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2019 (9) TMI 1637 - AT - Income TaxInterest u/s 244A - only contention raised that when the AO did not allow credit of TDS in A. Y. 2001-02 on this basis that corresponding income is not offered to tax in that year, the AO should have suo moto allowed credit of TDS in correct year - HELD THAT - We find no merit in this claim because this not the case of the assessee that corresponding income was offered to tax in the same year in which TDS credit is claimed and the AO wrongly disallowed the claim of TDS credit. This is admitted position of fact that the assessee claimed TDS credit in A. Y. 2001-02 and offered corresponding income for tax in an earlier year and therefore, the delay in granting of refund is attributable to the assessee and as a consequence, interest u/s 244A is not allowable. In our considered opinion, if the TDS credit is claimed in a year in which corresponding income is not offered to tax, the AO has to disallow such claim of TDS credit in that year and it is not practically possible for the AO to allow such credit in the correct year in which corresponding income is offered to tax and it is for the assessee to point out the year in which such income is offered to tax and then the AO can allow credit of TDS in that year but in such case, delay in granting refund is attributable to the assessee and therefore, interest u/s 244A is not allowable. We therefore, decide this issue against the assessee in both years. Allowability of depreciation on lease transactions - HELD THAT - As decided in own case that the lease transaction is sham because the assessee on the one hand pays the value of machinery and at the same time receives the equivalent amount as deposit and thus, there is no out flow of fund so as to validly make payment for purchase price. It is seen that no difference in facts is pointed out in the present year or in any other year. When, the lease transaction itself is sham as per the earlier tribunal order in assessee s own case under similar facts, no other argument or judgment cited in the written submissions reproduced above is required to be considered. Hence, we decline to interfere in the orders of the lower authorities on this issue in all years including the present year. Amounts forfeited by the depositors in terms of the scheme approved by the High Court of Karnataka - This is by now a settled position of law that treatment in the books by the assessee is not decisive. This is also a settled position of law that taxability of a receipt cannot be on this basis that the assessee offered it for taxation. If a receipt is a capital receipt as held by Hon ble Karnataka High Court in the judgment rendered in the case of Manipal 2014 (10) TMI 706 - KARNATAKA HIGH COURT it cannot be taxed merely because the assessee treated it as revenue receipt or offered it for taxation. No other difference in fact is noted by CIT (A). Learned DR of the revenue also could not point out any other difference in facts. Hence, respectfully following this judgment of Hon ble Karnataka High court, we decide this issue in favour of the assessee. MAT credit in respect of MAT paid in earlier years - HELD THAT - It is held by CIT (A) that there is no merit in this ground because the AO adopted the tax payable under regular provisions as it was more than MAT. As per written submission reproduced by CIT (A) on page 3 of his order, it is submitted by the learned AR of the assessee that this issue may not arise as on date but it may arise in future. Hence, it is seen that the assessee wants an advance decision. In the written submissions before us also as reproduced above, it is submitted that this ground has been raised as a matter of abundant precaution. Hence, it is seen that before us also, the assessee wants an advance decision. Hence, this ground is rejected.
Issues Involved:
1. Allowability of Depreciation on Finance Lease. 2. Disallowance of Depreciation on Assets Leased to Educational Institutions. 3. Disallowance of Depreciation on Assets Leased to Khatima Fibers Ltd. and Mohan Mekin Ltd. 4. Allowability of Interest u/s 244A. 5. Taxability of Amounts Forfeited by Depositors. 6. MAT Credit for Earlier Years. Issue-Wise Detailed Analysis: 1. Allowability of Depreciation on Finance Lease: The primary issue in all appeals was the allowability of depreciation on finance leases. The tribunal noted that the assessee failed to produce lease agreements to establish the nature of the transactions. The AO had previously determined that the transactions were financial rather than lease transactions, citing the absence of lease agreements and the nature of the transactions. The tribunal upheld the AO's findings, stating, "the bench has no option but to give due weightage to this finding of the AO because no material has been brought on record by the assessee to dislodge this finding of the AO." Consequently, the tribunal declined to interfere with the orders of the lower authorities on this issue. 2. Disallowance of Depreciation on Assets Leased to Educational Institutions: The assessee argued that the disallowance of depreciation on assets leased to educational institutions was incorrect, relying on the decision of the Karnataka High Court in Manipal Finance Corporation Ltd. vs. ACIT. The tribunal restored this issue to the CIT (A) for fresh decision after examining the lease agreements in light of the judgments of the apex court and Karnataka High Court, stating, "we restore this issue to CIT (A) for a fresh decision after examining the lease agreements in the light of this judgment." 3. Disallowance of Depreciation on Assets Leased to Khatima Fibers Ltd. and Mohan Mekin Ltd.: The disallowance was based on the AO's finding that the assessee financed only a part of the asset cost, indicating a financial transaction rather than a lease. The tribunal upheld this disallowance, noting that the assessee did not bear the full cost of the assets, stating, "When full cost is not borne by the assessee, how the assessee can claim ownership and claim depreciation." 4. Allowability of Interest u/s 244A: The issue was whether interest u/s 244A on refunds due to the assessee was allowable. The tribunal held that the delay in granting refunds was attributable to the assessee, as the corresponding income was offered to tax in earlier years, not the year in which TDS credit was claimed. Consequently, interest u/s 244A was not allowable, with the tribunal stating, "interest u/s 244A is not allowable." 5. Taxability of Amounts Forfeited by Depositors: The assessee argued that amounts forfeited by depositors in terms of a scheme approved by the High Court of Karnataka were not income subject to tax. The tribunal agreed, citing the Karnataka High Court's decision in Manipal Finance Corporation Ltd. vs. ACIT, which held that such amounts were capital receipts and not taxable. The tribunal stated, "respectfully following this judgment of Hon’ble Karnataka High court, we decide this issue in favour of the assessee." 6. MAT Credit for Earlier Years: The assessee sought MAT credit for earlier years. The tribunal rejected this request, noting that the issue was raised as a precaution and did not arise as of the current date. The tribunal stated, "the assessee wants an advance decision... Hence, this ground is rejected." Summary of Results: - ITA Nos. 240 & 241/Bang/2018, 251 to 253/Bang/2018: Partly allowed for statistical purposes. - Remaining appeals (239, 242 to 250 & 254 to 255/Bang/2018): Dismissed.
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