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TMI Blog2014 (8) TMI 710X X X X Extracts X X X X X X X X Extracts X X X X ..... ik Service India Pvt. Ltd. reported in [2013 (12) TMI 968 - CESTAT NEW DELHI] in absence of the definition of this term, the same must be interpreted in the sense it is understood in the common parlance or trade parlance and accordingly, this term is to be understood according to its meaning in the ICAI Accounting Standard or International Accounting Standards. There is absolutely no element of financing and the agreements, in question, are purely the agreements of renting of immovable property(plant & machinery) which became taxable under Section 65(105)(zzzz) of the Finance Act, 1994 w.e.f 1.6.2007. Therefore, during the period of dispute, the renting of plant & machinery by the appellant under lease agreement/licence agreement was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g with education cess amounting to ₹ 5,10,09,000/- from them for the period from April, 2004 to May, 2007 along with interest thereon under Section 75 of the Finance Act, 1994 and also for imposition of penalty on them under Section 76, 77 and 78 ibid. This show cause notice was adjudicated by the Commissioner vide order-in-original dated 29.09.2008 by which the above mentioned service tax demand was confirmed against the appellant along with interest on it under Section 75 and besides this, penalties were imposed on them under Sections 76, 77 and 78 ibid. Against this order of the Commissioner, this appeal has been filed. 2. Heard both the sides. 3. Shri K.K. Anand, Advocate, ld. Counsel for the appellant, pleaded that the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t though during the period prior to 1.6.2007, there was no definition of financial lease in Section 65(12), it has to be interpreted in the sense in which it is understood in the common parlance or trade parlance and that lease agreements, which, do not satisfy the criteria for financial leasing in Accounting Standards published by ICAI for financial leases, cannot be treated as financial lease agreements. Shri Anand emphasized that lease agreement, in question, is not a financial lease agreement as there is no option to the lessee to acquire the asset at the end of the lease period. He, therefore, pleaded that the impugned order is not correct. 4. Shri Pramod Kumar, ld. Joint CDR defended the impugned order by reiterating the findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... banking and other financial services. The expression Banking and other Financial Services is defined in Section 65(12) the clause (a) (i) of which covers financial leasing services including equipment leasing and higher purchase. During the period of dispute, there was no definition of financial lease given in this Section. However, w.e.f. 1.6.2007, an explanation was added to clause (a) (i) of Section 65(12) explaining the scope of the financial leasing as under:- Explanation: For the purposes of this item, ''financial leasing is a lease transaction where:- (i) Contract for lease is entered into between two parties for leasing of a specific asset; (ii) Such contract is for use and occupation of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial lease and the same are basically the rent agreements, which are renewed on expiry of 11 months. There is absolutely no element of financing and the agreements, in question, are purely the agreements of renting of immovable property(plant machinery) which became taxable under Section 65(105)(zzzz) of the Finance Act, 1994 w.e.f 1.6.2007. Therefore, during the period of dispute, the renting of plant machinery by the appellant under lease agreement/licence agreement was not taxable as Banking and Financial Services under Section 65(105) (zzm) read with Section 65(12) and as such, the impugned order is not sustainable. The same is set aside. The appeal is allowed. (Operative portion already pronounced in open court) - - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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