ALD AUTOMOTIVE P.LTD, MUMBAI V. DCIT CIR 3(1), MUMBAI

ITA 907/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2653 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 04-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B B RAJENDRA PRASAD
• Assessee Lawyers: BRIJMOHAN P AGARWAL
• Keywords: Depreciation
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , , , BEFORE SHRI SANJAY ARORA , A M AND SHRI AMIT SHUKLA , J M ./ I.T.A. NO S . 907 & 109 /MUM/2013 ( / ASSESSMENT YEAR S : 200 8 - 0 9 & 200 7 - 0 8 ) ALD AUTOMOTIVE PVT. LTD. 13 TH FLOOR, MAKER CHAMBER IV, NARIMAN POINT, MUMBAI - 400 021 / VS. DY. CIT, CIRCLE 3(1), ROOM NO. 607, 6 TH FLOOR, AAYKAR BHAWAN, MUMBAI - 400 020 ./ ./ PAN/GIR NO. AAFCA 0924 K ( ASSESSEE ) : ( RE VENUE ) & ./ I.T.A. NO S . 2179 & 601/MUM/2013 ( / ASSESSMENT YEARS: 2008 - 09 & 2007 - 08 ) DY. CIT, CIRCLE 3(1), ROOM NO. 607, 6 TH FLOOR, AAYKAR BHAWAN, MUMBAI - 400 020 / VS. ALD AUTOMOTIVE PVT. LTD. 13 TH FLOOR, MAKER CHAMBER IV, NARIMAN POINT, MUMBAI - 400 021 ./ ./ PAN/GIR NO. AAFCA 0924 K ( RE VENUE ) : ( ASSESSEE ) ASSESSEE BY : SHRI BRIJMOHAN P. AGARWAL RE VENUE BY : SHRI B. B. RAJENDRA PRASAD / DATE OF HEARING : 26.4.2016 / DATE OF PRONOUNCEMENT : 25 .7.2016 / O R D E R PER SANJAY ARORA, A. M.: TH E S E ARE CROSS APPEALS, I.E., BY THE A SSESSEE AND THE REVENUE , FOR TWO CONSECUTIVE YEARS , B EING ASSESSMENT YEAR S (A.Y.) 2007 - 08 AND 2008 - 09 , U/S. 253 OF 2 ITA NO S . 907,109, 2179 & 601/MUM/2013 (A.YS. 2007 - 08 & 2008 - 09) AL D AUTOMOTIVE PVT. LTD. THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) , ARISING OUT OF THE ORDER S BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 5 , MUMBAI (CIT(A) FOR SHORT) DATED 31.12.2012. THE APPEALS RAISE TWO ISS UES, ONE BROUGHT BY THE ASSESSEE AND THE OTHER BY THE REVENUE, I.E., WITH REGARD TO: A) DEPRECIATION ON LEASE ASSETS ; AND B) TRANSFER (OF A PART ) OF FLEET MANAGEMENT CHARGES TO MAINTENANCE ACCOUNTS 2. T HE ASSESSEE IS IN THE BUSINESS OF PROVIDING VEHICL E S OF DIFFERENT TYPES O N , AS STATED , OPERATIN G LEASE BASIS , TO ITS CUSTOMERS. APART THERE - FROM , IT PROVIDES ALLIED SERVICES LIKE REPAIRING, MAINTAINING, INSURING, PROVIDING DRIVERS, PROVIDING REL IEF VEHICLE S AND EMERGENCY BR E AK - DOWN SERVICE S . ITS OTHER AC TIVITIES INCLUDE DISTRIBUTION AND WHOLESALE TRADING IN VEHICLE S . THE RECEIPTS FROM THE PRINCIPLE ACTIVITY OF L EA SING AND PROVIDING ALL IED SERVICES ARE BOOK ED UNDER THE HEAD OF ACCOUNT LEASE RENTALS AND FLEET MAINTENANCE