Duruva Finance Pvt. Ltd., CHENNAI V. DCIT, CHENNAI

ITA 1712/CHNY/2002

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7842 (ITAT-CHENNAI)
• Duration Of Justice: 14 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-01-2017
• Assessment Year: 1997-1998
• Appeal Filed On: 31-10-2002
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAHADEVAN JCIT
• Assessee Lawyers: G BASKAR
• Keywords: Depreciation
• Section: 37

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , .. ' #$, & '( BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NOS.1712 & 1713/MDS/2002 * +* / ASSESSMENT YEARS : 1997-98 & 1998-99 M/S DURUVA FINANCE PVT. LTD., C/O ANITA SUMANTH, D. ANAND, N. MUTHUKUMAR & VIKRAM RAMAKRISHNAN, ADVOCATES, NO.51, NUNGAMBAKKAM HIGH RD., CHENNAI - 600 034. PAN : 37-D V. THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(2), CHENNAI. (-./ APPELLANT) (/0-./ RESPONDENT) -. 1 2 / APPELLANT BY : SHRI G. BASKAR, ADVOCATE /0-. 1 2 / RESPONDENT BY : SHRI B. SAHADEVAN, JCIT ' 1 3& / DATE OF HEARING : 03.01.2017 45+ 1 3& / DATE OF PRONOUNCEMENT : 31.01.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AG AINST THE COMMON ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS) III, CHENNAI, DATED 09.08.2002 AND PERTAIN TO ASSESSMENT YEARS 1997- 98 AND 1998-99. IN FACT, BOTH THE APPEALS OF THE AS SESSEE WERE 2 I.T.A. NOS.1712 & 1713/MDS/02 DISPOSED OF EARLIER BY THIS TRIBUNAL BY AN ORDER DA TED 31.03.2005. ON THE APPEALS FILED BY THE ASSESSEE BEFORE THE HIG H COURT, THE HIGH COURT HAS REMITTED BACK THE APPEALS TO THE FIL E OF THIS TRIBUNAL WITH A DIRECTION TO CONSIDER THE MATTER AFRESH BY P ROVIDING AN OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE THE CAS E AND ALSO IN THE LIGHT OF JUDGMENT OF DELHI HIGH COURT AND MADRAS HI GH COURT REFERRED IN THE HIGH COURT JUDGMENT AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW. AN OPTION WAS GIVEN TO THE TRIBUNAL TO REMAND BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER IF IT IS NECESSARY TO DO SO. THEREFORE, THE APPEALS WERE FI XED FOR FINAL DISPOSAL AS PER THE DIRECTION OF THE HIGH COURT. 2. SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE LEASE EQUALIZATION CHARGE IS NOTHING BUT M ETHOD OF RECALIBRATING THE DEPRECIATION CLAIMED BY THE ASSES SEE DURING THE ACCOUNTING PERIOD AS PER THE METHOD OF ACCOUNTING E MPLOYED BY THE ASSESSEE. LEASE EQUALIZATION CHARGE, ACCORDING TO THE LD. COUNSEL, DEBITED TO PROFIT & LOSS ACCOUNT CANNOT BE DISALLOW ED WHILE COMPUTING THE TAXABLE INCOME OF THE ASSESSEE. THE HIGH COURT, AFTER REFERRING TO THE JUDGMENT OF APEX COURT IN SO UTHERN TECHNOLOGIES LTD. V. JCIT (2010) 320 ITR 577, FOUND THAT THE 3 I.T.A. NOS.1712 & 1713/MDS/02 MADRAS HIGH COURT IN TVS FINANCE AND SERVICES LTD. V. JCIT (2009) 318 ITR 435 AND DELHI HIGH COURT IN CIT V. VIRTUAL SOFT SYSTEMS LTD. (2012) 341 ITR 393 FOUND THAT THESE ARE ALL AL LOWABLE EXPENDITURE UNDER SECTION 37 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). ACCORDING TO THE LD. COUNSEL, SINCE TH E JUDGMENTS WERE NOT CONSIDERED EITHER BY THE ASSESSING OFFICER OR B Y THE CIT(APPEALS), HE HAS NO OBJECTION IN REMITTING THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION AS DIR ECTED BY THE HIGH COURT. 3. WE HAVE HEARD SHRI B. SAHADEVAN, THE LD. DEPARTM ENTAL REPRESENTATIVE, ALSO. THE LD. D.R. HAS VERY FAIRLY SUBMITTED THAT THE LEASE EQUALIZATION CHARGE WHETHER DEBITED TO TH E PROFIT & LOSS ACCOUNT OR NOT? NEEDS TO BE VERIFIED, THEREFORE, TH E MATTER MAY BE REMITTED BACK FOR RECONSIDERATION. 4. WE HAVE CONSIDERED THE SUBMISSIONS ON EITHER SID E AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WHETHER THE LEASE EQUALIZATION CHARGE IS ALLOWABLE AS REVENUE E XPENDITURE UNDER SECTION 37 OF THE ACT, AS SUBMITTED BY THE AS SESSEE, OR NOT NEEDS TO BE EXAMINED. THE ASSESSEE CLAIMS THAT AS PER ACCOUNTING SYSTEM EMPLOYED BY IT, LEASE EQUALIZATION CHARGE IS NOTHING BUT 4 I.T.A. NOS.1712 & 1713/MDS/02 RECALIBRATING THE DEPRECIATION CLAIMED BY THE ASSES SEE DURING THE ACCOUNTING PERIOD. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE FACTUAL MATTER NEEDS TO BE VERIFIE D REGARDING THE METHOD OF ACCOUNTING EMPLOYED BY THE ASSESSEE. ACC ORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND T HE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER AFRESH IN THE L IGHT OF THE DIRECTION OF THE HIGH COURT AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 5. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 31 ST JANUARY, 2017 AT CHENNAI. SD/- SD/- ( . . ' #$ ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) & / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 31 ST JANUARY, 2017. KRI. 1 /3#8 98+3 /COPY TO: 1. -. /APPELLANT 2. /0-. /RESPONDENT 3. ' :3 () /CIT(A)-III, CHENNAI 4. ' :3 /CIT, CHENNAI-1, CHENNAI 5. 8; /3 /DR 6. * < /GF.