9911796707
TMI Blog2012 (11) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid addition without examining whether the conditions laid down under the provisions of Section 43D of the Act were actually fulfilled in the case of the assessee. 1.3 In doing so, the ld.CIT(A) has erred in law and on facts in not examining, in particular, whether the assessee had classified the NPAs on the basis of the RBI guidelines or not. 1.4 In do so, the ld.CIT(A) has erred in law and on facts in not examining whether the bad and doubtful debts had been categorized by the assessee within the provisions of Section 43D of the Act, as per the conditions laid down in the Incometax Rules." 3. The learned CIT-DR has relied on the order of the AO. The learned counsel for the assessee submitted that the issue in the grounds of the appeals of the Revenue regarding the addition made on account of non-charging of interest on non-performing advances on accrual basis is covered in favour of the assessee with the decision of the ITAT, Ahmedabad in assessee's own case for the earlier assessment year 2001-2002 in ITA Nos.2909/Ahd/2004 dated 29.4.2009. He submitted that the provision of Section 43D was introduced w.e.f. 1-4-2000 and the said provision was considered by the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse remark has been made by the auditors in its annual report. The AO has asked the assessee to submit true and correct accounts with the certificate from the statutory auditors in the light of such adverse remarks given by the auditors. He submitted that the system of accounting of the assessee and particularly in view of the various deficiencies pointed out by the statutory auditors, it is clear that the accounts of the assessee did not reflect the true state of affairs and profit of the assessee for the relevant period. He relied on the order of the AO. 7. The learned counsel for the assessee has opposed the submission of the learned CIT-DR. He submitted that the so-called objection of the auditors were only routine noting of the auditors and in the similar facts with similar objections of the statutory auditors, the books of accounts of the assessee were accepted in all the earlier years as well as in the succeeding assessment year 2006-2007. He submitted that main objection of the auditors were with respect to procedural lapses and internal checks and controls and that the management of the assessee had complied with all such observations and the same were reflected in the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejection of the books of accounts of the assessee and invoking the provisions of section 145(3) of the Act. In this view of the matter, we confirm the order of the CIT(A) on this issue and the grounds of the appeals of the Revenue are dismissed. ITA No.481/Ahd/2011 - Asstt.Year 2002-2003 and ITA No.482/Ahd/2011 - Asstt.Year 2003-2004 (Assessee's appeal) 9. The identical grounds of the appeal of the assessee in both the appeals are as under: "1. The ld.CIT(A) has erred in law and on facts in upholding the disallowance of depreciation of Rs.69,98,367/- for A.Y.2002-2003 and Rs.52,48,755/- for A.Y.2003-2004 on leased assets without properly appreciating the facts of the appellant engaged in the business of financing by way of term loans, lease finance etc. for industrial units in the State of Gujarat. 2. He has erred in law & on facts in holding that actual owner of leased assets are the lessees and not the appellant. 3. He has erred in law and on facts in confirming the disallowance of depreciation without applying the principle of consistency in as much as that in the earlier years no such disallowance of deprecation was made. 4. He has erred in law & on facts in confirming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile of the AO to give a finding on the issue after going into the terms and conditions of the lease deed in this case. 13. We have considered rival submissions carefully and have perused the orders of the AO and the CIT(A). We find that the Revenue have not gone into the terms and conditions of the lease agreements entered into by the assessee-company. There is no finding by the AO that these lease were only finance lease and not operating lease. In the facts and circumstances of the case, we consider that it will be necessary to go into the terms and conditions of the lease agreement entered into by the assessee and to record a clear finding whether it is a finance lease or operating lease. In this view of the matter, we set aside the issue to the file of the AO with direction to decide the issue afresh in accordance with law after going through the terms and conditions of the lease deeds in the light of the decision of the Hon'ble Supreme Court in the case of Asea Brown Boveri Ltd. Vs. IFCI (supra) and to record a clear finding whether the lease was finance lease or operating lease after allowing reasonable opportunity of hearing to the assessee. We direct accordingly. ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest" and not in the nature of penalty. The assessee is in the business of finance and interest was paid by the assessee-company on account of late payment of amount payable to the State Government. There is no infringement of law and there is no act on the part of the assessee which can be said to be against the public policy. The assessee has advanced finance by way of term loans, lease finance etc. for the industrial units in the State of Gujarat during the relevant period and has earned interest thereon. The penal interest in the nature of finance charges for late payment of instalment/amount could not be equated with penalty imposable due to some infringement of law. The use of the word "penal interest" as a nomenclature does not mean any penalty for infringement of law. We find that the observations of the CIT(A) that such late payment is against the public policy and amount paid by the same could not be allowed as deductible expenses u/s.37(1A) in view of the explanation to section 37(1), is not sustainable in law. The interest charged at the rate of 2% per month for delayed payment of instalment by the assessee-company could not be equated with payment made against th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