CHARGES RESPECTIVELY (REFER S TA TEMENT OF F ACTS BEFORE THE FIRST APPELLATE AUTHORITY). THE ASSESSING OFFICER (A.O.) DISALLOWED THE CLAIM FOR DEPRECIATION, WHICH THOUGH WAS ALLOWED BY THE LD. CIT(A). THE SECO ND ISSUE IS WITH REGARD TO THE R EVENUE GENERATED BY WAY OF F LEET MANAGEMENT CHA RGES , AND QUA WHICH THE ASSESSEE IS IN APPEAL. WE SHALL TAKE UP THE TWO IN SERIATIM. 3. AS REGARDS DEPRECIATION, WHICH IS THE SUBJECT MATTER OF THE REVENUES APPEAL, THE SAME STOOD DISALLOWED AS THE INVOICES A N D D ELIVERY NOTE S (OF THE VEHICLE S LEASED) AR E ALSO IN THE NAME OF THE PART Y USING THE VEHICLE (LE SS EE) , WHOSE NAME APPEARS ON THE VEHICLE REGISTRATION CERTIFICATE. CLEARLY, IT WAS THIS PART Y WHICH I S THE OWNER OF THE VEHICLE, WITH THE ASSESSEE BEING ONLY A FINANCER. FURTHER , THE ASSESSEE COULD PRODU CE CONFIRM ATION S AS TO NON CLAIM OF DEPRECIATION BY THE L ESSE ES ONLY BY A FEW OF THEM . THE CLAIM FOR DEPRECIATION WAS ACCORDINGLY DIS ALLOWED. THE LD. CIT(A), ON PERUSAL OF THE M ASTER L EASE A GREEMENT (MLA) (WHICH THOUGH MAY VARY IN SOME RESPECTS FROM CUSTOM ER TO CUSTOMER), AS WELL AS THE OPERATIN G LEASE AGREEMENT S ENTERED INTO BY THE 3 ITA NO S . 907,109, 2179 & 601/MUM/2013 (A.YS. 2007 - 08 & 2008 - 09) AL D AUTOMOTIVE PVT. LTD. ASSESSEE - COMPANY WITH ITS CUSTOMERS, OPINED THE LEASE ENTERED INTO BY THE ASSESSEE TO BE AN OPERATING LEASE, SO THAT IT, AS A LESS O R, IS A REAL OWNER OF THE VEHICLE LEASED, WITH THE LE S SE E BEING ALLOWED ONLY THE RIGHT TO USER AND CONCOMITANT POS SESS ION. HE , ACCORDINGLY , DIRECTED ALLOW ANCE OF DEPRECIATION, RELY IN G ON MYSORE MINERALS LTD. VS. CIT [1999] 239 ITR 775 (SC). AGGRIEVED , THE REVENUE IS IN APPEAL, RAISING THE FOLLOWING G R OUND: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING DEPRECIATION TO THE ASSESSEE ON VEHICLES GIVEN ON LEASE WITHOUT APPRECIATING THE FACT THAT THE VEHICLES WERE NOT REGISTERED IN THE NAME OF TH E ASSESSEE AND THE SAME WERE DIRECTLY DELIVERED TO THE PARTIES USING IT AND NOT TO THE ASSESSEE. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. THE BASIS OF THE ASSESSEES CLAIM , SINCE ALLOWED BY THE FIRST APPELLATE AUTHORITY, IS THAT THE LEASE IS A OPERATING LEASE , SO THAT THE RISK AND REWARD OF OWNERSHIP ARE NOT TRANSFERRED, AND WHAT IS GRANTED (TO THE LE S S E E) IS A MERE RIGHT OF USER. THE REGISTRATION OF THE VEHICLE IN THE NAME OF THE LE S SEE IS ONLY FOR THE PURPOSES OF THE MOTOR VEHI CLE S ACT, 1988. RELIANCE IS PLACED BEFORE US ON I.C.D.S LTD. VS. CIT [2013] 