of the AO with a direction to examine the claim put forth for deduction by the assessee and take appropriate decision in accordance with law.
Issues:
1. Disallowance of lease payment 2. Disallowance of employees' contribution to Provident Fund 3. Rejection of claim for deduction of expenditure relating to reimbursement of deputed staff cost Issue 1 - Disallowance of lease payment: The dispute revolved around the treatment of lease payment made to M/s IBM for computer lease. The assessee claimed the entire lease rental as revenue expenditure, treating it as an "operating lease," while the tax authorities considered it a financial lease and disallowed the deduction of the principal portion. The Tribunal noted that the authorities did not examine the lease agreement to determine the lease's nature accurately. The Tribunal directed a fresh examination by the AO to decide the issue considering the lease agreement and other relevant information provided by the assessee. Issue 2 - Disallowance of employees' contribution to Provident Fund: The AO disallowed the claim as the employees' contribution to Provident Fund was not paid before the due date. The Tribunal, based on decisions of the Jurisdictional High Court, held in favor of the assessee, noting that the contribution was paid before the end of the financial year. The Tribunal directed the AO to delete this addition. Issue 3 - Rejection of claim for deduction of expenditure relating to reimbursement of deputed staff cost: The assessee filed a revised computation during assessment proceedings to claim deduction for reimbursement of deputed staff cost. The AO rejected the claim, citing the requirement of filing a revised return. However, the Tribunal referred to a decision by the Jurisdictional High Court, allowing the appellate authority to consider additional claims. The Tribunal directed the AO to examine the deduction claim and make a decision in accordance with the law, restoring the issue for further assessment. In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing that the assessee should be given a necessary opportunity to be heard. The judgment was pronounced on 10th March 2015 by the Appellate Tribunal ITAT Mumbai, with detailed analysis and directions provided for each issue raised in the appeal.
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