2012 (7) TMI 329 - AT - Income Tax

Disallowance of lease charges - sale and lease back transaction - assessee is claiming an expenditure towards quarterly rent and lease management fee Held that - If the assessee used the safety locker for part of the Assessment Year and the other part falls in the next Assessment Year, the lease charges paid by the assessee has to be necessarily allowed in the next Assessment Year. Claim of fall of market value of Government securities - claim on account of depreciation in market value of Government securities and claim for loss in sale of Government securities Held that - Once it is accepted that Government securities were to be treated as stock-in-trade, the loss in such Government securities are to be allowed - claim for depreciation in market value of Government securities stands resolved in favour of the assessee

Summary

Issues involved:
1. Disallowance of lease charges and claim for fall in market value of securities for assessment year 1995-96.
2. Claim on account of depreciation in market value of Government securities and claim for loss in sale of Government securities for assessment year 1996-97.

Analysis:

Issue 1: Disallowance of lease charges and claim for fall in market value of securities for assessment year 1995-96:
The Tribunal recalled the orders for assessment years 1992-93, 1995-96, and 1996-97 to decide on issues related to fall in market value of securities, loss on sale of Government securities, and lease rent of safety lockers that were previously omitted. The Tribunal considered the disallowance of lease charges and the claim for fall in market value of securities. The Appellant argued that the Tribunal had previously considered these issues but omitted to mention relevant appeal numbers. The Department was in the process of appealing before the High Court. The Tribunal reviewed the lease charges issue and concluded that the lease transaction was genuine, directing the Assessing Officer to allow the lease charges in the respective assessment years. Regarding the claim of fall in market value of Government securities, the Tribunal upheld the claim based on previous decisions and allowed it, confirming the same.

Issue 2: Claim on account of depreciation in market value of Government securities and claim for loss in sale of Government securities for assessment year 1996-97:
The Tribunal considered the issues of claim on account of depreciation in market value of Government securities and claim for loss in the sale of Government securities for this assessment year. The Appellant argued that these issues were previously decided in favor of the assessee by the Tribunal. The Tribunal reviewed its previous decision and concluded that once Government securities were treated as stock-in-trade, the loss on the sale of such securities should be allowed. Therefore, the Tribunal allowed the appeal for the assessment year 1996-97 concerning the recalled issues.

In conclusion, the appeals of the assessee for assessment year 1995-96 and 1996-97, insofar as they concern the recalled issues, were allowed by the Tribunal. The order was pronounced on May 25, 2012, in Chennai.