3 50 ITR 527 (SC) AND MYSORE MINERALS LTD. (SUPRA). THE OWNERSHIP CLAUSE UNEQUIVOCALLY STATES THE INTENT THAT THE VEHICLE SHALL BE AT ALL MATERIAL TIMES THE PROPERTY OF THE LESS O R. AND, FURTHER, THAT THE LESS EE SHALL BE FULLY LIABLE AND RESPONSIBLE FOR ALL THE OBLIGATIONS, LIABILITIES AND DUTIES AS PER THE M OTOR V EHICLES A CT OR UNDER ANY OTHER LAW OR INSTRUMENT PERT AINING TO THE USE OF THE VEHICLES. ONE OF THE I NDICA OF A FINANCIAL L EASE IS THAT THE DISCOUNTED VALUE OF THE LEASE RENTALS , I.E., OVER THE LEASE TERM, COVERS THE COST OF THE SUBJECT MATTER OF (ASSET UNDER) LEASE. THE LEASE TERM IN SUCH A CASE APPROXIMATES THE USEFUL LIFE OF THE VEHICLE, WITH THE LESSOR BEING GENERALLY OBLI GED TO TRANSFER THE ASSET TO THE LESSEE AT A NOMINAL, PREDETERMINED VALUE. IN THE PRESENT CASE, THE LEASE TERM IS NOT FIXED, AND IS GUIDED BY THE REQUIREMENT OF THE LESSEE , I.E., THE LEASE TERM VARIES FROM LESSEE TO LESSEE . FURTHER, ALONG WITH THE PRINCIPA L TRANSACTION OF 4 ITA NO S . 907,109, 2179 & 601/MUM/2013 (A.YS. 2007 - 08 & 2008 - 09) AL D AUTOMOTIVE PVT. LTD. LEASE, OTHER SPECIFIED , INCIDENTAL SERVICES MAY BE PROVIDED, AGAIN , AS PER THE REQUIREMENT OF THE LESSEE . THE SAME ARE CLEARLY OFFERED AS A PACKAGE, CONTRACTUALLY, BY WAY OF VALUE - ADDED SERVICES, TOWARD PROVIDING VEHICLE (COMMUTATION) SOLU TIONS TO THE CUSTOMERS . THE SAME THOUGH WOULD NOT DETRACT FROM AS C ERT AIN ING WHETHER THE LEASE UNDER REFERENCE IS AN OPERATING OR A FINANCIAL LEASE. THE R EVENUES CONCERN, AS WE UNDER STAND, IS THAT THE LESSEES MAY NOT, SIMILARLY, CLAIM DEP REC I A TION, CONTEND ING THE LEASE TO BE A FINANCIAL LEASE, AND TO WARD WHICH, THEREFORE, THE AO SOUGHT CONFIRMATION FROM THE LESSEES IN RESPECT OF NON - CLAIM OF DEP RECIA TION. THIS IS AS, ADMITTEDLY, IT IS NOT THE FORM BUT THE SUBSTANCE (OF THE TRANSACTION) THAT MATTERS AND, FUR THER, WHAT IS RELEVANT IS THE BENEFICIAL ( DE FACTO ) OWNERSHIP OF THE VEHICLE AS AGAINST ITS TITULAR ( DE JURE ) OWNERSHIP , AND WHICH, IN CASE OF A FINANCIAL LEASE, VESTS WITH THE LESSEE . SUCH CONFIRMATION S COU LD BE PROVIDED, HOWEVER, ONLY BY A FEW CUSTOMERS . THE MOOT QUESTION, HOWEVER, IS WHETHER SUCH A CLAIM BY THE LESSEE /S , AS SUMING SO, VALID AND, AS A CO ROLLAR Y, WOULD INVALIDATE THE ASSESSEES CLAIM. IT IS THE CORRECT LEGAL POSITION THAT IS RELEVANT, AND NOT THE VIEW THAT THE PARTIES MAY TAKE OF THEIR RI GHTS IN THE MATTER [REFER: CIT V. C. PARAKH & CO. (INDIA) LTD . [ 1956 ] 29 ITR 661 (SC); KEDARNATH JUTE MFG. CO. LTD. V. CIT [ 1971 ] 82 ITR 363 (SC)]. NOTWITHSTANDING, THEREFORE, A CLAIM OF DEP RECIATION B Y THE LESSEES/ S, I.E., ASSUMING SO, THERE BEING NO ESTO PPEL AGAINST LAW, THE ASSESSEES CLAIM, WHERE CORRECT, CANNOT BE DENIED. THE PROPER COURSE WITH THE R EVENUE IS TO DENY OR, AS THE CASE MAY BE, WITHDRAW SUCH A CLAIM IN THE HANDS OF THE LESSEE / S . RATHER, AS THE ASSESSEE CONTENDS, AND WHICH WE ENDORSE, CLAIM ING DEP RECIA TION, I.E., AS AGAINST LEASE RENTALS, BY THE LESSEE WOULD BE DISADVANTAGE OU S FOR I T IN - AS - MUCH AS THE LATTER SHALL EXCEED THE FORMER . T HE REASON IS SIMPLE ; THE LEASE RENTALS WOULD INCLUDE THE PROFIT ELEMENT AS WELL AND, THUS, BE IN EXCESS OF DE PRECIATION, WORKED OUT W.R.T. THE COST OF THE ASSET . T HE LAW BEING WELL SETTLED, IT IS THE CORRECTNESS OF THE ASSESSEES CLAIM ON FACTS, ON WHICH IT S CLAIM THEREFORE HINGES. BY ALL I NDICA, IT IS AN OPERATING LEASE, GUID ANCE 5 ITA NO S . 907,109, 2179 & 601/MUM/2013 (A.YS. 2007 - 08 & 2008 - 09) AL D AUTOMOTIVE PVT. LTD. FOR WHICH MAY BE HAD FROM THE A CCOUNTING S TANDARD (AS ) 19 (BY ICAI). THE VEHICLE, A T THE END OF THE LEASE TERM, IS NOT RETURNED TO THE CUSTOMER ( LESSEE ), BUT SOLD IN THE MARKET, RETURNING THE AMOUNT REALIZED IN EXCESS OF THE WDV AS PROFIT. THE LEASE TERM VARIES AND, FURTHER, IS AT THE MAXIMUM OF FIVE YEARS ( C LAUSE 9.5 OF THE MLA/AT PB I ), AS AGAINST THE ECONOMIC LIFESPAN OF 8 - 10 YEARS. WE ARE CONSCIOUS THAT THE ECONOMIC LIFE OF THE VEHICLE DEPENDS ALSO ON ITS USER, AND THAT A PERIOD OF FIVE YEARS, COUPLED WITH EXTENSIVE USER , MAY EXH AUST THE LIFE OF A VEHICLE AND , IN ANY CASE , WITH REFERENCE TO A PARTICULAR (STANDARD) OPERATING EFFICIENCY. EVEN SO, THE FACT REMAINS THAT THE ASSESSEE EXTENDS VARIOUS LEASE TERMS TO ITS CLIENTS AND, TWO, A HIGHER TERM OPTED BY A LESSEE WOULD NECESSARILY IMPLY A LOW SALVAGE/SALE VALUE, SO THAT THE ASSESSEE IS ENTITLED TO RECOVER THE PRINCIPAL (ALONG WITH PROFIT ) , SO THAT ITS CLAIM FOR DEPRECIATION WHICH IS A CHARGE TOWARD THE CAPITAL CONSUMED, WOULD BE IN ANY CASE EXIGIBLE ; THE ONLY CAVEAT BEING THAT IN SUCH A CASE, I.E., WHERE THE DEP RECIA TION IS PREFER RED ON THE BASIS OF THE ACCOUNTING THEORY, T HE SAME SHALL HAVE TO BE ON A SYSTEMATIC BASIS, AND NOT NECESSARILY AT THE RATES AS DEFINED UNDER THE A CT. THE INSURANCE PREMIUM, THOUGH RECOVERED FROM THE LESSEE (AS PART OF FLEET MANAGEMENT CHARGES) , IS THE OBLIGATION OF THE LESSOR, WHOSE NAME IS SHOWN THEREIN AS THE BENEFICIARY. CONFIRMATION FROM ALL MAJOR CLIENTS ALSO STANDS FURNISHED BEFORE THE AO. IN OUR VIEW, THEREFORE, THE FINDING BY THE LD. CIT (A) OF THE CHARACTER O F THE LE A SE A S AN OPERATING LEASE CANNOT, UNDER THE CIRCUMSTANCES, BE FAULTED , AND THE ASSESSEE, ACCORDINGLY, ENTITLED TO I T S CLAIM FOR DEP RECIATION ON THE LEASE D VEHICLES . THE R EVENUES APPEAL IS ACCORDINGLY DISMISSED. 5. WE, NEXT, TAKE UP THE ASSESSEE S APPEAL. THE ASSESSEES CLAIM IS THAT THE REPAIR AND MAINTENANCE COSTS ARE NOT PERIOD COSTS, BUT RISE GRADUALLY WITH T IME, WHILE THE RECOVERY THEREOF (WHICH IS ALONG WITH A MARGIN THEREON) IS MADE AT A UNIFORM RATE, I.E., EQUAL L Y OVER THE TERM OF THE LEAS E . THE HIGHER (THAN PROPORTIONATE) AMOUNT RECEIVED IN THE INITIAL YEARS OF THE CONTRACT IS TO BE REGARDED AS AN ADVANCE, W HICH IS APPROPRIATED 6 ITA NO S . 907,109, 2179 & 601/MUM/2013 (A.YS. 2007 - 08 & 2008 - 09) AL D AUTOMOTIVE PVT. LTD. TO A RESERVE ACCOUNT. RECOGNIZING REVENUE THUS, IS CONSIDERED BY THE ASSESSEE AS IN AGREEMENT WITH A S - 9 (ISSUED BY ICAI). THE R EVENUE CONSIDERS IT AS NOT PROPER IN - AS - MUCH AS WHAT IS RECEIVED DOES NOT CARRY ANY CONCOMITANT OBLIGATION. IF THE COSTS INCURRED , OR LIABLE TO BE INCURRED , IN FUTURE , STAND TO INCREASE, SO BE IT , AND WHICH WOULD ONLY IMPLY THAT THE ASSES SEE WOULD STAND TO EARN A LOWER PROFIT (ON THAT ACCOUNT) FOR THAT YEAR/ S ; EA CH YEAR BEING AN INDEPENDENT UNIT OF ASSESSMENT . DURING HEARING, THE LD. AR WAS Q U E RIED BY THE B ENCH THAT IN THAT CASE AN APPROPRIATION WOULD BE EQUALLY JUSTIFIED IN RESPE CT OF LEASE RENTALS , A LS O CH ARGED UNIFORMLY , WHILE THE CAPITAL CHARGE (FOR DEP RECIATION ), BEING ON WDV BASIS, IS HIGHER FOR THE INITIAL YEARS. HE CONCEDED, WOULD THOUGH SUBMIT THAT DEP RECIA TION IS A CHARGE/ALLOWANCE AT THE RA TES PROVIDED UNDER THE A CT, SO THAT THE SAME, IRRESPECTIVE OF THE ASSESSEES METHOD OF ACCOUNTING IN RESPECT THEREOF, IS TO BE CLAIMED AT THE STATUTORY PRESCRIBED RATES. WE AGREE. FURTHER, THE ASSESSEES CLAIM IS, IN OUR VIEW, UNEXCEPTIONAL. IF THE EXPENDITURE ( ON REPAIRS) IS THE BASIS FOR THE CHARGE RAISED IN ITS RESPECT , AS I T INDEED IS , CALIBRATING THE RECEIPT (BY PASSING ADJUSTMENT ENTRIES IN T HE ACCOUNTS) TO SYNCHRONI Z E WITH THE COSTS LIKELY TO BE INCURRED OVER THE CONTRACT PERIOD, CANNOT BE FAULTED. WE MAKE A STATEMENT IN DEFINITE TERMS AS, IF THE RENDERING OF THE RELEVANT SERVICES, INCURRING THE CONCOMITANT COST S, IS NOT THE BASIS OF THE CHARGE, WHAT IS? IT IS NOT THE CHARACTER OF THE RECEIPT AS REVENUE THAT IS IN DISPUTE, BUT THE