2016 (8) TMI 610 - HC - Income Tax

Disallowance made on account of survey charges - Tribunal deleted addition - Held that - We find that the impugned order of the Tribunal has deducted the disallowance on a finding of fact that the tax has already been offered on the same for the Assessment Year 1999-2000 on receiving it from the successful bidder. No substantial question of law. Deprecation on transactions relating to lease of assets - Held that - 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 - We find that 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 Allocation of expenses on estimate basis - Tribunal directing the AO to treat 50% of the expenses as capital and the remaining 50% expenditure as revenue expenditure - Held that - The issue raised herein stands concluded against the Appellant-Revenue and in favour of the Respondent-Assessee in view of the decision of this Court in CIT v/s. Ogilvy and Mather Pvt. Ltd 2011 (9) TMI 1013 - BOMBAY HIGH COURT Deduction u/s. 80M - interest paid on borrowed funds related to purchase of shares would be deducted out of dividend income - Held that - The issue raised herein is concluded against the Appellant-Revenue by the decision of this Court in CIT v/s. Emerald Co. Ltd. 2005 (9) TMI 50 - BOMBAY High Court . Moreover, we find that the impugned order itself records the fact that the Appellant-Revenue had before the Tribunal accepted the fact that the issue raised herein, stands concluded in favour of the Respondent-Assessee

Issues:
1. Disallowance of survey charges under Mercantile System of accounting.
2. Disallowance of depreciation on lease transactions.
3. Disallowance of depreciation on assets involved in sale & lease back transactions.
4. Allocation of expenses on an estimate basis.
5. Interpretation of judgment in the case of M/s. Emerald Co. Ltd.

Analysis:

1. Disallowance of survey charges under Mercantile System of accounting:
- The Respondent-Assessee incurred expenses for the port Development Programme, intending to recover them from successful bidders later.
- The Assessing Officer disallowed the deduction, considering the expenses as receivables not reducible from assessable income.
- The CIT(A) upheld the AO's decision, but the Tribunal allowed the deduction, noting that tax had been offered on the expenses in a later assessment year.
- The court found no substantial question of law, as it was a factual finding.

2. Disallowance of depreciation on lease transactions:
- The Tribunal allowed the Respondent-Assessee's appeal based on a decision by the Apex Court.
- The issue raised by the Revenue was concluded against them by the Apex Court's decision.
- No substantial question of law arose, and the issue was not entertained.

3. Disallowance of depreciation on assets involved in sale & lease back transactions:
- The Assessing Officer and CIT(A) disallowed depreciation on assets involved in certain sale and lease back agreements.
- The Tribunal found that the lower authorities lacked material to support the disallowance and remanded the issue to the Assessing Officer.
- The Tribunal directed a reexamination of the transactions with specific reference to a Delhi High Court decision.
- The court found no substantial question of law in this issue.

4. Allocation of expenses on an estimate basis:
- The issue raised by the Revenue was concluded against them by previous court decisions.
- The court held that no substantial question of law arose, and the issue was not entertained.

5. Interpretation of judgment in the case of M/s. Emerald Co. Ltd.:
- The issue raised was concluded in favor of the Respondent-Assessee by a previous court decision.
- The court found no substantial question of law and did not entertain the issue.

Conclusion:
The High Court dismissed the appeal, stating no substantial questions of law arose in the issues presented. The judgments of the lower authorities were upheld, and the appeal was dismissed without costs.

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