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TMI Blog2021 (2) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in Vasisth Chay Vyapar Ltd. [ 2018 (3) TMI 56 - SUPREME COURT] and the ratio laid down in M/S. INDBANK MERCHANT BANKING SERVICES LTD. [ 2019 (7) TMI 1740 - MADRAS HIGH COURT] the order passed by the Income Tax Appellate Tribunal is liable to be set aside. Accordingly, the same is set aside. The substantial questions of law are decided in favour of assessee. - T.C.A. No. 1394 of 2008 - - - Dated:- 1-2-2021 - THE HON'BLE MR. JUSTICE M.DURAISWAMY AND THE HON'BLE MRS.JUSTICE T.V.THAMILSELVI For the Appellant : Mr.Venkatanarayanan for M/s.Subbaraya Aiyar For the Respondent : Mr.T.Ravi Kumar, Senior Standing Counsel JUDGMENT (Judgment was delivered by M. DURAISWAMY, J.) Challenging the order passed in I.T.A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtaken by the Department, found that the transaction in steel rolls allegedly supplied by M/s. ORV Castings Private Limited, Bellary and leased to BSAL was not genuine lease transaction, but was only an arrangement to arrange finance and to claim the benefits under the Income Tax Act. Finally, the Assessing Officer concluded that by rejecting the explanation of the assessee that it is a bonafide transaction entered into in the normal course of business activities of the assessee Company. In these circumstances, the Assessing Officer denied the claim of the assessee for depreciation. For the assessment year 1996-97 also the claim of depreciation in respect of asset leased to BSAL was negatived by the Assessing Officer and upheld by the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the Hon'ble Division Bench of this Court in the appeals in T.C.A.Nos.2097 to 2099 of 2008 [Commissioner of Income Tax, Chennai Vs. M/s.Indbank Merchant Banking Services Ltd., Krest Bldg (III Floor), 26/27, Jehangir Street, Second Line Beach, Chennai] dated 30.07.2019, following the ratio laid down by the Hon'ble Supreme Court in (2018) 90 taxmann.com 365 (SC) [Commissioner of Income Tax vs. Vasisth Chay Vyapar Ltd.], decided the questions of law in favour of the assessee and against the Department. Further, the learned counsel submitted that the ratio laid down by the Hon'ble Division Bench squarely applies to the facts and circumstances of the present case. 5.In view of the submission made by the learned counsel for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved that in so far as the permissible deductions or exclusions under the Act are concerned, the same are admissible only if such deductions/exclusions satisfy the relevant conditions stipulated therefor under the Act. To that extent, it was observed that the Prudential Norms do not override the provisions of the Act. However, the Apex Court made a distinction with regard to Income Recognition and held that income had to be recognized in terms of the Prudential Norms, even though the same deviated from mercantile system of accounting and/or section 45 of the Income Tax Act. It can be said, therefore, that the Apex Court approved the real income theory which is engrained in the Prudential Norms for recognition of revenue by NBFC. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act is only in the matter of Income Recognition and presentation of Financial Statements. The Accounting Policies adopted by an NBFC cannot determine the taxable income. It is well settled that the Accounting Policies followed by a company can be changed unless the AO comes to the conclusion that such change would result in understatement of profits. However, here is the case where the AO has to follow the RBI Directions 1998 in view of Section 45Q of the RBI Act. Hence, as far as Income Recognition is concerned, Section 145 of the IT Act has no role to play in the present dispute. 19. We have also noticed the other line of cases wherein the Supreme Court itself has held that when there is a provision in other enactment which contai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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