MITCO MANAGEMENT SERVICES PVT.LTD., MUMBAI V. I.T.O.1(2)(3), MUMBAI

ITA 2950/MUM/2009

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1810 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: I
• Next Hearing Date: 26-10-2015
• Assessment Year: 1997-1998
• Appeal Filed On: 07-05-2009
• Court: TRIBUNAL
• Department Lawyers: B D NAIK
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice
• Section: 32

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER I.T.A. NO. 2950/M/2009 (ASSESSMENT YEAR : 1997 - 1998 ) MITCO MANAGEMENT SERVICES PVT LTD., 414, REWA CHAMBERS, SIR V.T. MARG, NEW MARINE LINES, MUMBAI 400 020. / VS. ITO, 1(2)(3), AAYAKAR BHAVAN, 5 TH FLOOR, MUMBAI. ./ PAN : AACCM1587B ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI NITESH JOSHI / RESPONDENT BY : SHRI B.D. NAIK, DR / DATE OF HEARING : 05.11 .2015 / DATE OF PRONOUNCEMENT : 16 .12.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 7.5.2009 IS AGAINST THE ORDER OF THE CIT (A) - 1, MUMBAI DATED 19.2.2009 FOR THE ASSESSMENT YEAR 1997 - 98. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE CIT (A) ERRED IN UPHOLDING THE DISA LLOWANCE OF THE APPELLANTS CLAIM FOR DEPRECIATION OF RS. 15,26,800/ - ON AUTOMATIC LOAD MONITORING SYSTEM. 2. THE CIT (A) ERRED IN UPHOLDING THE TREATMENT OF LEASE TRANSACTION AS A FINANCE LEASE AND ALSO THEREBY DENYING THE APPELLANTS CLAIM FOR DEPRECIATI ON THEREON. 3. THE CIT (A) ERRED IN MAKING OBSERVATIONS (A) THAT THE AUTOMATIC LOAD MONITORING SYSTEM WAS NOT MANUFACTURED, DELIVERED OR USED TILL 31 ST MARCH, 1997. (B) THAT THE ENTIRE CLAIM OF PURCHASE AND LEASE BACK IS JUST A CLAIM ON PAPER (C) THAT THERE IS NO GENUINE LEASE OF ASSETS AND ACCORDINGLY DEPRECIATION CANNOT BE ALLOWED. 2. VIDE LETTER DATED 17.1.2013 ASSESSEE ALSO RAISED AN ADDITIONAL GROUND AND THE SAME READS AS UNDER: - IN THE ALTERNATIVE AND WITHOUT PREJUDICE TO THE ABOVE, IF THE REVENUE IS OF THE VIEW THAT THE LEASE TRANSACTION ENTERED IN TO BY THE APPELLANT WITH ASIAN 2 ELECTRONICS LTD IS IN THE NATURE OF THE FINANCE TRANSACTION , THEN, THE LEASE RENT SHOULD BE ASSESSED TO TAX OR IN THE ALTERNATIVE , ONLY THE INTEREST COMPONENT IN TH E LEASE RENTAL. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SALES ORGANIZER FOR AMBUJA CEMENT / GUJARAT AMBUJA CEMENT. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 5,01,77 0/ - . IN THE FIRST ROUND OF THE ASSESSMENT PROCEEDINGS, AO DISALLOWED THE ASSESSEES CLAIM OF DEPRECIATION ON AUTOMATIC LOAD MONITORING SYSTEM UNDER SECTION 32 OF THE ACT. IN THE SECOND ROUND OF THE PROCEEDINGS, AO CONFIRMED THE EARLIER DISALLOWANCE OF DE PRECIATION. AGGRIEVED WITH THE SAID DECISION OF THE AO, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. ON APPEAL, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) DISMISSED THE APPEAL. AGAIN AGGRIEVED WITH THE SAID DECISION OF THE CIT (A), ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED ORIGINAL GROUNDS AS WELL AS ADDITIONAL GROUND. 4. DURING THE PROCEEDINGS BEFORE US, A T THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE GROUNDS AND MENTIONED THAT THE ISSUE RAISED IN THE GROUNDS RELATES TO THE TAXABILITY OF VARIOUS ASPECTS OF LEASE OF THE ASSETS. MENTIONING THE ASPECTS OF FINAL LEASE AND OPERATING LEASE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE NATURE OF L EASE IS REQUIRED TO BE FRESHLY ADJUDICATED IN THE LIGHT OF THE RECENTLY PRONOUNCED JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF M/S. I.C.D.S. LTD VS. CIT IN CIVIL APPEAL NO.3282 OF 2008, DATED 14 TH JANUARY 2013 REPORTED IN 350 ITR 527 . 5. ON PERU SAL OF THE SAID GROUNDS AND AFTER CONSIDERING THE ARGUMENTS OF THE LD COUNSEL FOR THE ASSESSEE AS WELL AS THE LD DR FOR THE REVENUE, AS DISCUSSED IN THE OPEN COURT, THE GROUNDS RAISED BY THE ASSESSEE ARE SET ASIDE TO THE FILE OF THE AO FOR DE NOVO ASSESSME NT ON THE ISSUE RELATING TO THE NATURE OF LEASE OF THE ASSETS . AO IS DIRECTED TO GO STRICTLY WITH THE PRINCIPLES LAID DOWN IN THE SAID JUDGMENT OF THE APEX COURT IN THE CASE OF M/S. I.C.D.S LTD (SUPRA) WHILE ADJUDICATING THE ISSUE UNDER CONSIDERATION. AO SHALL GRANT A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE SET PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 3 6. WITH REFERENCE TO THE ADDITIONAL GROUND, WE FIND IT RELEVANT TO ADMIT THE SAME AND ADJUDICATE IN FAVOUR OF THE ASSESSEE. IT IS UNFAIR THAT ALL THE RECEIPTS RECEIVED BY THE ASSESSEE CONSTITUTES INCOME, WHEN THE LEASE P AYMENTS INCLUDES OF THE CAPITAL , WHICH FALLS IN THE CAPITAL ZONE AND SHOULD BE EXCLUDED. CONSIDERING THE SAME, ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ADMITTED AND ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCE D IN THE OPEN COURT ON 1 6 T H DECEMBER, 2015. S D / - S D / - ( RAM LAL NEGI ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 1 6 /12/2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI