2015 (3) TMI 1283 - HC - Income Tax

Capital recovery of leased assets termed as lease equalisation charges - rolling stock of the Indian Railways which is owned by the assessee and which is on lease finance basis - Held that - The issue in respect of the assessee itself is covered for the previous assessment year 2001-02, in its favour. The ITAT had followed its previous order for assessment year 2001-02 in its impugned order. The ITAT s order for the previous year 2001-02 has been affirmed by a judgment of this Court in Commissioner of Income, Large Taxpayers Unit V. Indian Railways Finance Corporation Ltd. 2014 (6) TMI 224 - DELHI HIGH COURT . This position is in fact conceded by the revenue. Consequently, the appeals do not involve any substantial question of law. They are dismissed. Prior interest expenditure claim on account interest for a prior period - assessee had contended that on account of retrospective revision of rate of interest which occurred in the assessment year in question i.e. AY 2006-07 - Held that - ITAT s final order noticed its direction for assessment year 2002-03 held that there is no dispute about the allowability of expenses. Only dispute is regarding the year of allowability. If the Assessing officer is of the view that the expenses are pertaining to the prior period, the same are required to be considered for the prior and allowed in that year. If it is found that the expenses are allowable in this year on the basis of crystallization of liability, the same may be considered in the year under appeal. The assessee is therefore, directed to place necessary evidence in support of claim of expenses. The Assessing officer on appreciation of evidence may determine the year of allowability and allow the same in either of the year. No substantial question of law

Summary

Issues:
1. Revenue's appeal against ITAT's order in four assessment years.
2. Capital recovery of leased assets - lease equalisation charges.
3. Previous favorable judgment for the assessee in a similar issue.
4. Additional issue in ITA 104/2015 - prior interest expenditure claim.
5. ITAT's directions regarding the allowability of expenses for prior periods.
6. Dismissal of revenue's appeals based on previous judgments and directions.

Analysis:
1. The main issue in this case is the revenue's appeal against the common order of the Income Tax Appellate Tribunal (ITAT) for the assessment years 2006-07, 2007-08, 2008-09, and 2009-10.

2. The specific issue raised pertains to the capital recovery of leased assets, termed as lease equalisation charges, related to the Indian Railways rolling stock owned by the assessee on a lease finance basis.

3. It is noted that a previous judgment in favor of the assessee for the assessment year 2001-02, affirmed by the High Court, covers a similar issue. The ITAT's order for the previous year has been followed, leading to the dismissal of the current appeals as they do not involve any substantial question of law.

4. In ITA 104/2015, an additional issue arises concerning a prior interest expenditure claim. The Assessing Officer (AO) had disallowed a claim of &8377;1,10,10,874, contended by the assessee as a legitimate expense due to a retrospective revision of interest rates in the relevant assessment year.

5. The ITAT's directions regarding the allowability of expenses for prior periods, as seen in the case of assessment year 2002-03, were reiterated in the impugned order. The issue was restored back to the AO with similar directions for determination of allowability, leading to the Court's opinion that no substantial question of law arises for the assessment year 2006-07.

6. Consequently, based on the previous judgments and directions, the revenue's appeals are dismissed, and all rights and contentions of the parties are reserved for future proceedings.