9911796707
TMI Blog2019 (10) TMI 308X X X X Extracts X X X X X X X X Extracts X X X X ..... their business purposes. A perusal of the profit and loss account also shows that the assessee has been earning income from lease business. Circular No. 2/2001 issued by the CBDT on 9.2.2011 explicitly provides that under the Income Tax Act, in all leasing transactions, the owner of the assets is entitled to depreciation if the same is used in the business. As the assessee was being allowed the benefit of depreciation prior to the two assessment years under consideration. Copies of assessment orders for assessment years 2004-05 and 2005-06 also show that the assessee s claim with respect to depreciation was allowed. Thus, it is apparent that there has been no change in the facts and circumstances of the case and, therefore, there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 994-95. The assessee corporation purchases machineries on behalf of the loanees and the plant and machinery were installed at the premises of various loanees. It has been claimed by the assessee that the ownership of the plant and machinery has always remained with the assessee corporation. The assessee corporation had claimed depreciation on such plant and machinery leased out to the borrowers and depreciation had been allowed as deduction since the year 1994- 95. However, the leasing and loaning activity was shut down since October, 2001 and there were no new machineries given on lease in assessment years 2002-03, 2003-04 and even in earlier three years. It is also the assessee s claim that there was no buyback agreement entered into with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the lease was a finance lease or operating lease vide order dated 12.10.2012 in ITA No. 482/Ahd/2011. 2.4 In set-aside proceedings for assessment year 2003-04 the AO again held that the nature of lease was finance lease and proceeded to again disallow depreciation to the tune of ₹ 52,48,755/-. 2.5 The assesee s appeals before the Ld. CIT (A) for both the years under consideration were dismissed and now the assessee is before this Tribunal again challenging the action of the lower authorities in treating the transaction as a finance lease transaction. 3.0 The Ld. Authorised Representative (AR) submitted that the lower authorities had wrongly treated the transaction as a sale and a fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 350 ITR 527 (SC) wherein the Hon ble Apex Court has held that section 32 of the Act required use of asset for the purpose of business and it did not mandate usage of asset by the assessee itself. It was submitted that in this case the Hon ble Apex Court has held that even though motor vehicles were registered in the name of the lessee, the lessor would be entitled to depreciation. 3.4 The Ld. AR also submitted that the reliance by the Department in the case of Asea Brown Boveri Ltd. vs International Finance Corporation of India reported in 2006 154 Taxman512 (SC) was misplaced as no issue of depreciation was involved in this case and, therefore, the same had been wrongly relied upon by the lower authorities. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orities have taken a view that the impugned transaction is a finance lease transaction, we are not in agreement with the same due to the following reasons :- (1) We have perused a copy of the lease arrangement between the assessee and M/s. Add-Life Pharma Ltd. and it is seen that the agreement provides that the assets are owned by the assessee corporation and after the period of expiry of lease, the leased assets are restored to the lessor. It is also seen that the insurance policies are taken in the name of lessor by the lessee and the lessee is also required to affix a sign on the assets indicating that assets belong to the lessor. (2) It is further seen that the lessee uses the equipment leased out to it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of business, the requirement of section 32 would stand satisfied notwithstanding the non usage of the assets by the assessee. In this case the assessee was a leasing company which leased out trucks that it purchased and the Hon ble Apex Court held that the income derived from leasing of the trucks would be business income and, therefore, the requirement of section 32 i.e. the assets must be used in the course of business stood fulfilled. In the present case also it is undisputed that the assessee is earning income from leasing activities and the leased out assets are being used by the lessees for their business purposes. A perusal of the profit and loss account also shows that the assessee has been earning income from lease business. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
