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TMI Blog2019 (9) TMI 1637X X X X Extracts X X X X X X X X Extracts X X X X ..... ly possible for the AO to allow such credit in the correct year in which corresponding income is offered to tax and it is for the assessee to point out the year in which such income is offered to tax and then the AO can allow credit of TDS in that year but in such case, delay in granting refund is attributable to the assessee and therefore, interest u/s 244A is not allowable. We therefore, decide this issue against the assessee in both years. Allowability of depreciation on lease transactions - HELD THAT:- As decided in own case that the lease transaction is sham because the assessee on the one hand pays the value of machinery and at the same time receives the equivalent amount as deposit and thus, there is no out flow of fund so as to validly make payment for purchase price. It is seen that no difference in facts is pointed out in the present year or in any other year. When, the lease transaction itself is sham as per the earlier tribunal order in assessee s own case under similar facts, no other argument or judgment cited in the written submissions reproduced above is required to be considered. Hence, we decline to interfere in the orders of the lower authorities on this issue in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of CIT (A), Mangalore dated 23.10.2017 for A. Ys. 2006-07 to 2008-09 & 2011-12 to 2012-13 in proceedings u/s 143 (3). All these appeals were heard together and are being disposed of by way of this common order for the sake of convenience. 2. The grounds raised by the assessee in these seventeen appeals are as under:- (a) ITA No. 239/Bang/2018, A. Y. 1995-96:- "1) The order of the C.I.T (A) Mangalore (hereinafter referred to as the Appellate Officer) so far as it is against the appellant is against law, facts of the case and weight of evidences. 2) a) The learned appellate officer has erred in ignoring the CBDT circular No 2 of 2001 which has specifically issued to the department not to follow the directions issued by the Institute of Chartered Accounts of India to its members and allow the depreciation. b) The learned appellate officer has erred in overlooking the decision of the jurisdictional ITAT in allowing the depreciation in the case of Manipal Finance Ltd vs J.C.I.T(Asst) Special Range Mangalore (ITA No 294(Bang)/99, 344 & 644 (Bang)/99 which has been accepted by the department. c) Hence the depreciation as claimed be allowed and deduction now allowed for p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in the case of Manipal Finance Ltd vs J.C.I.T(Asst) Special Range Mangalore (ITA No 294(Bang)/99, 344 & 644 (Bang)/99 which has been accepted by the department. c) Hence the depreciation as claimed be allowed and deduction now allowed for payment towards capital portion be disallowed. 3) The learned appellate officer has erred in confirming the disallowance of depreciation on the assets leased to certain educational institutions by AO based on the decision of the High Court of Karnataka in the case of ICDS vs CIT Karnataka. Hence the depreciation as claimed be allowed. 4) The appellant prays it may be permitted to raise further ground the time of hearing of the appeal." (d) ITA No. 242/Bang/2018, A. Y. 1998-99 :- "1. The order of the Commissioner of Income Tax (Appeals) Mangalore (hereinafter after referred to as the Appellate Officer) so far as it is against the appellant is against law, facts of the case and weights of evidences. 2. Learned Appellate Officer has erred in ignoring the decision of the jurisdictional ITAT in allowing depreciation on leased assets in the case of Manipal Finance ltd vs J.C.I.T (Asst) Special Range Mangalore which has been accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dge its mistake" and not agitate for "what is not due to him" 3. The appellant prays that it may be permitted to raise additional grounds of appeal at the time of hearing of this appeal." (g) ITA No. 245/Bang/2018, A. Y. 2000-01 :- "1. The order of the commissioner of Income tax (Appeal) Mangalore (hereinafter referred as the Appellate Officer) so far as it is against the appellant, is against law, facts of the case and weight of evidences. 2. a) The learned Appellate Officer has erred in ignoring the decision of the Income Tax Appellate Tribunal Bangalore in the case of Manipal Finance Ltd vs. J.C.I.T (Asst) Special Range Mangalore on leased assets based on CBDT circular No2/2001 which has been accepted by department and confirming the action of Assessing Officer, in disallowing the depreciation given on lease for earlier year for this year also. b) The Appellate officer has erred is concluding the Apex Court's decision in the case of ICDS Ltd vs. C.I.T (Mysore) applicable only to motor vehicles and not to other assets given on lease. 3. The appellant prays it may be allowed to raise further grounds of appeal at the time of hearing of the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer has erred in concluding the Apex court's decision in the case of ICDS Ltd vs C.I.T Mysore applicable only to motor vehicles given on lease. 3. The learned Appellate officer has erred in holding that delay in getting refund from department is due to appellant not filing TDS certificate on time "as such should be gracious to acknowledge its mistake and not agitate for what is not due to him" when the facts are quite to the contrary. 4. The appellant prays it may be allowed to raise additional grounds of appeal at the time of hearing of this appeal." (k) ITA No. 249/Bang/2018, A. Y. 2004-05 :- "1. The order of the commissioner of Income tax (Appeal) Mangalore (hereinafter referred as the Appellate Officer) so far as it is against the appellant, is against law, facts of the case and weight of evidences. 2. a) The learned Appellate Officer has erred in ignoring the decision of the Income Tax Appellate Tribunal Bangalore in the case of Manipal Finance Ltd vs. J.C.I.T (Asst) Special Range Mangalore on leased assets based on CBDT circular No2/2001 which has been accepted by department and confirming the action of the Assessing Officer in disallowing deprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer. 5. The appellant prays that it may be permitted to raise further grounds of appeal at the time of hearing of this appeal." (n) ITA No. 252/Bang/2018, A. Y. 2007-08 :- "1. The order of the Commissioner of Income Tax (A) Mangalore so far as it is against appellant is against law, facts of the case and weight of evidences. 2. The learned Appellate officer has erred in concluding the appellant is not entitled to claim depreciation on assets leased out to customers as the lease is a financial lease in spite of the CBDT circular No 2/2001 and the decision of ITAT Bangalore in the case of Manipal Finance Ltd vs. J.C.I.T (Asst) Special Range Mangalore which has been accepted by the department. 3. The learned Appellate Officer has erred in concluding the decision of Apex Court in case of ICDS ltd vs C.I.T (Mysore) is only applicable for motor vehicles given on lease and not for other goods given lease. 4. The appellate officer has erred in ignoring the decision of the High Court of Karnataka in the case of Manipal Finance Corporation Ltd that the amount forgone by deposit holders is a capital receipt not taxable to income tax and confirming the addition now made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Corporation Ltd that the amount forgone by deposit holders is a capital receipt not taxable to income tax and confirming the addition now made by assessing officer. 5. The appellant prays that it may be permitted to raise further grounds of appeal at the time of hearing of this appeal." (q) ITA No. 255/Bang/2018, A. Y. 2012-13:- "1. The order of the Commissioner of Income Tax (A) Mangalore so far as it is against appellant is against law, facts of the case and weight of evidences. 2. The leased Appellate officer has erred in concluding the appellant is not entitled to claim depreciation on assets leased out to customers as the lease is a financial lease in spite of the CBDT circular No 2/2001 and the decision of ITAT Bangalore in the case of Manipal Finance Ltd vs. J.C.I.T (Asst) Special Range Mangalore which has been accepted by the department. 3. The learned Appellate Officer has erred in concluding the decision of Apex Court in case of ICDS ltd vs C.I.T (Mysore) is only applicable for motor vehicles given on lease and not for other goods given lease. 4. The appellate officer has erred in ignoring the decision of the High Court of Karnataka in the case of Man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this, the assessee has not brought on record the relevant lease agreements to controvert this finding of the AO and therefore, the bench has no option but to give due weightage to this finding of the AO because no material has been brought on record by the assessee to dislodge this finding of the AO. In reply, learned AR of the assessee had nothing specific to say although, he made some arguments and reliance was placed by him on the judgment of Hon'ble Madras High Court rendered in the case of First Leasing Co. of India Ltd. Vs. ACIT as reported in356 ITR 128, copy available on pages 85 to 104 of the paper book. It was also submitted that extract of CBDT circular No. 762 dated 18.02.1998 is available on pages 83 to 84 of the paper book and it should be considered for deciding this issue. Written submissions are also available in the paper book on pages (i) to (xviii). The same are reproduced herein below: - "Submission on Issues relating to the common grounds of appeal being claim of depreciation on Assets given under Lease GROUNDS a) The learned Appellate Officer has erred in concluding the appellant is not entitled to claim depreciation on assets leased out to custome ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very. 2. The written submissions made before the CIT-A are separately given Si No 12 (Page 127 to 136 of the paper book). The submissions now are to supplement the submissions made before CIT-A and put the issues in perspective. 