2012 (12) TMI 1159 - AT - Income Tax

Summary

Issues involved: Appeals by the assessee for assessment years 2002-03 to 2008-09 and cross appeal by the Revenue for assessment year 2003-04 regarding taxing of lease rent as income and depreciation treatment.

Assessment Year 2003-04 Delay Condoned:
The Revenue's appeal for assessment year 2003-04 was delayed by four days, which was condoned by the Tribunal due to a reasonable cause shown by the Revenue in its affidavit.

Assessee's Contention on Lease Rent Taxation:
The sole issue raised by the assessee was the taxing of lease rent, including the principal portion, as income, while claiming entitlement to depreciation based on Accounting Standard 19. The Revenue, in its cross appeal, contested the deduction of amounts received on pre-closed leased contracts before computing depreciation.

Assessing Officer's Findings and Reopening of Assessments:
The Assessing Officer noted that only a portion of lease rent was offered as income, and the assessee had not claimed depreciation in its accounts but was claiming it for tax purposes. Assessments for various years were reopened to tax the principal portion of lease rental as income.

Arguments Before the Tribunal:
The assessee argued that the treatment of financial leases differed from operational leases and questioned the verification of lease agreements. The Revenue contended that the assessee had not shown full lease rentals as income and could not now dispute the inclusion of such amounts in the assessments.

Tribunal's Decision:
The Tribunal observed that the assessee had voluntarily declared the principal portion of lease rentals as income in revised returns for certain years, precluding the argument against its inclusion. It emphasized that if depreciation was claimed, the full lease rentals had to be shown as income, regardless of the Accounting Standard followed. The Tribunal upheld the Assessing Officer's treatment and dismissed all appeals.

Conclusion:
The Tribunal found no merit in the appeals by both the assessee and the Revenue, leading to the dismissal of all appeals. The decision was pronounced on December 20, 2012, in Chennai.