ACIT,CIRCLE-2(1), CHANDIGARH vs. M/S FASTWAY TRANSMISSIONS PVT.LTD., CHANDIGARH

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, “B” CHANDIGARH

BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI R.L NEGI, JUDICIAL MEMBER आयकर अपील सं./ITA Nos. 315 & 316/Chd/2020 िनधा�रण वष� / Assessment Years : 2016-17 & 2017-18 The ACIT, M/s Fastway Transmissions Pvt. Ltd., बनाम Circle-2(1), Plot No.17, Industrial Area-1, Chandigarh Chandigarh

�थायीलेखासं./PAN NO: AABCF1854B अपीलाथ�/Appellant ��यथ�/Respondent C.O. Nos 1 & 2/Chd/2021 आयकर अपील सं./ITA Nos. 315 & 316/Chd/2020 िनधा�रण वष� / Assessment Years : 2016-17 & 2017-18 M/s Fastway Transmissions The ACIT, बनाम Pvt. Ltd., Circle-2(1), Plot No.17, Industrial Area-1, Chandigarh Chandigarh �थायीलेखासं./PAN NO: AABCF1854B अपीलाथ�/Appellant ��यथ�/Respondent Hearing through video Conferencing

राज�वक�ओरसे/ Revenue by : Smt. C.Chandrakanta, CIT िनधा�रतीक�ओरसे/Assessee by : Shri Ashwani Kumar, CA & Shri Bhavesh Jindal, CA

सुनवाईक�तारीख/Date of Hearing : 22.03.2021 उदघोषणाक�तारीख/Date of Pronouncement : 24.03.2021 आदेश/Order आदेश आदेश आदेश Per R.L. Negi, Judicial Member:

The Revenue and the assessee have filed the captioned appeals and

cross objections against the common order dated 22.6.2020 passed by

2 ITA No. 315 & 316-c-2020 for AY 2016-17 & 2017-18 & C.O. Nos 1 & 2-C-2021 AY 2016-17 & 2017-18 – M/s Fastway Transmissions Pvt. Ltd, Chandigarh the Commissioner of Income Tax (Appeals)-1, Chandigarh [(for short

‘the CIT(A)], pertaining to the assessment years 2016-17 & 2017-18

vide which the Ld. CIT(A) has partly allowed the appeals filed by the

assessee against the assessment orders passed u/s 143(3) of the Income

Tax Act, 1961 (for short 'the Act'). Since these appeals and cross

objections pertain to the same assessee for two assessment years and the

Revenue has raised identical grounds in both the appeals and the

assessee has raised identical grounds in both the cross objections, these

were clubbed, heard together and are being disposed of by this common

and consolidated order for the sake of convenience.

ITA No. 315/Chd/2020 A.Y. 2016-17

2016-17 are that the assessee engaged in the business as Multi

System Operators and digital cable, filed its return of income for the

assessment year under consideration declaring total income of Rs.

60,79,98,8000/- The case of the assessee was selected for scrutiny

and the AO passed assessment order determining the total income at

Rs.133,03,80,120/- inter alia making addition of Rs. 90,91,34,741/-

on account of disallowance of lease rental claimed by the assessee on

set top boxes taken on lease, addition of Rs. (-) 5,52,39,403/- on

account of depreciation calculated on equipments procured from

3 ITA No. 315 & 316-c-2020 for AY 2016-17 & 2017-18 & C.O. Nos 1 & 2-C-2021 AY 2016-17 & 2017-18 – M/s Fastway Transmissions Pvt. Ltd, Chandigarh CISCO on lease hold basis, addition of Rs. 9,89,077/-on account of

disallowance of interest attributable to work in progress and addition

of Rs. 1,83,17,325/- u/s 14A read with Rule 8D of the Income Tax

Rules.

CIT(A). The ld. CIT(A) after hearing the assessee partly allowed the

appeal and deleted the addition of Rs. (-) 5,52,39,403/-made on

account of depreciation calculated on equipments procured from

CISCO on lease hold basis, addition of Rs. 9,89,077/-on account of

disallowance of interest attributable to work in progress and addition

of Rs. 1,83,17,325/- u/s 14A read with Rule 8D of the Income Tax

Rules, however, confirmed the addition of Rs. 90,91,34,741/- made

on account of disallowance of lease rental claimed by the assessee on

set top boxes taken on lease. The Revenue is in appeal against the

said findings of the ld. CIT(A).

following grounds of appeal:

4 ITA No. 315 & 316-c-2020 for AY 2016-17 & 2017-18 & C.O. Nos 1 & 2-C-2021 AY 2016-17 & 2017-18 – M/s Fastway Transmissions Pvt. Ltd, Chandigarh

challenged the action of the Ld. CIT(A) in allowing depreciation @

60% on STBs following the decision of the Chandigarh Bench of the

ITAT rendered in assessee,s own cases for the assessment years

2012-13 to 2015-16.

