Gujarat Lease Finance Ltd., Ahmedabad V. The Dy.CIT.,Circle-4, Ahmedabad

ITA 825/AHD/2013

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9457 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 21-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Business income; Depreciation; Earning of tax free income
• Section: 43B; 14A

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ I.T.A. NOS. 825, 2534 2535/AHD/2013 2584/AHD/2015 ( / ASSESSMENT YEARS: 2008-09, 2009-10, 2010-11 & 2012- 13) GUJARAT LEASE FINANCE LTD. HASUBHAI CHAMBERS, OPP. TOWN HALL, ELLISBRIDGE, AHMEDABAD- 380006 / VS. DCIT CIRCLE-4, AHMEDABAD ./ . / PAN/GIR NO. : AAA CG8 354 N ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S. N. SOPARKAR, AR / RESPONDENT BY : SHRI S. K. DEV, SR. DR / DATE OF HEARING 24/06/2019 AND 25/06/2019 !'# / DATE OF PRONOUNCEMENT 28/06/2019 $%/ O R D E R PER SUDHANSHU SRIVASTAVA - JM: ALL THE FOUR APPEAL HAVE PREFERRED BY THE ASSESSEE AND INVOLVED IDENTICAL ISSUES. ITA NO. 825/AHD/2013 IS ASSESSEES APPEAL FOR A.Y. 2008-09 AND CHALLENGES THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-8, AHMEDABAD ( HEREINAFTER CALLED CIT (A)) VIDE ORDER DATED 27.12.2012 UPHOL DING CERTAIN ITA NOS.825, 2534 & 2535/AHD/2013 2584/AHD/2015 [GU JARAT LEASE FINANCE LTD. VS. DCIT] A.YS. 2008-09, 2009-10, 2010 -11 & 2012-13 - 2 - DISALLOWANCE/ADDITIONS. ITA NO. 2534/AHD/2013 IS T HE ASSESSEES APPEAL FOR A.Y. 2009-10 AND IS PREFERRED AGAINST THE ORDER DATED 20.08.2013 PASSED BY THE LD. CIT (A)-8 AHMEDABAD. ITA NO. 2535/AHD/2013 IS ASSESSEES APPEAL AGAINST THE ORDER DATED 18.03.2013 PASSED BY THE LD. CIT (A)-8 AND PERTAINS TO A.Y. 2010- 11. ITA NO. 2584/AHD/2013 IS ASSESSEES APPEAL FOR A.Y. 2012-13 AND IS PREFERRED AGAINST ORDER DATED 10.08.2015 PAS SED BY THE LD. CIT (A)-2, AHMEDABAD. FOR THE SAKE OF CONVENIENCE THESE APPEALS ARE BEING DISPOSED BY A COMMON ORDER. 2.0 THE BRIEF FACTS OF THE CASE ARE THAT IN THE PAS T YEARS THE ASSESSEE COMPANY WAS ENGAGED IN LEASING AND FINANCI NG ACTIVITY. ADMITTEDLY IN A.Y. 2008-09 AND THE OTHER YEARS UNDE R APPEAL, THERE WAS NO BUSINESS ACTIVITY AND THERE WAS NO INCOME FR OM THE PRINCIPAL SOURCE OF BUSINESS. FOR A.Y. 2008-09 THE RETURN OF INCOME WAS FILED DECLARING A LOSS OF RS. 2,18,70,903/-. THE CASE WA S SELECTED FOR SCRUTINY AND, THEREAFTER, DURING THE COURSE OF ASSE SSMENT PROCEEDINGS THE ASSESSING OFFICER (AO) NOTED THAT T HE ASSESSEE COMPANY HAD CLAIMED DEPRECIATION OF RS. 2,31,42,720 /-. THE ASSESSEE COMPANY WAS ASKED TO SHOW-CAUSE AS TO WHY THE DEPRECIATION CLAIMED SHOULD NOT BE DISALLOWED BECAU SE THERE WAS NO BUSINESS ACTIVITY AND ALSO IN VIEW OF THE FACT THAT THE ASSETS BELONGING TO THE COMPANY HAD BEEN ASSIGNED TO THE B ANKS AND ITA NOS.825, 2534 & 2535/AHD/2013 2584/AHD/2015 [GU JARAT LEASE FINANCE LTD. VS. DCIT] A.YS. 2008-09, 2009-10, 2010 -11 & 2012-13 - 3 - FURTHER BECAUSE THERE WAS NO INCOME ACCRUING TO THE COMPANY FROM LEASING. IT WAS THE ASSESSEES SUBMISSION BEFORE T HE AO THAT ALTHOUGH THE COMPANY HAD NOT CARRIED OUT ANY FRESH FINANCING ACTIVITY IN THE YEAR UNDER CONSIDERATION DUE TO FIN ANCIAL CONSTRAINTS AND ADVERSE SITUATION BEING FACED BY IT, THE COMPAN Y WAS NOT ENTIRELY CLOSED DOWN AND, THEREFORE, SINCE THE BUSI NESS OF THE COMPANY HAD NOT SHUT DOWN PERMANENTLY, THE ASSESSEE CLAIM OF DEPRECIATION COULD NOT BE DENIED. IT WAS ALSO SUBM ITTED THAT THE ASSETS ON WHICH THE DEPRECIATION HAD BEEN DENIED WE RE NOT TRANSFERRED TO THE BANKS WHICH THEY WERE ASSIGNED A ND THE SAME CONTINUED TO BE UNDER THE OWNERSHIP OF THE ASSESSEE . HOWEVER, THE AO WAS OF THE VIEW THAT SINCE THE ASSESSEE COMPANY HAD NOT CARRIED OUT ANY BUSINESS ACTIVITY AND SINCE THE ASSETS ON W HICH THE DEPRECIATION WAS CLAIMED HAD BEEN ASSIGNED TO A CON SORTIUM OF BANK DEPRECIATION WAS NOT TO BE ALLOWED. THE AO PROCEED ED TO MAKE AN ADDITION OF RS. 23,142,720/- FOR A.Y. 2008-09. THE ASSESSEES APPEAL ON THIS ISSUE BEFORE THE LD. FIRST APPELLATE AUTHORITY WAS DISMISSED. THE ASSESSEE HAD ALSO RAISED AN ALTERNA TE PLEA BEFORE THE LD. CIT(A) IN THIS REGARD THAT DEPRECIATION ON THOS E ASSETS WHICH HAD NOT BEEN LEASED OUT COULD NOT BE REFUSED. IT W AS SUBMITTED BEFORE THE LD. CIT (A) THAT THERE WERE TWO OTHER BL OCKS OF ASSETS NAMELY FURNITURE AND FIXTURES AND COMPUTERS WHI CH WERE PRESENT ITA NOS.825, 2534 & 2535/AHD/2013 2584/AHD/2015 [GU JARAT LEASE FINANCE LTD. VS. DCIT] A.YS. 2008-09, 2009-10, 2010 -11 & 2012-13 - 4 - IN THE BLOCK OF ASSETS APART FROM PLANT AND MACHIN ERY WHICH HAD BEEN LEASED OUT. IT WAS SUBMITTED THAT SINCE THESE TWO BLOCKS OF ASSETS DID NOT HAVE ANY CONNECTION WITH LEASING OUT AND THE SAME WERE STILL BEING USED BY THE ASSESSEE, DEPRECIATION ON THESE BLOCKS COULD NOT BE DISALLOWED. THE LD. CIT (A) DID NOT A LLOW THIS ALTERNATE PLEA OF THE ASSESSEE ALSO. 2.1 IN A.Y. 2009-10 THE ASSESSEE HAD CLAIMED DEPREC IATION OF RS. 81,34,281/- WHICH WAS DISALLOWED BY THE AO ON IDENT ICAL FACTS AND REASONING AND THE ASSESSEES APPEAL BEFORE THE FIRS T APPELLATE AUTHORITY WAS PARTLY ALLOWED BY ACCEPTING THE ASSES SEES ALTERNATE PLEA THAT DEPRECIATION ON ASSETS WHICH HAD NOT BEIN G LEASED OUT SHOULD BE ALLOWED. 2.2 SIMILAR ISSUE RELATED TO DEPRECIATION AROSE IN A.Y. 2010-11 ALSO WHEREIN THE ASSESSEE HAD CLAIMED DEPRECIATION OF RS. 69,55,219/-. THE AO NOTED THAT THE ASSESSEE HAD NO T PROVIDED ANY BREAK UP OF THE DEPRECIATION CHARGE AS CHARGED TO T HE DIFFERENT BLOCKS LIKE PLANT AND MACHINERY FURNITURE AND FI XTURES AND COMPUTERS AND, THEREFORE, PROCEEDED TO DISALLOW T HE ENTIRE AMOUNT OF 69,55,219/-. THE ASSESSEES APPEAL BEFORE THE L D. CIT (A) ON THIS ISSUE WAS AGAIN PARTLY ALLOWED WITH THE LD. CI T(A) DISMISSING THE ASSESSEES CLAIM OF DEPRECIATION ON LEASE OUT A SSETS BUT ITA NOS.825, 2534 & 2535/AHD/2013 2584/AHD/2015 [GU JARAT LEASE FINANCE LTD. VS. DCIT] A.YS. 2008-09, 2009-10, 2010 -11 & 2012-13 - 5 - ACCEPTING THE ALTERNATIVE GROUND OF ALLOWING DEPREC IATION IN RELATION TO ASSETS WHICH WERE NOT LEASED OUT. 2.3 IN A.Y. 2012-13, THE DISALLOWANCE OF DEPRECIATI ON ON IDENTICAL FACTS AMOUNTED TO RS. 43,35,278/- AND ASSESSEES AP PEAL BEFORE THE LD.CIT (A) ON THE ISSUE WAS ALSO PARTLY ALLOWED AS IN EARLIER TWO ASSESSMENT YEARS UNDER APPEAL BY GIVING THE DIRECTI ON THAT THE ASSESSEES CLAIM OF DEPRECIATION IN RESPECT OF FUR NITURE AND FIXTURES AND COMPUTERS WAS TO BE ALLOWED. 2.4 NOW, THE ASSESSEE IS IN APPEAL ALL THESE FOUR Y EARS AND HAS CHALLENGED THE ACTION OF THE LD. CIT (A) IN RESTRIC TING THE ASSESSEES CLAIM OF DEPRECIATION ONLY TO THE EXTENT THE DEPREC IATION OF ASSETS THAT HAD NOT BEEN LEASED OUT BY THE ASSESSEE COMPAN Y. THE ASSESSEE IS ALSO CHALLENGING THE COMPLETE DISALLOWANCE OF DE PRECIATION IN AY 2008-09. 2.5 IN A.Y. 2008-09, IT IS FURTHER SEEN THAT THERE WERE OTHER ADDITIONS TO THE ASSESSEES INCOME I.E. DISALLOWANC E UNDER SEC. 14A AND DISALLOWANCE OF SALES TAX/ENTRY TAX. THESE TWO DISALLOWANCE WERE ALSO UPHELD BY THE LD. CIT (A) AND THE ASSESSE E IS AGITATING BOTH THESE DISALLOWANCES NOW BEFORE US. IN A.Y. 20 09-10 APART FROM THE DEPRECIATION DISALLOWANCE THERE IS A DISAL LOWANCE UNDER SEC. 14A WHICH IS ALSO BEING AGITATED BEFORE US. IN A.Y. 2010-11 ITA NOS.825, 2534 & 2535/AHD/2013 2584/AHD/2015 [GU JARAT LEASE FINANCE LTD. VS. DCIT] A.YS. 2008-09, 2009-10, 2010 -11 & 2012-13 - 6 - THE SOLE ISSUE BEFORE US IS THE ISSUE OF DEPRECIATI ON AND IN A.Y. 2012-13 AGAIN THE MAIN ISSUE PERTAINS TO DEPRECIATI ON AND OTHER DISALLOWANCE BEING CHALLENGED IS THE DISALLOWANCE U NDER SEC. 14A. 3.0 AT THE OUTSET, THE LD. AUTHORISED REPRESENTATIV E (AR), WHILE TAKING UP THE APPEAL FOR A.Y. 2008-09, SUBMITTED TH AT GROUND NO 2 CHALLENGES THE ACTION OF THE LD. CIT (A) IN DISMISS ING THE ASSESSEES GROUND NO. 2 IN THE APPEAL BEFORE HIM AS GENERAL IN NATURE NOT REQUIRING ANY SPECIFIC ADJUDICATION. OUR ATTENTION WAS DRAWN TO GROUND NO. 2 AS CONTAINED IN THE FORM 35 AND IT WAS SUBMITTED THAT IN THIS GROUND THE ASSESSEE HAS CHALLENGED THE ACTI ON OF THE AO IN COMPUTING THE ASSESSEES TOTAL INCOME AT RS. 25,76, 980/- AS AGAINST THE RETURNED BUSINESS LOSS OF RS. 2,18,70,903/- AND , THEREAFTER, SETTING OF BROUGHT FORWARD LOSS OF RS. 25,76,980/- PERTAINING TO A.Y. 2006-07 INSTEAD OF GRANTING CARRY FORWARD OF BUSINE SS LOSS AMOUNTING TO RS. 2,18,70,903. IT WAS SUBMITTED THA T THIS GROUND HAD NOT BEEN ADJUDICATED BY THE LD. CIT (A) AND HAD BEE N SIMPLY DISMISSED BY HIM BY TREATING IT AS GENERAL GROUND R EQUIRING NO SPECIFIC ADJUDICATION. 3.1 WITH RESPECT TO GROUND NO. 3 IT WAS SUBMITTED B Y THE LD.AR THAT DEPRECIATION HAD BEEN INCORRECTLY DISALLOWED B Y THE AO AND THE DISALLOWANCE UPHELD BY THE LD. CIT (A) ON THE GROUN D THAT NO BUSINESS ACTIVITY OF THE ASSESSEE WAS BEING CARRIED OUT. IT WAS ITA NOS.825, 2534 & 2535/AHD/2013 2584/AHD/2015 [GU JARAT LEASE FINANCE LTD. VS. DCIT] A.YS. 2008-09, 2009-10, 2010 -11 & 2012-13 - 7 - SUBMITTED THAT UNDER THE SCHEME OF COMPROMISE AND A RRANGEMENT APPROVED BY THE HONBLE GUJARAT HIGH COURT UNDER SE C. 391 OF THE COMPANIES ACT, 1956, THE RECEIVABLES OF THE ASSESSE E WERE REQUIRED TO BE ASSIGNED TO THE CONSORTIUM OF BANKS AND THE A CTUAL ASSIGNMENT HAD NOT BEEN DONE TILL THE YEAR 2014 WHICH WAS EVID ENT FROM THE DIRECTORS REPORT CONTAINING THE ANNUAL REPORT FOR THE VARIOUS ASSESSMENT YEARS UNDER APPEAL. IT WAS SUBMITTED TH AT DURING THE YEARS UNDER CONSIDERATION THE FINAL ACT OF ASSIGNME NT OF THE CHARGED ASSETS IN FAVOUR OF BANKS WAS YET TO BE EXECUTED AN D, THEREFORE, THE ASSESSEE CONTINUED TO BE THE OWNER OF THE ASSETS. IT WAS ALSO SUBMITTED THAT AS PER THE ORDER OF THE HONBLE HIGH COURT IT WAS THE RECEIVABLES WHICH HAD BEEN ASSIGNED AND NOT THE LEA SED FIXED ASSETS ON WHICH DEPRECIATION HAD BEEN CLAIMED. IT WAS ALS O SUBMITTED THAT, ADMITTEDLY, NO FRESH FINANCING HAD BEEN DONE BY THE COMPANY DURING THE YEARS UNDER CONSIDERATION BUT IT REMAINED A FAC T THAT THE ASSESSEE HAD INCURRED VARIOUS OTHER ADMINISTRATIVE EXPENSES DURING THE YEARS UNDER CONSIDERATION WHICH HAD NOT BEEN DISTURBED BY THE AO. IT WAS SUBMITTED THAT THE ASSESSEE WAS ENTITLED TO FULL CL AIM OF DEPRECIATION FOR ALL THE YEARS UNDER CONSIDERATION. 3.2 IN THE ALTERNATE, IT WAS SUBMITTED THAT THE LD. CIT (A) IN THE FIRST APPELLATE ORDERS FOR A.YS. 2009-10, 2010-11 A ND 2012-13 HAD ACCEPTED THE ASSESSEES PLEA THAT DEPRECIATION ON T HOSE ASSETS WHICH ITA NOS.825, 2534 & 2535/AHD/2013 2584/AHD/2015 [GU JARAT LEASE FINANCE LTD. VS. DCIT] A.YS. 2008-09, 2009-10, 2010 -11 & 2012-13 - 8 - HAD NOT BEEN LEASED OUT SHOULD BE ALLOWED AND, THER EFORE, FOLLOWING THE SAME, SUITABLE DIRECTIONS MAY BE GIVEN FOR THIS YEAR ALSO FOR SIMILAR ALLOWANCE OF CLAIM OF DEPRECIATION. 3.3 FOR A.YS. 2009-10, 2010-11 AND 2012-13 IT WAS S UBMITTED THAT THE ARGUMENTS ON THE ISSUE OF DEPRECIATION REMAINED THE SAME AND FOR THE SAKE OF BREVITY, THE SAME WERE NOT BEING RE PEATED. 3.4 WITH RESPECT TO GROUND NO. 4 IN ASSESSEES APPE AL FOR A.Y. 2008-09 CHALLENGING THE UPHOLDING OF DISALLOWANCE O F RS. 1,00,000/- UNDER SEC. 14A OF THE ACT, THE LD. AR SUBMITTED THA T THE SAME WAS NOT BEING PRESSED DUE TO SMALLNESS OF THE AMOUNT. 3.5 WITH RESPECT TO GROUND NO. 5 CHALLENGING THE AC TION OF THE LD. CIT (A) IN SUSTAINING THE DISALLOWANCE OF RS. 12,31 ,000/- ON ACCOUNT OF SALES TAX/ENTRY TAX DEBITED TO THE PROFI T AND LOSS ACCOUNT, IT WAS SUBMITTED THAT THE SAME WAS AN ITEM OF LOSS AND NOT ITEM OF EXPENDITURE. HE DREW OUT ATTENTION TO OBSERVATION OF THE AO ON PAGE 7 OF THE ASSESSMENT ORDER THAT THIS EXPENDITUR E HAD NEITHER BEEN INCURRED IN THE CURRENT YEAR NOR DID THE SAME PERTAIN TO THE YEAR UNDER CONSIDERATION AND, THEREFORE, THE SAME W AS TO BE DISALLOWED. IT WAS SUBMITTED THAT EARLIER THE ASSES SEE HAD BEEN IN RECEIPT OF A NOTICE BY THE SALES TAX DEPARTMENT TO SUBMIT DETAILS OF SALES AND PURCHASES IN RESPECT OF HIRE PURCHASE TRA NSACTION FOR THE ITA NOS.825, 2534 & 2535/AHD/2013 2584/AHD/2015 [GU JARAT LEASE FINANCE LTD. VS. DCIT] A.YS. 2008-09, 2009-10, 2010 -11 & 2012-13 - 9 - YEARS 1994-95, 1995-96 AND 1996-97 AND THE ASSESSEE COMPANY WAS REQUIRED TO PAY ENTRY TAX ON THE LOCAL PURCHASES. I T WAS SUBMITTED THAT THE ASSESSEE COMPANY HAD PAID THE ENTRY TAX AM OUNTING TO RS. 13,17,601/- TO THE MAHARASHTRA SALES TAX DEPARTMENT AND THE ASSESSEE COMPANY, AT THAT POINT, WAS OF THE OPINION THAT IT WAS NOT LIABLE TO PAY ANY SUCH TAX AND, THEREFORE, THE SAME WAS NOT ROUTED TO THE PROFIT AND LOSS ACCOUNT AND WAS SHOWN UNDER LO ANS AND ADVANCES IN THE BALANCE SHEET SINCE MARCH 1997. B UT, NOW AS THE AMOUNT WAS NOT RECOVERABLE THE SAME WAS WRITTEN OFF IN THE ASSESSMENT YEAR UNDER CONSIDERATION. OUR ATTENTION WAS ALSO DRAWN TO THE BALANCE SHEET WHERE THE AMOUNT WAS SHOWN AS AN ADVANCE. 3.6 WITH RESPECT TO GROUND NO. 2 IN A.Y. 2009-10 PE RTAINING TO DISALLOWANCE OF RS. 5,77,683/- UNDER SEC. 14A OF TH E ACT. IT WAS SUBMITTED THAT SINCE THERE WAS NO EXEMPT INCOME DUR ING THE YEAR UNDER CONSIDERATION, NO DISALLOWANCE UNDER SEC. 14A OF THE ACT COULD BE MADE. 3.7 WITH RESPECT TO GROUND NO. 2 IN AY 12-13 PERTAI NING TO DISALLOWANCE UNDER SEC. 14A OF THE ACT, THE LD. AR SUBMITTED THAT THE SAME WAS NOT BEING PRESSED DUE TO SMALLNESS OF AMOUNT. 4.0 IN RESPONSE, THE LD. SR. DR APPEARING ON BEHALF OF THE DEPARTMENT PLACED EXTENSIVE RELIANCE ON THE FINDING S OF THE LD. CIT ITA NOS.825, 2534 & 2535/AHD/2013 2584/AHD/2015 [GU JARAT LEASE FINANCE LTD. VS. DCIT] A.YS. 2008-09, 2009-10, 2010 -11 & 2012-13 - 10 - (A) /AO AND VEHEMENTLY ARGUED THAT THE DISALLOWANCE /S HAD BEEN RIGHTLY MADE AND THE SAME DID NOT REQUIRE ANY FURTH ER TINKERING. IT WAS PRAYED THAT THE ASSESSEES APPEALS BE DISMISSED . 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PE RUSED THE MATERIAL ON RECORD. WE NOW TAKE UP THE ISSUES BEFOR E US ONE BY ONE. THE FIRST ISSUE FOR CONSIDERATION BEFORE US IS THE ISSUE OF DEPRECIATION AND THE FACTS LEADING TO THE CONTROVER SY ON THIS ISSUE ARE THAT THE ASSESSEE HAD CLAIMED DEPRECIATION DURI NG THE YEARS UNDER CONSIDERATION. HOWEVER, THE AO DISALLOWED TH E ASSESSEES CLAIM OF DEPRECIATION ON THE GROUND THAT THE ASSESS EES BUSINESS WAS NO LONGER IN OPERATION AND IN ABSENCE OF BUSINESS A CTIVITY AND IN VIEW OF THE ASSETS BELONGING TO THE COMPANY HAVING BEEN ASSIGNED TO THE BANK, THERE WAS NO INCOME ACCRUING TO THE ASSES SEE COMPANY FROM LEASING. THE AO HAS OBSERVED THAT SINCE THE A SSETS WERE TO BE ASSIGNED TO THE CONSORTIUM OF BANKS, THE TEST OF OW NERSHIP OF ASSETS WAS NOT FULFILLED WHICH WAS SINE QUA NON FOR CLAIM OF DEPRECIATION. THE AO ALSO PLACED RELIANCE ON THE FACT THAT SINCE THE ASSESSEES BUSINESS WAS NO LONGER IN OPERATION, IT COULD NOT B E SAID THAT THE ASSETS WERE USED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE ASSESSEES APPEAL BEFORE THE LD. CIT (A) FOR A.Y. 2 008-09 ON THE ISSUE WAS DISMISSED COMPLETELY WHEREAS IN THE REMAI NING ASSESSMENT YEARS THE LD. CIT (A) ALLOWED PART RELIE F TO THE ASSESSEE ITA NOS.825, 2534 & 2535/AHD/2013 2584/AHD/2015 [GU JARAT LEASE FINANCE LTD. VS. DCIT] A.YS. 2008-09, 2009-10, 2010 -11 & 2012-13 - 11 - BY DIRECTING THAT DEPRECIATION ON ASSETS WHICH WERE NOT LEASED OUT BY THE ASSESSEE SHOULD BE ALLOWED. BEFORE US, IT H AS BEEN SUBMITTED BY THE LD. AR THAT THE FACT THAT ASSESSEE HAD OR HA D NOT CARRIED ANY BUSINESS IN THE YEAR WILL NOT BE DEPENDENT UPON WHE THER THE ASSESSEE HAD EARNED ANY BUSINESS INCOME OR ENTERED INTO BUSINESS DEALS DURING THE YEAR. IT IS ALSO THE ASSESSEES C ONTENTION THAT ALTHOUGH THE SCHEME OF COMPROMISE AND ARRANGEMENT, AS APPROVED BY THE HONBLE GUJARAT HIGH COURT UNDER SEC. 391 OF THE COMPANIES ACT, REQUIRED ASSIGNMENT OF ASSETS/RECEIVABLES, THE ACTUAL ASSIGNMENT DID NOT HAPPEN TILL THE YEAR 2014. A PE RUSAL OF THE ASSESSMENT ORDERS SHOWS THAT THE AO HAS TAKEN A VIE W THAT DEPRECIATION ON LEASED ASSETS IS NOT ALLOWABLE. IT IS THE ASSESSEES CONTENTION THAT AS PER THE HIGH COURTS ORDER WHAT HAS BEEN ASSIGNED IS THE RECEIVABLES AND NOT THE LEASED FIXE D ASSETS ON WHICH DEPRECIATION HAS BEEN CLAIMED. IT IS THE ASSESSEE S SUBMISSION THAT SINCE THERE WAS NO ASSIGNMENT OF THE LEASED FIXED A SSETS THERE WAS NO CHANGE IN OWNERSHIP. THUS, IT IS APPARENT FROM A COMBINED READING OF THE ASSESSMENT ORDERS AS WELL AS THE ORD ERS OF THE LD. CIT (A) FOR ALL THE FOUR YEARS UNDER CONSIDERATION THAT THERE IS AN APPARENT CONTRADICTION BETWEEN THE CLAIM OF THE ASS ESSEE AND THE STAND OF THE DEPARTMENT ON THIS ISSUE. ON THE ONE HAND IT IS THE ASSESSEES CLAIM THAT THE LEASED ASSETS WERE NOT AS SIGNED AND, ITA NOS.825, 2534 & 2535/AHD/2013 2584/AHD/2015 [GU JARAT LEASE FINANCE LTD. VS. DCIT] A.YS. 2008-09, 2009-10, 2010 -11 & 2012-13 - 12 - THEREFORE, THERE IS NO CHANGE IN OWNERSHIP ON THE O THER HAND IT IS THE DEPARTMENT CONTENTION THAT THE LEASED ASSETS HAVE B EEN ASSIGNED AND, THEREFORE, BY VIRTUE OF THIS ASSIGNMENT THE ASSESSE E IS NO LONGER IN OWNERSHIP OF THE ASSETS. THIS IS AN ISSUE WHICH NE EDS FACTUAL VERIFICATION AT THE END OF THE AO. THEREFORE, IT I S OUR CONSIDERED OPINION THAT, IN INTEREST OF SUBSTANTIAL JUSTICE, T HE ISSUE OF DEPRECIATION SHOULD BE REEXAMINED. ACCORDINGLY, WE RESTORE THE ISSUE TO THE FILE OF THE AO AND DIRECT HIM TO EXAMI NE THE ISSUE IN DETAIL AND RE-EXAMINE THE ASSESEEES CLAIM OF DEPRE CIATION ESSENTIALLY TO EXAMINE AND DECIDE (1) AS TO WHETHER THERE IS A CHANGE IN OWNERSHIP OF THE LEASED ASSETS OR NOT AS PER THE ARRANGEMENT APPROVED BY THE HONBLE GUJARAT HIGH COURT AND (2) WHETHER THE ASSESSEE WOULD BE ENTITLED TO CLAIM OF DEPRECIATION ON LEASED ASSETS IN LIGHT OF SETTLED JUDICIAL PRECEDENTS. WE ARE NO T GOING INTO THE MERITS OF THIS ISSUE AT THIS JUNCTURE AND WE LEAVE IT OPEN TO THE AO TO ADJUDICATE THE ISSUE AFRESH AFTER AFFORDING PROP ER OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE ITS CASE. THIS ISSUE IS COMMON IN ALL THE FOUR YEARS UNDER APPEAL AND THE ISSUE IS RESTORED A CCORDINGLY IN ALL THE FOUR YEARS UNDER CONSIDERATION. 5.1 COMING TO GROUND NO. 2 OF THE ASSESSEES APPEAL IN A.Y. 2008- 09 IT IS EVIDENT FROM THE READING OF THE IMPUGNED O RDER THAT THE LD. CIT (A) HAS NOT ADJUDICATED THE GROUND AS MENTIONED IN FORM 35 OF ITA NOS.825, 2534 & 2535/AHD/2013 2584/AHD/2015 [GU JARAT LEASE FINANCE LTD. VS. DCIT] A.YS. 2008-09, 2009-10, 2010 -11 & 2012-13 - 13 - THE ASSESSEES APPEAL. THIS ISSUE IS ALSO RESTORED TO THE FILE OF THE LD.CIT (A) FOR PASSING A SPEAKING ORDER ON THE ISSU E. 5.2 GROUND NO. 4 IN APPEAL FOR A.Y. 2008-09 HAS BEE N NOT PRESSED BY THE ASSESSEE DUE TO SMALLNESS OF THE AMOUNT. ACC ORDINGLY, THIS GROUND IS DISMISSED HAS NOT PRESSED. 5.3 GROUND NO. 5 IN APPEAL FOR A.Y. 2008-09 IS AGAI NST THE DISALLOWANCE OF SALES TAX/ENTRY TAX. IT IS APPAREN T THAT THIS ISSUE HAS NOT BEEN EXAMINED IN PROPER PERSPECTIVE BECAUSE IT IS ASSESSEES CLAIM THAT THIS WAS SHOWN UNDER ADVANCES AND WAS LA TER WRITTEN OFF WHEREAS THE LOWER AUTHORITIES HAVE TREATED IT AS A DISALLOWANCE U/S 43B OF THE ACT. ACCORDINGLY, IN OUR OPINION, THIS ISSUE ALSO NEEDS REEXAMINATION AND THE SAME IS RESTORED TO THE FILE OF THE AO TO ADJUDICATE IT AFRESH AFTER GIVING PROPER OPPORTUNIT Y TO THE ASSESSEE. 5.4 IN THE RESULT, ITA 825/AHD/2013 STANDS PARTLY A LLOWED FOR STATISTICAL PURPOSES. 6.0 IN A.Y. 2009-10 THE ISSUE OF DEPRECIATION IS ID ENTICAL AND IN VIEW OF OUR DIRECTIONS IN THE PRECEDING PARAGRAPHS FOR AY 2008-09, THE SAME ALSO STAND RESTORED. ITA NOS.825, 2534 & 2535/AHD/2013 2584/AHD/2015 [GU JARAT LEASE FINANCE LTD. VS. DCIT] A.YS. 2008-09, 2009-10, 2010 -11 & 2012-13 - 14 - 6.1 WITH RESPECT TO GROUND NO. 2 REGARDING DISALLOW ANCE U/S. 14A OF THE ACT, IT HAS BEEN CLAIMED BY THE ASSESSEE THA T THERE WAS NO EXEMPT INCOME DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THIS ISSUE ALSO NEEDS REEXAMINATION AND FINDING BY THE AO AS TO WHETHER OR NOT ANY EXEMPT INCOME WAS EARNED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE AO IS DIR ECTED TO PASS THE ORDER AS PER LAW AFTER VERIFYING THIS FACT AND KEEP ING IN MIND THE SETTLED JUDICIAL PRECEDENTS AND AFTER GIVING PROPER OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE. 6.2 IN THE RESULT, ITA NO. 2534/AHD/2013 ALSO STAND S ALLOWED FOR STATISTICAL PURPOSES. 7.0 IN A.Y. 2010-11, THE SOLE ISSUE IS THE ISSUE OF DEPRECIATION AND IN VIEW OF OUR OBSERVATIONS AND DIRECTIONS IN A.Y. 2008-09 AS CONTAINED IN THE PRECEDING PARAGRAPHS THIS ISSUE AL SO STAND RESTORED TO THE FILE OF THE AO. 7.1 IN THE FINAL RESULT, ITA 2535/AHD/2013 STANDS A LLOWED FOR STATISTICAL PURPOSES. 8.0 IN A.Y. 2012-13, THE LD. AR HAS STATED THAT THE GROUND REGARDING 14A DISALLOWANCE WAS NOT BEING PRESSED DU E TO SMALLNESS OF AMOUNT. ACCORDINGLY, THIS GROUND IS DISMISSED A S NOT PRESSED. ITA NOS.825, 2534 & 2535/AHD/2013 2584/AHD/2015 [GU JARAT LEASE FINANCE LTD. VS. DCIT] A.YS. 2008-09, 2009-10, 2010 -11 & 2012-13 - 15 - 8.1 THE OTHER GROUND PERTAINS TO THE ISSUE OF DEPRE CIATION WHICH IS IDENTICAL TO THE ISSUE IN THE OTHER THREE YEARS UND ER APPEAL AND LIKEWISE THIS GROUND ALSO STANDS RESTORED TO THE FI LE OF THE AO. 8.2 IN THE RESULT, ITA 2584/AHD/2015 STANDS ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE FINAL RESULT, ALL THE FOUR APPEALS OF T HE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (AMARJIT SINGH) (SUDHANSHU SRIVA STAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 28/06/2019 TANMAY TRUE COPY !' #' / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. $ / ASSESSEE 3. ) *+ , / CONCERNED CIT 4. ,- / CIT (A) 5. 012 33*+, *+#, 56$)$ / DR, ITAT, AHMEDABAD 6. 289 : / GUARD FILE. BY ORDER / $% , ;/5 *+#, 56$)$ < THIS ORDER PRONOUNCED IN OPEN COURT ON 28 /06/2019