INFRASTRUCTURE LEASING & FINANCIAL SERVICES LIMITED , MUMBAI V. JOINT COMMISSIONER OF INCOME TAX SPECIAL. RANGE.32, MUMBAI

MA 469/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6045 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-02-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 1998-1999
• Appeal Filed On: 04-07-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMIT PRATAP SINGHLD
• Assessee Lawyers: PRASHANT BHOJWANI LD ARS
• Keywords: Depreciation; Set aside
• Section: 115JB; 254(2); 37

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE HONBLE SHRI SAKTIJIT DEY, JM AND SHRI HONBLE MANOJ KUMAR AGGARWAL, AM N O. M A NO. ARISING OUT OF ITA NO. APPELLANT RESPONDENT AY 1. 469/M/18 1583/M/2011 ORDER DATED 11/07/2014 (ASSESSEES APPEAL) INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD. JCIT-SPL. RANGE-32, MUMBAI 1998-99 2. 468/M/18 4783/M/2001 ORDER DATED 10/04/2015 (REVENUES APPEAL) INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD. ADDL. CIT-SPL. RANGE-32, MUMBAI 1998-99 3. 478/M/18 6063/M/2002 ORDER DATED 17/12/2014 (ASSESSEES APPEAL) INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD. ACIT-CIRCLE 10(1), MUMBAI 1999-00 4. 690/M/18 5987/M/2002 ORDER DATED 17/12/2014 (REVENUES APPEAL) INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD. ACIT-CIRCLE 10(1), MUMBAI 1999-00 5. 479/M/18 6768/M/2003 ORDER DATED 17/12/2014 (ASSESSEES APPEAL) INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD. ACIT-CIRCLE 10(1), MUMBAI 2000-01 6. 691/M/18 6810/M/2003 ORDER DATED 17/12/2014 (REVENUES S APPEAL) INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD. ACIT-CIRCLE 10(1), MUMBAI 2000-01 7. 480/M/18 7631/M/2004 ORDER DATED 17/12/2014 (ASSESSEES APPEAL) INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD. ACIT-CIRCLE 10(1), MUMBAI 2001-02 8. 692/M/18 6863/M/2004 ORDER DATED 17/12/2014 (REVENUES APPEAL) INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD. ACIT-CIRCLE 10(1), MUMBAI 2001-02 9. 481/M/18 978/M/2006 ORDER DATED 17/12/2014 INFRASTRUCTURE ACIT-CIRCLE 10(1), MUMBAI 2002-03 2 (REVENUES APPEAL) LEASING & FINANCIAL SERVICES LTD. 10. 693/M/18 77/M/2006 ORDER DATED 17/12/2014 (ASSESSEES APPEAL) INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD. ACIT-CIRCLE 10(1), MUMBAI 2002-03 11. 576/M/18 4319/M/2007 ORDER DATED 09/03/2016 (ASSESSEES APPEAL) INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD. ACIT-CIRCLE 10(1), MUMBAI 2003-04 12. 625/M/18 4189/M/2007 ORDER DATED 09/03/2016 (REVENUES APPEAL) INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD. ACIT-CIRCLE 10(1), MUMBAI 2003-04 13. 575/M/18 3203/M/2008 ORDER DATED 28/06/2017 (ASSESSEES APPEAL) INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD. ADDL. CIT- RANGE-10(1), MUMBAI 2004-05 14. 626/M/18 3156/M/2008 ORDER DATED 28/06/2017 (REVENUES APPEAL) INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD. ADDL. CIT- RANGE-10(1), MUMBAI 2004-05 REVENUE BY : SHRI AMIT PRATAP SINGH LD.DR ASSESSEE BY : S/SHRI SANDEEP BHALLA & PRASHANT BHOJWANI LD. ARS / DATE OF HEARING : 07/02/2020 / DATE OF PRONOUNCEMENT : 14/02/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. BY WAY OF THESE MISCELLANEOUS APPLICATIONS, THE ASSESSEE SEEKS RECTIFICATION IN VARIOUS ORDERS PASSED BY TRIBUNAL IN CAPTIONED APPEALS ON VARIOUS DATES. THE DETAILS OF THE SAME HAVE ALREADY BEEN TABULATED IN THE CAUSE-TITLE. SINCE THE GRIEVANCE OF THE ASSESSEE IS COMMON, ALL THE 3 APPLICATIONS WERE HEARD TOGETHER AND ARE NOW BEING DISPOSED-OFF BY WAY OF CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. SINCE THE ORDER OF TRIBUNAL FOR AYS 1999-00 TO 2 001-02 IS COMMON ORDER, WE FIRST TAKE UP APPLICATIONS FILED FOR THES E YEARS. 3.1 THE APPLICATION MA NO. 478/MUM/2018 FOR AY 1999 -2000 HAS BEEN PREFERRED AGAINST TRIBUNALS ORDER DATED 17/12/2014 IN ASSESSEES APPEAL ITA NO.6063/MUM/2002. WE HAVE PERUSED THE CONTENTS OF THE PETITION. IT HAS BEEN SUBMITTED IN THE APPLICATION THAT THE ASSE SSEE RAISED A CLAIM REGARDING DEDUCTION OF LEASE EQUALIZATION ON THE ST RENGTH OF VARIOUS JUDICIAL PRONOUNCEMENTS WHEREIN IT WAS HELD THAT THE ASSESSE E WHICH WAS ENGAGED IN THE BUSINESS OF LEASES AND RECOGNIZES INCOME AS PER ACCOUNTING STANDARD-19 (AS-19) AS PRESCRIBED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA, THE ASSESSEE WOULD BE ENTITLE D FOR DEDUCTION OF LEASE EQUALIZATION. THE ASSESSEE HAD CLAIMED THAT THE DIF FERENCE BETWEEN CAPITAL RECOVERY AND THE BOOK DEPRECIATION, BEING THE LEASE EQUALIZATION SHOULD BE ALLOWED AS DEDUCTION. THIS ASPECT HAS BEEN DEALT BY AS-19 AND THERE WAS REFERENCE TO THIS IN THE JUDGMENT PASSED BY HONBLE DELHI HIGH COURT IN THE CASE OF VIRTUAL SOFTWARE LTD. (HONBLE DELHI HIGH C OURT) AND ALSO IN THE JUDGMENT PASSED BY HONBLE KARNATAKA HIGH COURT IN THE CASE OF PRAKASH LEASING LTD. HOWEVER, THE BENCH RESTORED THE MATTER BACK TO THE FILE OF LD. AO WITH A DIRECTION TO DECIDE THE ISSUE AFRESH IN T HE LIGHT OF DISCUSSION MADE BY THE TRIBUNAL IN AYS 1994-95 TO 1997-98 AS D ONE BY THE TRIBUNAL IN ITS ORDER FOR AY 1998-99. THE ASSESSEE FURTHER SUBM IT THAT THE ISSUE OF DEDUCTION OF LEASE EQUALIZATION HAS NOW BEEN SETTLE D BY THE ORDER OF HONBLE SUPREME COURT IN THE CASE OF VIRTUAL SOFT S YSTEMS LTD. (92 4 TAXMANN.COM 370) WHEREIN HONBLE COURT HAS APPROVED THE RATIO LAID DOWN BY HONBLE DELHI HIGH COURT IN VIRTUAL SOFT SYSTEMS LTD. (341 ITR 593). IT HAS BEEN SUBMITTED THAT THE ASSESSEE HAS ALSO FOLLO WED EXACTLY THE SAME METHOD OF ACCOUNTING AND CLAIMED DEDUCTION. IN THE ABOVE BACKGROUND, IT HAS BEEN SUBMITTED THAT THERE IS MISTAKE APPARENT F ROM RECORD SINCE THE ISSUE HAS NOW BEEN SETTLED BY HONBLE SUPREME COURT AND THEREFORE, THE AFORESAID DIRECTIONS GIVEN BY TRIBUNAL BE SET ASIDE AND THE ISSUE BE DECIDED IN ASSESSEES FAVOR. 3.2 WE HAVE CAREFULLY HEARD THE ARGUMENTS ADVANCED BY BOTH THE REPRESENTATIVES AND WE HAVE ALSO DELIBERATED UPON T HE ORDER PASSED BY THE TRIBUNAL. WE FIND THAT THE ISSUE OF LEASE EQUALIZAT ION RESERVE HAS BEEN DEALT WITH AT PARA-3 OF THE ORDER WHICH READ AS UND ER: - 3. WE SHALL FIRST TAKE UP THE APPEALS FILED BY THE ASSESSEE. THE FIRST COMMON ISSUE RELATES TO THE DISALLOWANCE OF LEASE EQUALIZATION R ESERVE. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF LEASE EQUALIZATION RESERVE ON THE REASONING THAT IT IS NOT A PRESCRIBED EXPENDITURE U/S 30 TO 37 OF THE ACT. TH E LD CIT(A) ALSO CONFIRMED THE SAME. BEFORE US, THE LD A.R SUBMITTED THAT IDENTICAL ISSU E HAS ARISEN BEFORE THE TRIBUNAL AND THE ITAT HAS RESTORED THE MATTER BACK TO THE FILE O F THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS. IN THIS REGARD, HE INVITED OUR ATTENTI ON TO THE ORDER DATED 11.7.2014 PASSED IN THE ASSESSEES HAND IN ITA NO.1583/MUM/2011 RELA TING TO ASSESSMENT YEAR 1998-99. WE NOTICE THAT THE TRIBUNAL, IN THE ABOVE SAID ASSE SSMENT YEAR, HAS FOLLOWED THE DECISION RENDERED BY THE CO-ORDINATE BENCH IN THE A SSESSEES OWN CASE RELATING TO ASSESSMENT YEARS 1994-95 TO 1997-98 IN ITA NO.2308, 2307, 2309 & 2310/MUM/2011. WE HAVE GONE THROUGH THE ORDER PASSED BY THE TRIBUN AL FOR AY 1998-99, WHEREIN THE TRIBUNAL HAS EXTRACTED THE OBSERVATIONS MADE BY THE CO-ORDINATE BENCH IN THE ORDER PASSED FOR AY 1994-95 TO 1997-98, WHEREIN THE TRIBU NAL HAS EXPLAINED THE CONCEPT OF LEASE EQUALIZATION CHARGE AND ACCORDINGLY RESTORED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR CARRYING OUT FRESH EXAMINATIO N. CONSISTENT WITH THE VIEW TAKEN BY THE TRIBUNAL IN THE EARLIER YEARS, WE SET ASIDE THE ORDERS OF LD CIT(A) IN ALL THE THREE YEARS UNDER CONSIDERATION AND RESTORE THE SAME TO T HE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO DECIDE THE ISSUE AFRESH IN THE LIG HT OF DISCUSSIONS MADE BY THE TRIBUNAL IN AY 1994-95 TO 1997-98. 5 AS EVIDENT FROM THE ORDER, THE HONBLE BENCH HAS ME RELY FOLLOWED THE CONSISTENT VIEW TAKEN BY THE TRIBUNAL IN EARLIER YE ARS AND RESTORED THE MATTER BACK FOR FRESH ADJUDICATION TO THE FILE OF L D.AO ON IDENTICAL LINES. IT IS QUITE DISCERNIBLE THAT THE ORDER OF LD. FIRST APPEL LATE AUTHORITY, ON THE ISSUE, HAS BEEN SET ASIDE AND LD. AO HAS BEEN DIRECTED TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH DIRECTIONS ISSUED BY TRIB UNAL IN AYS 1994-95 TO 1997-98. IT IS ALSO OBSERVED THAT THE BINDING DECIS ION OF HONBLE DELHI HIGH COURT IN VIRTUAL SOFT SYSTEMS LTD. (341 ITR 593 DAT ED 07/02/2012) AND THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CAS E OF PRAKASH LEASING LTD. WAS MUCH AVAILABLE AT THE TIME OF AFORESAID AD JUDICATION BY TRIBUNAL ON 17/12/2014 AND HONBLE SUPREME COURT HAS APPROVED T HE SAME ON 24/04/2018 SUBSEQUENT TO ADJUDICATION BY TRIBUNAL. HOWEVER, THE SAID FACT WOULD NOT MATERIALLY ALTER THE LEGAL POSITION SINCE THE DECISION OF HONBLE DELHI HIGH COURT AS WELL AS HONBLE KARNATAKA HIGH COURT WAS ALSO BINDING IN NATURE AND VERY MUCH AVAILABLE AT THE TIME OF PA SSING OF THE AFORESAID ORDER BY THE TRIBUNAL. IT IS ALSO EVIDENT THAT THE DECISION OF HONBLE DELHI HIGH COURT IN VIRTUAL SOFT SYSTEMS LTD. AND THE DEC ISION OF HONBLE KARNATAKA HIGH COURT IN PRAKASH LEASING LTD. WERE A LREADY CONSIDERED BY THE TRIBUNAL WHILE PASSING ORDERS FOR AYS 1994-95 T O 1997-98 ON 06/09/2013. THE BENCH WHILE PASSING ORDER FOR AY 19 99-2000, IN HIS WISDOM, THOUGHT FIT TO FOLLOW THE CONSISTENT VIEW T AKEN BY THE TRIBUNAL IN EARLIER YEARS AND RESTORED THE MATTER BACK TO THE F ILE OF LD. AO FOR FRESH ADJUDICATION WITH A VIEW TO ENABLE THE REVENUE TO T AKE CONSISTENT STAND IN THE MATTER. THEREFORE, THE PLEA AS URGED BY THE ASS ESSEE IN THE APPLICATION, IN THIS REGARD, COULD NOT BE ACCEPTED. HENCE, FINDI NG NO MISTAKE APPARENT 6 FROM RECORD AS ENVISAGED BY THE PROVISIONS OF SEC. 254(2), WE DECLINE TO INTERFERE IN THE ORDER, ON THIS POINT. CONSEQUENTLY , THE APPLICATION STAND DISMISSED. 3.3 SIMILAR IS THE GRIEVANCE OF ASSESSEE IN FOLLOWI NG APPLICATIONS: - NO. MA NOS. ASSESSMENT YEAR 1. 479/MUM/2018 2000-01 2. 480/MUM/2018 2001-02 3. 481/MUM/2018 2002-03 4. 576/MUM/2018 2003-04 5. 575/MUM/2018 2004-05 6. 469/MUM/2018 1998-99 SINCE FACTS ARE PARI-MATERIA THE SAME, ALL THESE AP PLICATIONS STAND DISMISSED. 4.1 THE APPLICATION MA NO.690/MUM/2018 FOR AY 1999 -2000 HAS BEEN PREFERRED AGAINST TRIBUNALS ORDER DATED 17/12/2014 IN REVENUES APPEAL ITA NO.5987/MUM/2002. THE ASSESSEE SEEK REPLACEMENT OF WORD OPERATING AS MENTIONED IN PARA-12 OF THE ORDER BY THE WORD FINANCE SINCE AS PER THE APPLICATION, THE ASSESSEE WAS ENGAGED IN FINANCE LE ASE. 4.2 THE POINT URGED BY THE ASSESSEE FIND PLACE IN P ARA-12 OF THE ORDER, WHICH READ AS UNDER: - 12. NEXT COMMON ISSUE URGED BY THE REVENUE IN AL L THE THREE YEARS IS THAT THE CLAIM OF DEPRECIATION MADE ON LEASED ASSETS. IN AY 1996-97, THE CO-ORDINATE BENCH OF TRIBUNAL HAS ALLOWED THE CLAIM OF DEPRECIATION ON LEASED ASS ETS BY FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ICDS LIMITED ( 29 TAXMAN.COM 129). THERE SHOULD NOT BE ANY DISPUTE THAT THE ASSESSEE IS ENTI TLED TO DEPRECIATION, IF IT HAS LEASED OUT THE ASSETS UNDER OPERATING LEASE. THE AO HAD T AKEN THE VIEW THAT THE LEASE TRANSACTIONS ENTERED INTO BY THE ASSESSEE WERE NOT GENUINE LEASE TRANSACTIONS. HOWEVER, THE LD CIT(A) HAS COME TO THE CONCLUSION T HAT THE LEASE TRANSACTIONS WERE GENUINE IN NATURE AND HE HELD SO BY PLACING RELIANC E ON THE DECISION RENDERED IN THE PRECEDING YEARS. IT WAS SUBMITTED THAT THE LEASE T RANSACTIONS HAS BEEN ACCEPTED BY THE 7 TRIBUNAL IN THE EARLIER YEARS AND ACCORDINGLY DEPRE CIATION WAS ALLOWED. ACCORDINGLY, CONSISTENT WITH THE VIEW TAKEN IN THE EARLIER YEARS , WE UPHOLD THE ORDER OF LD CIT(A) ON THIS ISSUE. IT IS QUITE EVIDENT THAT THE CLAIM MADE BY THE ASSE SSEE HAS BEEN ACCEPTED AND THE DEPRECIATION OF LEASED ASSETS HAVE BEEN ALL OWED SINCE THE LEASE TRANSACTIONS HAVE BEEN ACCEPTED TO BE GENUINE BY TH E TRIBUNAL IN EARLIER YEARS. WE FIND THAT NO ELABORATE FINDING HAS BEEN R ENDERED BY THE BENCH ON THE FACTUAL ASPECT WHETHER THE TRANSACTIONS WERE IN THE NATURE OF FINANCE LEASE OR OPERATING LEASE. THE MAIN ISSUE WAS WHETHER THE TRANSACTIONS WERE GENUINE IN NATURE ON NON-GENUINE IN NATURE. UP ON PERUSAL OF CIT(A) ORDER FOR THIS YEAR, AS PLACED ON RECORD, WOULD ALS O SHOW THAT NO SUCH FACTUAL FINDINGS WERE RENDERED BY LEARNED FIRST APP ELLATE AUTHORITY IN ITS ORDER. THE DEPRECIATION WAS ALLOWED BY FOLLOWING EA RLIER YEARS ORDERS AND BY OBSERVING THAT THE APPELLANT WERE THE OWNERS OF LEASED ASSETS AND THEY HAVE BEEN USED FOR THE BUSINESS PURPOSE ALSO. THERE FORE, THE POINT URGED BY THE ASSESSEE COULD NOT BE ACCEPTED SINCE THERE I S NO MISTAKE APPARENT FROM RECORD IN TERMS OF SEC. 254(2) WHICH WOULD WAR RANT INTERFERENCE IN THE ORDER. THE APPLICATION MERELY SEEKS FURTHER FACTUAL FINDING IN THE MATTER AND SEEK MERE IMPROVEMENT IN THE ORDER, WHICH IS IMPERM ISSIBLE. RESULTANTLY, WE DISMISS THE APPLICATION. 4.3 SIMILAR IS THE GRIEVANCE OF ASSESSEE IN FOLLOWI NG APPLICATIONS: - NO. MA NOS. ASSESSMENT YEAR 1. 691/MUM/18 2000-01 2. 692/MUM/2018 2001-02 3. 693/MUM/2018 2002-03 4. 468/MUM/2018 1998-99 8 SINCE FACTS ARE PARI-MATERIA THE SAME, ALL THESE AP PLICATIONS STAND DISMISSED. 5.1 THE APPLICATION MA NO.625/MUM/2018 FOR AY 2003- 04 HAS BEEN PREFERRED AGAINST TRIBUNALS ORDER DATED 09/03/2016 IN REVENUES APPEAL ITA NO.4189/MUM/2007. THE ASSESSEE SUBMIT THAT THE REVENUE CHALLENGED THE DECISION OF LD. CIT(A) IN DELETING THE AMOUNT O F LEASE EQUALIZATION WHILE COMPUTING BOOK PROFITS U/S 115JB. THE SAID MATTER H AS ALSO BEEN RESTORED BACK BY THE TRIBUNAL TO THE FILE OF LD. AO FOR FRES H ADJUDICATION IN VIEW OF THE FACT THAT SIMILAR ISSUE, IN ASSESSEES APPEAL, WAS RESTORED BACK TO THE FILE OF LD. AO. THE ASSESSEE HAS RAISED SIMILAR ARGUMENTS A S RAISED IN MA NO. 478/MUM/2018 AND SUBMITTED THAT SINCE THE ISSUE IS NOW COVERED IN ASSESSEES FAVOR BY THE DECISION OF HONBLE SUPREME COURT, THE DIRECTIONS GIVEN IN THE ORDER MAY BE SET-ASIDE AND THE GROUND RAISED BY THE DEPARTMENT MAY BE DISMISSED. HOWEVER, THE PLEA URGE D BY THE ASSESSEE WOULD STAND DISMISSED SINCE WE HAVE DISMISSED SIMIL AR PLEA IN MA NO. 478/MUM/2018 AND DECLINED TO INTERFERE IN THE ORDER OF THE TRIBUNAL. CONSEQUENTIALLY, THIS APPLICATION WOULD ALSO STAND DISMISSED. 5.2 SIMILAR IS THE APPLICATION MA NO.626/MUM/2018 F OR AY 2004-05 WHEREIN IT HAS BEEN URGED THAT REVENUES GROUND CHA LLENGING ADJUSTMENT OF LEASE EQUALIZATION U/S 115JB BE DISMISSED. TAKING T HE SAME VIEW AS TAKEN IN MA NO.625/MUM/2018, WE DISMISS THIS APPLICATION ALSO. 9 6. RESULTANTLY, ALL THE APPLICATIONS STAND DISMISSE D IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH FEBRUARY, 2020. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 14/02/2020 SR.PS:-JAISY VARGHESE ! / 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 FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.