3. The Appellant is a finance company which was classified under the then NBFC Directions of RBI as a Leasing and Hire Purchase Finance Company, the classification based on the portfolio of financing contracts. As a Leasing and Hire Purchase Finance Company it could collect deposits from the public over 10 times its net worth of, where as a "loan company" it could have only collected deposits from the public only up to one time the net worth. The financing through contracts structured as hire purchase or lease contracts was as per the then policy of Government of India conveyed through RBI directions which believed that hire purchase and lease finance would promote the creation of productive assets, as against loan finance. The Appellant never dealt with any of the movables financed either under Hire Purchase or Lease. Under both these contracts the customer would identify the movable of his choice and purchase the same in the name of " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts or Loan balance in case of Loan and income component in the "Hire Charges" or "EMI" was taken to its Profit & Loss Account. In the case of Contracts of Lease, the monthly lease rental was taken to the Profit and Loss as income. The charge against that income came through depreciation. The Customers on the other hand would classify the movables obtained on hire purchase finance or loan under Fixed Assets in their Balance Sheets and claim depreciation on the same in the IT Computation. In the case of lease, the entire lease rent was charged to the P&L. 6. This treatment in the Income Tax Return of Hire Purchase and Lease transactions was being accepted by the Department. The Assessing Officers in the assessment would rely on the accounts of the assessees and unless the transactions was a sham, asset was nonexistent, the computations were not disturbed. The concept of Finance Lease and Operating Lease did not entire the accounting lexicon till 1988 by the issue of the "Guidance Note on Accounting for Leases" which was revised in 1995 and withdrawn after Accounting Standard (AS)- 19 leases became mandatory with effect from 1-4-2001. The Revised Guida ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed assets and claim depreciation. 8. After the introduction of the Guidance Note the leasing contracts of the Appellant were classified as Finance Leases as required by the Guidance Note. However in the initial years after introduction of the Guidance Note the claim of the Appellant for depreciation in respect of leased assets was not denied or disturbed. However, in Asst Year 1992-93, 1992-94 and 1994-95 the AO questioned certain sale and lease back transactions on the ground that these transactions were sham, assets bought were having Nil wdv and purpose was to reduce the taxable income and disallowed depreciation on 5 sale and lease back transactions. Out of 5, 4 were upheld by the CIT-A. However, he allowed deduction for capital recovery on the same. The one Sale and Lease back transaction with Kongrar Clothes and Synthetics Limited was allowed by CIT-A and not contested by the Department before the ITAT. In Appellant's appeal for AY 1992-93, 1993-94 and 1994-95 the disallowance of depreciation on 4 transactions was upheld (ITA No 17,48 & 87/Bang/2000) vide its order dated October 6th 2003.. Based on certain documentation in one case i.e. JL Morrison & Co the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d vs ACIT [2013] 38 Taxmann.com 213 where similar reasons cited by the Department and Tribunal for holding the SLB transactions as sham were dismissed by the High court. As appellant has not gone on appeal against these orders the AO has disallowed the depreciation on these assets leased in earlier year in the assessments for AY 1995-96,1996-97 and 1997-98 and subsequent years and allowed deduction for capital recovery. 9. In the case of Manipal Finance Corporation Limited in ITAs No 249/Bang/99 and 344&644/Bang/2000 for Assessment Years 1995- 96,199697 and 1997-98 passed on 16th July 2004, ( decision enclosed in pages 31 to 52 of the paper book), the Honourable Bangalore Tribunal has allowed the claim of depreciation on sale and lease back transactions, distinguishing the order for AY 1992-93 to 1994-95 passed by it in the case of the Appellant. Of the 4 transactions which came up for adjudication, one was not a SLB and 3 were SLBs. In this order the Tribunal observed that AO and CIT-A have not questioned the genuineness of the transactions as was the case in Appellant's case for AY 1992-93 to 1994-95. It was found that in the case of Manipal Finance Corporation Limited: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant was concerned it was a transaction of lease finance. (Paragraph 7) and rights and obligations had to be worked out accordingly. Para 8, 9 and 10 discusses the nature of finance lease and the rights of the lessee. d. The dispute was primarily relating to the amount owed by ABB to terminate the hypothecation. (Para 6). e. As appellant was ready to pay the amount still found to be due and payable it was not considered necessary for the Court to adjudicate on the applicability of the provisions of Subsection (2) of Section 3 of the Special Court Act. f. The order of the Hon'ble Apex Court finally was to allow the petition and set aside the order of the Special Court directing the petitioner to hand over possession of the 56 cars. g. There is no discussion in the case on taxation of finance leases as observed in paragraph 4 of the Honourable Tribunal's order. However, the Honourable Apex Court has clearly observed in fag end of paragraph 10 as under: "There are certain tax benefits which by styling the transaction like a financial lease become available to the lessor (financier) and the lessee (borrower) both. The accounting standards have been dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been making allegations of sham transactions only to disallow depreciation. This approach by AO has been commented upon by the Hon'ble Tribunal in the case of Manipal Finance Corporation Ltd (Supra). In the case of Manipal Finance Corporation ltd the asscssee's contention that Sale cum Lease Back is not illegal was accepted. He has also not co-ordinated with the AO of the Lessees to ensure there is no double disallowance of depreciation.. 13. The Departmental instructions do not make distinction between Finance Lease and Operating Lease and there are no instructions to disallow depreciation in the hands of Lessors in the case of Finance Leases. They only instruct for disallowance of depreciation where the asset does not exist or the moneys come back to the lessor through hawala transactions. It has been further clarified by the CBDT in circular No 2 /2001 that AS-19 leases (notified to come into effect from 1-4-2001) which requires capitalisation of assets in the hands of the lessees, by itself will not have any effect on the allowance of depreciation under the Act. The amendment made by Finance Act 1996 in Section 43 for insertion of Explanation 4A to the definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Finance Corporation Limited vs ACIT Circle-1 Udupi [2014] 49 Taxmann.com 353 (Karnataka) . In the case of Sale and Lease back with related parties the decision of the Hon'ble Supreme Court in Pr Commissioner of Income Tax, City-1 vs Bombay Burmah Trading Corporation Ltd [2018] 256 Taxman 393 dismissed the SLP of the Department both on the grounds of delay as well as merits (see pages 119 to 120 of the paper book). Hence depreciation now disallowed be allowed. ANNEXURE-1 MAHARASHTRA APEX CORPORATION LIMITED PARTICULARS OF LEASE CONTRACTS WHERE DEPRECIATION DISALLOWED BY AO Contracts of Asst Year Lessee 1992-93 to 1994-95 J L Morrison India Ltd Sowparnika Yarn & Fabrics Limited Mysore Polymers VXL Whether Sale & Lease ba Yes Yes Yes Yes Contracts of Asst Year 1995- 96 Lessee Deve Sugars Ltd Gannon Dunkerly & Co Ltd Emtex Industries Ltd Sharvani Pharmaceu ticals Shimoga Steels Kedia Castle Douglas Ltd Educational Institutions Whether Sale & Lease ba Yes Yes Yes Yes Yes No No Cost 51,44,000 24,99,960 50,03,000 23,00,000 2,25,00,000 55,83,357 6,97,678 Total Payments 84 84,00,000 29,69,953 78,74,725 33,49,260 2,82,82,500 71,35,52 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arded as one of purchase by instalments and no deduction in respect of "hire" should be made. Depreciation should be allowed to the lessee on the entire purchase price as per the agreement. 3. Where the terms of the agreement provide that the equipment shall eventually become the property of the hirer or confer on the hirer an option to purchase the equipment, the transaction should be regarded as one of hire purchase. In such cases the periodical payments made by the hirer should for tax purposes be regarded as made up of : a. Consideration for hire, to be allowed as a deduction in the assessment, and b. payment on account of purchase to be treated as capital outlay, depreciation being allowed to the lessee on the initial value (i.e., the amount for which the hired subject would have been sold for cash at the date of agreement). The allowance to be made in respect of hire should be the difference between the aggregate amount of the periodical payments under the agreement and the initial value (as described above), the amount of this allowance being spread evenly over the term of the agreement. If, however, the agreement was terminated either by the outright p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and thus, there is no out flow of fund so as to validly make payment for purchase price. In A. Y. 1995-96 which is before us also, it is noted by the AO on page 20 of the assessment order for A. Y. 1995-96 that cost of the leased asset is ₹ 1.99 Crores and the lessee had to pay security deposit of ₹ 1.7 Crores in addition to lease rental of ₹ 1.69 Crores in the total lease period of 96 months. It is seen that the facts in this year are similar and no difference in facts is pointed out in any other year. When, the lease transaction itself is sham as per the earlier tribunal order in assessee's own case under similar facts, no other argument or judgment cited in the written submissions reproduced above is required to be considered. Hence, we decline to interfere in the orders of the lower authorities on this issue in all years. 6. It was submitted by the learned AR of the assessee that Ground No. 3 in A. Y. 1996-97 in ITA No. 240/Bang/2018 and in A. Y. 1997-98 in ITA No. 241/Bang/2018 is regarding disallowance of Depreciation on the assets leased to certain Educational Institutions on the basis of a decision of Hon'ble Karnataka High Court rendered in the case of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase on hand is not an alternative chosen by the assessee but a mechanism devised to enable a non-tax paying entity to acquire an asset and also to claim depreciation on it. It cannot be said that the transactions are entered into with the effect of minimising the subject's burden of tax, but only in order to facilitate the benefit as aforesaid. 20. It does not require a vivid imagination to discern the obvious in these transactions there is no warrant to give chase to a will-o'- the-wisp. 21. The finding that the assessee is not entitled to claim depreciation on the assets is not on the basis of the underlying motive but the direct result of the manner these transactions are engineered. 5.7.3 The facts in this case being identical, taking into consideration the above Jurisdictional High Court judgement, the action of the AO in disallowing the depreciation in the case of assets leased to Educational Institutions is hereby upheld. The ground no.5 raised on this issue is rejected." 8. We find that the decision of the AO in the assessment orders and of CIT (A) are by following the judgment of Hon'ble Karnataka High Court rendered in the case of ICDS vs. CIT (Supra). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the lease agreement with M/s Mohan Mekin Ltd. Is available on pages 1 to 42 of a separate paper book filed for ITA No. 242/Bang/2018 and similarly, lease agreement with M/s Khatima Fibers Ltd. Is available on pages 43 to 78 of the same paper book. It was submitted that this is a case of lease transaction and not a finance transaction. Learned DR of the revenue supported the orders of the lower authorities. 10. We have considered the rival submissions. We find that in Para 5.4.6 of his order, it is noted by CIT (A) that in respect of transaction with M/s Mohan Mekin Ltd., in the covering letter dated 11.02.1998 to the lease agreement between the assessee and this party, it is stated that it is a lease finance of ₹ 19.98 lacs and the cost of purchase is ₹ 22,25,057/-. Similarly, in Para 5.4.7 of his order, it is noted by CIT (A) that in respect of transaction with M/s Khatima Fibers Ltd., as per two invoices dated 18.12.1997 and 27.12.1997 each of ₹ 25,50,975/-, total cost is ₹ 51,01,950/- and the lessee has paid ₹ 5.46 Lacs being excise duty portion to the suppliers directly and only the balance amount of ₹ 45,55,950/- was financed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se two appeals, separate written submissions are filed by the learned AR of the assessee on 08.08.2019 as per the direction of the bench. The same is reproduced herein below:- "Ground: The learned Appellate Officer has erred in upholding the action of the Assessing Officer in not granting interest u/s 244A on the refund due as per order of ITAT in an order passed u/s 143(3) r.w.s 254 dated 31.12.2010 for the assessment year under appeal, holding the "assessee should be gracious to acknowledge its mistake" and not agitate for "what is not due to him" 1. a) The deduction of income tax at source under chapter XVII B of the Income Tax Act were made by various entities who pay assessee, rent, interest, services, etc. Under Income Tax (Sixth Amendment) Rules 2009 [310 ITR st 17] inserted Rule 37BA by which credit for the tax deducted is now given on the basis of information given by deductor to income tax authority. Earlier, the credit for the same was given on the basis of TDS certificates (Form 16A) received from deductors and furnished by an assessee to the Income Tax Department. b) The assessee used to give credit to the deductors (customers) only on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed u/s 154 have been rejected for certain assessment years and the assessee has come in appeal against the said orders. As per the order u/s 154, the A.O. has refused to give credit for TDS on some pretext or other. This could also be due to the adverse remarks of the C&AG against the Department granting interest on refunds when there was no provision in the budget for granting such interest. The CIT-A also refused to give relief stating that non-credit of TDS was not appealable u/s 246A(1)(a). 3. This non-credit of TDS was dealt with by the ITAT in respect of claim for credit of such TDS in its orders in ITA No 346/Bang/2008 and 347/Bang/2008 for Asst year 1999-2000 and 2000-01 and the Tribunal directed the granting of the same after verification. Said common order is enclosed ( Annexure-2). The AO in his original orders u/s 254 rws 143(3) for Asst year 1999-2000 and 2000-01 giving effect to the ITAT order did not grant credit for the TDS. Subsequently on application by appellant he passed orders under Section 154 for both assessment years and granted the credit for TDS after due verification. However, he has not granted interest under Section 244A on the ground that the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee that corresponding income was offered to tax in the same year in which TDS credit is claimed and the AO wrongly disallowed the claim of TDS credit. This is admitted position of fact that the assessee claimed TDS credit in A. Y. 2001-02 and offered corresponding income for tax in an earlier year and therefore, the delay in granting of refund is attributable to the assessee and as a consequence, interest u/s 244A is not allowable. In our considered opinion, if the TDS credit is claimed in a year in which corresponding income is not offered to tax, the AO has to disallow such claim of TDS credit in that year and it is not practically possible for the AO to allow such credit in the correct year in which corresponding income is offered to tax and it is for the assessee to point out the year in which such income is offered to tax and then the AO can allow credit of TDS in that year but in such case, delay in granting refund is attributable to the assessee and therefore, interest u/s 244A is not allowable. We therefore, decide this issue against the assessee in both years. 14. Regarding ITA No. 245/Bang/2018 for A. Y. 2000-2001 and in ITA Nos. 247 to 255/Bang/2018 for A. Ys. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled for Asst Year 2006-07, 2007-08 and 2008-09 that the amounts forfeited by the Depositors in terms of Scheme approved by the High Court of Karnataka was not income subject to tax. The A.O. has not accepted the same and following additions have been made for each of the assessment years under appeal : AY Amount 2006-07 34,27,268 2007-08 1,87,18,276 2008-09 3,77,52,631 The appellant subsequently changed its stand and from Asst Year 2009-10, included the forfeited deposits as income. Said return for A Y 2009-10 and 2010-11 have been accepted u/s 143(1). Original stand of the appellant that forfeiture of portion of deposits by depositors was not income, was upheld by the Bangalore Tribunal in the case of both ICDS Ltd ( in the case of debentures) and Manipal Finance Corporation Ltd and the orders of the Tribunal was confirmed by the High Court in CIT vs Industrial Credit and Development Syndicate Ltd [2006] 285 ITR 310W (Kar) and Commissioner of Income Tax vs Manipal Finance Corporation Ltd [2015] 53 Taxmann.com 313 (Karnataka). Accordingly, the appellant pressed its grounds before CIT-A for allowing its ground of appeal that forfeited portion of deposit is not income sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e substantial questions of law is answered in favour of the assessee and against the revenue." Accordingly, it is clear from the above observations of the High Court that the amount of deposit foregone can never be income, notwithstanding any change in the stand of the Appellant in subsequent year. Accordingly, the ground be allowed as prayed for. The SLP filed by the Department against this order has been dismissed. B. Ground (For Asst Year 2008-09) "The learned CIT(A) has erred is not allowing the claim of the appellant that MAT paid for A.Y 1997-98,1998-99,1999-00 and 2000- 01 should be deducted before determining the tax payable on regular basis or under MAT." This ground has been raised as a matter of abundant precaution. The Honourable Tribunal may issue direction to AO to verify and allow eligible MAT Credit (if any)." 16. We find that as per Ground No. 4 in A. Y. 2006-07, ITA No. 251/Bang/2018 and in A. Y. 2007-08, ITA No. 252/Bang/2018 and as per Ground No. 5 in A. Y. 2008-09, ITA No. 253/Bang/2018, the assessee has raised this issue that amounts forfeited by the depositors in terms of the scheme approved by the High Court of Karnataka cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The grounds on the issue are rejected." 17. As per these paras reproduced from the order of CIT (A), it is seen that only objection of CIT (A) for not following the judgment of Hon'ble Karnataka High Court rendered in the case of Manipal Finance Corporation Ltd., 228 Taxman 271 is this that in the present case, the assessee has treated the difference as revenue receipt but in that case, the assessee treated it as capital receipt. This is by now a settled position of law that treatment in the books by the assessee is not decisive. This is also a settled position of law that taxability of a receipt cannot be on this basis that the assessee offered it for taxation. If a receipt is a capital receipt as held by Hon'ble Karnataka High Court in the judgment rendered in the case of Manipal (Supra), it cannot be taxed merely because the assessee treated it as revenue receipt or offered it for taxation. No other difference in fact is noted by CIT (A). Learned DR of the revenue also could not point out any other difference in facts. Hence, respectfully following this judgment of Hon'ble Karnataka High court, we decide this issue in favour of the assessee. 18. Regarding the next issue in A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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