5 ITA No. 315 & 316-c-2020 for AY 2016-17 & 2017-18 & C.O. Nos 1 & 2-C-2021 AY 2016-17 & 2017-18 – M/s Fastway Transmissions Pvt. Ltd, Chandigarh 6. At the outset, the ld. Counsel for the assessee submitted before

us that this issue is covered in favour of the assessee by the decision

of the Chandigarh Bench of the Tribunal in assessee’s appeals for the

assessment years 2012-13,2013-14, 2014-15 and 2015-16. The ld.

Counsel further submitted that since the ld. CIT(A) has allowed the

claim of the assessee by following the order dated 06.05.2020 passed

by the ITAT Chandigarh in assessee,s appeals for the aforesaid

assessment years, there is no merit in this ground of the revenue’s

appeal, therefore this ground of appeal is liable to be dismissed.

fairly admitted that the jurisdictional Tribunal has decided the

identical issue in favour of the assessee in assessee’s cases for the

previous years, however, supported the action of the AO.

decision of the coordinate Bench rendered in assessee’s cases

referred above. As pointed out by the ld. Counsel for the assessee,

the coordinate Bench has decided this issue in favour of the assessee

in ITA No.547/Chd/2017 for AY 2013-14, ITA No.139/Chd/2019 for

AY 2012-13, ITA No. 842/Chd/2018 for AY 2014-15 and ITA

No.140/Chd/2019 for AY 2015-16. The findings of the coordinate

Bench read as under:

6 ITA No. 315 & 316-c-2020 for AY 2016-17 & 2017-18 & C.O. Nos 1 & 2-C-2021 AY 2016-17 & 2017-18 – M/s Fastway Transmissions Pvt. Ltd, Chandigarh “43. Even otherwise, it is the own case of the Department that the STBs has a short life of three years. Referring to the clauses of the Master Lease Agreement with CISCO, as discussed above, it has been vehemently contended by the Department that the lease deed was so devised that the term of lease ends with the life of the equipment; that after the payment of the last installment, the equipment is rendered valueless; That the average life of the STBs is three years only and that is why the lease deed also ends at three years. In this respect, in the written submissions filed on 13.12.2017 by the Department, strong reliance has been placed on the observations of the Assessing officer in the assessment order in this respect, which reads as under:- “The economic life span of asset namely Set Top Box (STB) is 3 to 4 years. This fact is ascertained as per the TRAI guideline (page 232, Para 19 & 21 of DPB-II) and the sworn statement recoded u/s 131 on 20.2.2014 of Sh Sushil Thakur S/o Sh. Karam Singh Thakur working as Assistant Manager (accounts) in the assessee company since 2008 (page 143 of DPB-III) wherein he had categorically stated that ‘that usage life of STB is approx. 3-4 years only and lease tenure is also 3-4 years’. The tenure as per lease schedule is nearly the same as economic life of the equipment. Thus, lease period is settled in such a way so that the CISCO fully recovers the investment in the asset together with interest thereon within the life span of the asset.” Further, in the written submissions dated 26.2.2018, it has been submitted as under:- “The physical life of the assets is not relevant here. It is the economic life span of STB which is relevant as per ITAT Special Bench decision in Indus Ind Bank and accounting standard. As per TRAI guideline and sworn statement u/s 131 of Shri Sushil Thakur the economic life span is 3 to 4 years. Even otherwise the assessee has charged depreciation of these assets @ 27.82% (page 176

