2023 (1) TMI 1021 - SCH - Income Tax

Payment of lease amount to its holding company in respect of certain assets taken on lease - According to the Assessing Officer this was a financial transaction - The Tribunal noted that GNFC Limited had shown lease rent as income under the head Business income and in case of the lessor, the issue had been consistently decided that the assets were owned by the GNFC, and therefore, the lease rent received by the assessee was to be assessed as business income - HC held that Tribunal, has committed no error in allowing the appeal of the assessee - as per Revenue that the respondent being the owner shall be entitled to depreciation. HELD THAT - As once the lessors are held to be the owners and are entitled to depreciation, the Revenue thereafter cannot be permitted with respect to the same transaction, the Respondent being the lessee are the owners and are entitled to depreciation. We see no reason to interfere with the impugned judgment and order passed by the High Court. The Special Leave Petition stands dismissed.

Summary

Issues involved:
Ownership for depreciation entitlement

Analysis:
The Supreme Court heard the arguments from both parties and examined the material on record. The Revenue contended that the respondent, as the owner, should be entitled to depreciation. The respondent's counsel highlighted that if the lessors are considered the owners entitled to depreciation, then the Revenue cannot subsequently claim that the lessee (respondent) is also the owner entitled to depreciation. The High Court had relied on previous decisions, including one related to Gujarat Narmada Valley Fertilizers Company Limited, which had been confirmed by the High Court and dismissed in a Special Leave Petition.

The Court found no reason to interfere with the High Court's judgment and order. Consequently, the Special Leave Petition was dismissed, and any pending applications were disposed of.