EXTENT TO WHICH IT , IN THE FACTS AND CIRCUMSTANCES OF THE CASE , CAN IN LAW BE CONSIDERED AS ALLOCABLE TO /ARISING FOR A PARTICULAR YEAR, I.E., CONSIDERING THE YEAR - WISE PROFILE OF SUCH EXPENDITURE, AND GIVEN THAT INCURRING OF THE COST IS ITSELF THE BASIS OF THE CHARGE. THE AMOUNT CREDITED TO THE RESERVE ACCOUNT HAS TO BE REVERSED ( FOR EACH VEHICLE ) OVER THE TERM OF THE CONTRACT . THE CREDIT TO THE RESERVE IS STATED TO BE BY F O LL OW ING THE REVERSE R ULE OF 78 , AN INDUSTRY NORM. THESE ASPECTS, HOWEVER, WOULD REQUIRE VERIFICATION. WE MAY RESTATE THE ISSUE BY WAY OF AN EXAMPLE FOR THE SAKE OF BETTER COMMUNICATION THEREOF. A SUM OF RS.1 ,00, 000 / - IS REGARDED AS LIABLE TO BE INCURRED ON REPAIRS OVER THE 7 ITA NO S . 907,109, 2179 & 601/MUM/2013 (A.YS. 2007 - 08 & 2008 - 09) AL D AUTOMOTIVE PVT. LTD. LEASE TERM OF (SAY ) FIVE YEARS. ADDING 20% THEREOF (RS.20,000) AS MARGIN, A CHARGE OF RS.1.20 L ACS IS MADE BY THE ASSESSE E - LESSOR , WORKING TO AN ANNUAL CHARGE OF RS.24,000 (I.E., EMI OF RS.2000 ) . THE ASSESSEES EMPIRICAL DATA SUGGESTS THAT ONLY RS.8000 (SAY) IS LIABLE TO BE INCURRED IN THE FIRST YEAR, WHICH WOULD CARRY A CONCOMITANT CHARGE OF RS.9 , 600 / - . THE EXCESS RS.1 4, 400 / - ( RS. 24,000 RS.9,600 ) IS TRANSFERRED TO THE RESERVE ACCOUNT . IN THE LATTER YEARS, WHERE THE NORMATIVE COST IS HIGHER THAN THE AVERAGE, AT RS. 30,000 (SAY ), THE SHORTFALL IN THE PROPORTIONATE REVENUE FOR THAT YEAR (R S. 36,000) , IS ACCOUNTED BY WRITE BACK FROM THE RESERVE ACCOUNT TO THAT EXTENT (RS.12,000 / - , OR RS. 3 6,000 - RS. 2 4,000). THE ENTIRE RESERVE CREATED IN THE INITIAL YEARS WOULD THUS STAND TO BE REVERSED IN TIME. FURTHER , THE SAME WOULD TH EREFORE STAND TO BE PROVIDED AND, THUS, VERIFIED , WITH REFER ENCE TO EACH INDIVIDUAL CONTRACT, I.E., QUA EACH VEHICLE. WE FURT HER SUPPOSE THAT THE COSTS ARE ALSO LO GGED VEHICLE - WISE, ENABLING VERIFICATION OF SUCH PROVISION , AS WELL AS IT S REVER SAL, AND THAT THE FIGURE OF RS. 1 LA C AND RS. 1.20 L ACS (GOING BY OUR EX AMPLE), BEING THE AGGREGATE COST AND THE CORRESPONDING CHARGE RESPECTIVELY, ARE BASED ON OR APPROXIMATE THE AMOUNTS ACTUALLY OBTAINING , AND IS DEMONSTRABLE. WE, ACCORDINGLY, APPROVE THE ACCOUNTING TREATMENT - WHICH FORMS THE BASIS FOR RETURNING INCOME QUA THE SAID SERVICE , IN PRINCIPLE. TRUE, THE EXCESS AMOUNT RECEIVED IN THE INITIAL YEARS CANNOT BE CALLED OR SAID TO BE AN ADVANCE PROPER - WHICH COULD ONLY BE SO IN TERMS OF THE CONTRACT, AND NEITHER THE AMOUNT APPROPRIATED (TO THE RESERVE A/C) A PROVISI ON. YET, THE AMOUNT SO APPROPRIATED CAN BE SAID AS NOT LIABLE TO BE RECOGNIZED AS REVENUE FOR THE YEAR OF RECEIPT , CONSIDERING THAT THE CORRESPONDING COSTS, WHICH FORM THE BASIS OF THE CHARGE , IS YET TO BE INCURRED (TO THAT EXTENT). IN - AS - MUCH AS UNEVEN R EPAIRS AND, THEREFORE, CORRESPONDING SERVICES, ARE LIABLE TO BE RENDERED OVER THE LEASE TERM AS INDICATED BY THE CORRESPONDING EXPENDITURE, THE ACCOUNTING TREATMENT IS IN CONSONANCE WITH AS - 9. THE ASSESSEES RELIANCE ON THE DECISIONS IN CALCUTTA CO. LTD. V S. CIT [ 1959 ] 37 ITR 1 (SC) AND MADRAS INDUSTRIAL INVESTMENT CORPORATION LTD. VS. CIT [1997] 225 ITR 802 ( SC ) , 8 ITA NO S . 907,109, 2179 & 601/MUM/2013 (A.YS. 2007 - 08 & 2008 - 09) AL D AUTOMOTIVE PVT. LTD. BOTH ADVOCATING THE MATCHING PRINCIPLE , IS APPOSITE . THE AO SHALL CAUSE NECESSARY VERIFICATION A S INDICATED ABOVE, SUBJECT TO WHOSE FINDINGS OF FACT W E ALLOW THE ASSESSEES CLAIM. WE MAY FURTHER ADD THAT THE ASSESSEES PLEA IS ACCEPTABLE ONLY QUA SUCH EXPENDITURE WHICH IS SUBJECT TO, IN THE NORMAL COURSE OF EVENTS, AN INCREASE WITH TIME, I.E., I S AGE (OF THE VEHICLE) RELATED . WE SAY SO AS WE OBSE RVE SEVERAL EXPEN SES FORMING PART OF THE FLE E T MANAGEMENT SERVICES, VIZ . PROVIDING RELIEF VEHICLES, DRIVERS, EMERGENCY BREAKDOWN SERVICES, DOOR TO DOOR SERVICES, ETC . , AND WHICH ARE ESSENTIALLY PERIOD COSTS, SO THAT ALL SUCH COSTS WHICH DO NOT EXHIBIT A PR ONOUNCED INCREASE WITH TIME , I.E., IN RELATION TO THE AGE OF THE CORRESPONDING VEHICLE, WOULD NOT BE SUBJECT TO SUCH APPROPRIATION. THE AOS FINDING SHALL FURTHER INCLUDE THAT IN RESPECT OF R EVERSAL OF THE CREDIT (ON THE BASIS OF THE RULE BEING PURPORTEDLY FOLLOWED) AS WELL. REFERENCE TO THE SAID RULE, WE MAY ADD, IS ONLY TOWARD THE ASSESSEE FOLLOWING A SCIENTIFIC BASIS IN ALLOCATING THE REVENUE OVER THE TERM OF THE LEASE AND, ACCORDINGLY WOULD STAND TO BE EXAMINED BY THE A.O. , AND THE ALLOWANCE OF THE ASSESS EES CLAIM BY US IS SUBJECT TO HIS RETURNING POSITIVE FINDINGS. WE DECIDE ACCORDINGLY . 6. I N THE RESULT, THE ASSESSEES APPEAL S ARE ALLOWED FOR STATISTICAL PURPOSES, WHILE THE R EVENUES APPEAL S ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON JU LY 25 , 201 6 SD/ - SD/ - ( AMIT SHUKLA ) (S ANJAY ARORA) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 25 . 0 7 .201 6 . . ./ ROSHANI , SR. PS 9 ITA NO S . 907,109, 2179 & 601/MUM/2013 (A.YS. 2007 - 08 & 2008 - 09) AL D AUTOMOTIVE PVT. LTD. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI