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TMI Blog2015 (10) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue has raised three elaborate and identical grounds in its appeals for both the assessment years; however the crux of the issue is that the Revenue is aggrieved by the order of the Ld. CIT (A) who had erred in deleting the addition made towards "provision for lease equalization charges" for '47,78,834/- for the assessment year 2006-07 and '1,09,58,683/- for the assessment year 2007-08 while computing the book profit of the assessee for the purpose of determining tax U/s.115 JB of the Act. 3. The brief facts of the case are that the assessee is a company engaged in the business of financing two wheelers and consumer durables, filed its return of income for the assessment years 2006-07 & 2007-08 on 30.11.2006 & 31.01.2007 declaring loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Ld. A.R. also placed reliance in the decisions of the assessee's own case by the Hon. Jurisdictional High Court for the earlier assessment year reported in 318 ITR 435. The Ld. A.R further argued by stating that the "Provisions for lease equalization charges" is nothing but the excess of the "principle portion" embedded in the "total lease installment" received during the relevant assessment year over the depreciation written off for the relevant assessment year as per the Income Tax Act. Ld. A.R. explained that such amount is further required to be written off as "Provisions for lease equalization charges" because the entire "lease installments" received during the relevant assessment year which consists of "lease rent" and a portion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect the actual lease rental income accrued to the assessee for the relevant assessment year. Subsequently on the end of the lease period the written down value that remains in the "Asset A/c" will be written off by crediting the "Asset A/c" and debiting the "lease equalization Reserve" A/c in accordance with the Accounting Standrard-19. Accounting Standard-19(18 & 19) provides as follows: "AS-18: A finance lease gives rise to a depreciation expense for the asset as well as a finance expense for each accounting period. The depreciation policy for a leased asset should be consistent with that for depreciable assets which are owned, and the depreciation recognized should be calculated on the basis set out in Accounting Standard (AS)-6. Deprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the provisions of Parts II and III of Schedule VI to the Companies Act" in section 115J was made for the limited purpose of empowering the Assessing Officer to rely upon the authentic statement of accounts of the company. While so looking into the accounts of the company, the Assessing Officer has to accept the authenticity of the accounts with reference to the provisions of the Companies Act, which obligate the company to maintain its accounts in a manner provided by that Act and the same to be scrutinised and certified by statutory auditors and approved by the company in general meeting and thereafter to be filed before the Registrar of Companies who has a statutory obligation also to examine and be satisfied that the accounts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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