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TMI Blog2003 (3) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax (Appeals) and the Assessing Officer that additions could be made on estimation or presumption and by rejecting the documentary evidences produced by the assessee in contradiction of the judgment of the apex court in CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349? 2. Whether the Income-tax Appellate Tribunal was justified it bifurcating the lease rent into capital and revenue expenditure merely on a presumptive basis? 3. Whether the Tribunal was right in taking the view that the intention of the parties was to transfer in abrogation of the specific terms of lease agreement which all through the document provides for the ownership to be of the lessor, Key Leasing and Finance Co.? 4. Whether the Income-tax Appellate Tribunal was ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year, i.e., 1993-94, the assessee has shown income of Rs. 7,199. The Income-tax Officer noticed that the assessee had claimed lease rent as revenue expenditure. Considering the contents of the agreement with Key Leasing and Finance Ltd., the Income-tax Officer was of the view that the trucks were not taken on lease but it was a sale. Therefore, the lease amount which has been paid cannot be allowed as revenue expenditure and he assessed the total income of the assessee at Rs. 15,82,582 in the assessment year 1991-92. Similar view has been taken for the subsequent assessment years. In appeal before the Commissioner of Income-tax (Appeals), the Commissioner of Income-tax (Appeals) was of the view that as per the agreement, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the trucks or the trucks were taken on lease for three years, that has to be considered in the facts and circumstances of the case, i.e., taking into account the terms and conditions of the agreement and also the contents of the letter which reveal the intention of the assessee. The Assessing Officer after considering the submissions and also considering the directions of the Deputy Commissioner of Income-tax under section 144A of the Income-tax Act, 1961, has allowed the interest on the borrowed amount at 18 per cent. as revenue expenditure and the rest of 30 per cent. was not allowed treating the expenditure in the form of lease money as capital expenditure for purchase of trucks. The Commissioner of Income-tax after considering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cks and not the lessee. Clause 11 of the agreement further provides that the lessee when it is not the owner of the machinery has no right and shall not sell, hypothecate, mortgage, pledge, assign, let or otherwise encumber or suffer a lien upon and/or deal with or part with possession of the said machinery, i.e., the trucks, without the consent of the lessor in writing. The lessee, i.e., the assessee also cannot offer the machinery, i.e., the trucks, as security for any loan, guarantee, other assistance from any person, corporation, company, financial institution or bank. Clause 16 provides who will get depreciation as the owner of the trucks. This clause provides that notwithstanding any change in law or ambiguity in any clause thereof, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the truck but we are concerned with the lease period and terms of the lease. As we have referred above, in the terms and conditions of the agreement, when Key Leasing and Finance Ltd., both the parties agreed that during the lease period, the lessor, Key Leasing and Finance Ltd., shall be the owner of the trucks and the lessee, i.e., the assessee, will have no right to transfer or alienate to other party in any form. Not only that the lessee as well as the lessor both have agreed that the depreciation which is permissible under the Income-tax Act, being the owner of the trucks, the lessor will have that right and benefit and it will get the benefit of depreciation on these trucks during this lease period, i.e., during the assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X
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