9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (6) TMI 1123 - AT - Income TaxClaim of depreciation on assets given on lease - HELD THAT - even in cases of financial leases , the depreciation allowance contemplated under Section 32(1) of the Act is allowable to the lessor. It has not been shown by the Ld. CIT-DR that any of such precedents in assessee s own case has been altered by any higher authority. Therefore, so far as this aspect of the matter is concerned, we do not find any hesitation in directing the Assessing Officer to allow the claim of depreciation on lease of assets where it involves financial lease . Subsequent to the setting aside of the matter by the Tribunal on this aspect for Assessment Yea₹ 1994-95 to 1996-97, no further order has been passed by the AO till date. Considering the aforesaid, we deem it fit and proper to direct the AO to decide about the admissibility of depreciation of ₹ 2,09,04,638/- pertaining to the aforesaid seven lease arrangements in the light of decision in the earlier years following the order of Tribunal dated 29.10.2014 2015 (1) TMI 516 - ITAT MUMBAI . AO shall allow the assessee a reasonable opportunity of being heard and thereafter recompute the depreciation allowable to the assessee keeping in mind the directions of the Tribunal in the earlier years, and as per law. Disallowance of interest expenditure by invoking Sec. 36(1)(iii) - HELD THAT - A pertinent point which has been brought out by LR is that the interest income earned by the assessee on such Central and State Government securities have all along been assessed as business income and, therefore, there was no justification for disallowing the corresponding interest expenditure on the plea that that the investments are for non- business purpose. Even in the instant assessment year, a reference has been made to the assessment order to point out that the interest income from such securities is lying assessed as business income . Considering the aforesaid aspect, as also the fact that IDBI General Regulations, 1994 prescribe for making investments in securities of Central and State Governments, we do not find any reason to uphold the stand of the income-tax authorities that such investments are not in the course of assessee s business. In fact, there is an apparent contradiction in the stand of the assessing authority inasmuch as the interest yielded by such investments is assessed as business income whereas the interest expenditure attributable to such investments has been sought to be treated as a non-business expenditure. Considering the aforesaid, we deem it fit and proper to set-aside the order of CIT(A) on this aspect and direct the Assessing Officer to allow the claim made by the assessee. Thus, on this aspect, assessee succeeds. In the result this ground of appeal is allowed. Disallowance of deduction under section 80M - HELD THAT - As relying on assessee's own case 2015 (1) TMI 516 - ITAT MUMBAI we direct the Assessing Officer to restrict the disallowance under section 80M to 1% of the dividend income. In the result, the assessee succeeded on this ground of appeal. Correct head of income - profit on sale of investment - capital gain or Business Income - assessee submits that the A.O. has assessed the income from sale of shares of Joint Stock Company as Capital Gains for all the years i.e. AY 1997-98 to AY 2012-13 - HELD THAT - Assessee vehemently submitted that the A.O. taxed the income from sale of Joint Stock Company under the head Capital Gain. However, the ld. CIT(A) has treated the profit on sale of Joint Stock Company as Business Profit. As further noted that the department has accepted the similar profit on sale of investment as a Capital Gain from A.Y. 2002-03 to 2012-13 as the same has not been disputed by ld. DR while making his submission. Considering the fact that similar profit is accepted as Capital Gain from the year 2002-03 till 2012-13, therefore, the revenue should follow the consistency when there is no variance in the facts. Hence, we direct the A.O. to treat the profit on sale on investment as Capital Gain as has been accepted from A.Y. 2002-03 onwards. Therefore, the assessee also succeeded on this ground. Exemption u/s 10(23G) - assessee has claimed income exempt on gross basis in the return of income furnished by assessee - HELD THAT - The co-ordinate bench of Tribunal in ADIT vs. Credit Agricole Indosuez 2013 (9) TMI 364 - ITAT MUMBAI also held that it is an undisputed proposition that exemption under section 10(15) on the gross interest and not on net interest. The co-ordinate bench followed the decision Dresdner Bank Ag 2006 (10) TMI 175 - ITAT BOMBAY-F and JCIT vs. American Express Bank Ltd. 2012 (8) TMI 371 - ITAT MUMBAI . Considering the decision of coordinate bench of Tribunal, we direct the A.O. to allow the deduction on gross basis, of cource after deducting the direct expenses attributable to earning such income. In the result, the assessee also succeeded on this ground.
Issues Involved:
1. Claim of depreciation on assets given on lease. 2. Disallowance of expenditure claimed under Section 36(1)(iii). 3. Deduction under Section 80M. 4. Investment in shares. 5. Depreciation on guest house. 6. Exemption under Section 10(23G) of the Income Tax Act. Detailed Analysis: 1. Claim of Depreciation on Assets Given on Lease: The appellant, a public financial institution, claimed depreciation on leased assets amounting to ?157,78,82,261/-. The Assessing Officer (AO) disallowed the claim, classifying the leases as 'financial leases' rather than 'operating leases'. This stance was consistent with prior years. The Tribunal referred to its earlier decision for Assessment Years (AY) 1994-95 to 1996-97, where it allowed depreciation for financial leases based on the Supreme Court's judgment in I.C.D.S. Ltd. vs. CIT. The Tribunal directed the AO to allow depreciation for financial leases and to re-evaluate certain transactions, amounting to ?2,09,04,638/-, following its earlier directions. 2. Disallowance of Expenditure Claimed Under Section 36(1)(iii): The AO disallowed interest expenditure of ?455,70,63,150/- related to investments totaling ?4945 crores, arguing they were not business-related. The CIT(A) allowed relief for investments in industrial concerns but upheld disallowance for investments in government securities and financial institutions, amounting to ?113,38,12,959/-. The Tribunal found that investing in State Financial Corporations aligns with the appellant's business activities under Section 9 of the IDBI Act, 1964, and directed the AO to allow the interest expenditure. For investments in government securities, the Tribunal noted that interest income was assessed as business income, thus disallowing corresponding interest expenditure was contradictory. The Tribunal directed the AO to allow the claim. 3. Deduction Under Section 80M: The AO's computation of deduction under Section 80M was unclear, leading the CIT(A) to direct a re-evaluation. The Tribunal referred to its earlier decision, restricting disallowance to 1% of dividend income. The Tribunal directed the AO to follow this precedent and restrict the disallowance accordingly. 4. Investment in Shares: The AO treated profits from the sale of shares as capital gains, but the CIT(A) reclassified them as business profits. The Tribunal noted that from AY 2002-03 onwards, such profits were consistently treated as capital gains. The Tribunal directed the AO to follow this consistent treatment and classify the profits as capital gains. 5. Depreciation on Guest House: The appellant did not press this ground. The CIT(A) had allowed other expenses related to the guest house but disallowed depreciation. The Tribunal treated this ground as not pressed. 6. Exemption Under Section 10(23G) of the Income Tax Act: The appellant claimed exemption under Section 10(23G) on a gross basis, amounting to ?8,36,34,794/-, but revised it to ?1,86,27,921/- during assessment. The CIT(A) upheld the AO's decision to allow the exemption on a net basis. The Tribunal, referencing decisions in similar cases, directed the AO to allow the exemption on a gross basis after deducting direct expenses attributable to earning such income. Conclusion: The Tribunal allowed the appeal partly, directing the AO to re-evaluate and allow claims based on precedents and consistent treatment of similar issues in earlier and subsequent years. The Tribunal's order emphasized adherence to legal precedents and consistency in tax treatment.
|