7 ITA No. 315 & 316-c-2020 for AY 2016-17 & 2017-18 & C.O. Nos 1 & 2-C-2021 AY 2016-17 & 2017-18 – M/s Fastway Transmissions Pvt. Ltd, Chandigarh of DPB 1 on STB / Headends) in its books viz-a-viz charging of depreciation on other assets @ 14%. Thus major part of the life of STB is covered in 3 to 4 years.” Further, the assessing officer has also placed reliance on TRAI notification No. 1-19/2012-B&CS dated 27.3.2013 as reproduced in the assessment order as under: Sl. Particulars Tariff 1. Rent per month per set top box Rs.32.93 (exclusive of for the first three years taxes) 2. After three years from the date of No rent. The set top installation box shall become the property of the subscriber except smart card/viewing 3. Security Deposit (Adjustable) Rs. 800/- 4. Amount of Security Deposit As per attached Table- refunded on return of the Set Top B Box 5. Installation Charges Nil 6. Activation charges Nil 7. Smart Card/Viewing Card Charges Nil 8. Repair and Maintenance Nil Charges for three years from the date of installation

The Assessing Officer has observed that as per the above tariff plan adopted by the assessee with the consumers, at the end of 3 years from the date of installation of the STB in consumer’s premises, the consumer becomes the owner of the property. The assessing officer in this respect has observed that if the assessee was not the owner of the equipment, how can it pass on the ownership to the consumer after 3 years from the date of installation. We have already agreed in this respect with the contention of the Department. However, as per the TRAI notification also, the life of the STBs has been taken at 3 years. As per the said notification of the TRAI, after 3 years, the consumer becomes the owner of

8 ITA No. 315 & 316-c-2020 for AY 2016-17 & 2017-18 & C.O. Nos 1 & 2-C-2021 AY 2016-17 & 2017-18 – M/s Fastway Transmissions Pvt. Ltd, Chandigarh the equipment but at the same time, the service provider (assessee herein) is also absolved of the liability of any warranty / guarantee or maintenance of the equipment, meaning thereby the assessee recovers the rent for 3 years from the consumer and further the security deposit received from the consumer is forfeited/appropriated to the assessee at the end of 3 years and on the other hand the consumer becomes the owner of the equipment. As observed in the assessment order, at the end of the 3 years, the security deposit so forfeited or appropriated to it is offered as income by the assessee. The equipment thus is deemed to be sold to the consumer. Thus, the agreement of the assessee with consumers in substance is a hire purchase agreement for a term of 3 years. The equipment remains on hire for 3 years with the consumer but is deemed to be sold at the end of 3 years. Here, the interesting point is that when at the end of 3 years, the equipment is sold and the receipt / sale price along with the hire charges received from the consumer during the period already offered to the income tax, how can the deduction of corresponding investment / expenditure incurred for the purchase of such equipment can be postponed beyond such date of sale of equipment? The income under the Income Tax Act is the resultant profit after deduction of the investment / expenditure incurred from the total sale price received / receivable. Therefore, when the total receipt relating to the equipment either in the shape of hire charges or sale price in the shape of security deposit appropriated at the end of 3 years, is accounted for as receipt/income, then the deduction of the corresponding expenditure either in the shape of depreciation or in the shape of revenue expenditure, under no circumstances, can be delayed or postponed beyond the date of sale of equipment. The expenditure incurred for the purchase of such equipment is required to be set off from the final receipt / sale price by whatever manner either as a deduction on account of depreciation or as revenue expenditure. When the assessee no more remains the owner of the equipment, how can it claim depreciation on the same,

9 ITA No. 315 & 316-c-2020 for AY 2016-17 & 2017-18 & C.O. Nos 1 & 2-C-2021 AY 2016-17 & 2017-18 – M/s Fastway Transmissions Pvt. Ltd, Chandigarh which is sine qua non for claim of depreciation. The entire cost incurred by the assessee on the equipment is required to be squared off at the time of sale of equipment. Hence, under the circumstances, the assessee will be entitled either to the deduction of the cost of the equipment either as revenue expenditure and if the same is to be treated as capital asset, then depreciation cannot be postponed beyond the actual life / ownership of the equipment and the assessee will be entitled to the deduction of the written down value of the equipment at the end of 3 years from the sale price received. However, the peculiar facts and circumstances of the case are that it is the own case of the department that the life of the equipment is 3 years and that the asset in the hands of the assessee is a capital asset, then we cannot understand, how can the department press an argument for the grant of depreciation at a lower rate which may be extended beyond the life of the asset. Under these circumstances also, the assessee, in our view, is entitled to the higher rate of depreciation which is commensurate with the life of the asset. In view of our findings given above, it is held that the assessee is entitled to deprecation @ 60% as applicable to the computers for the year under consideration. This ground is accordingly stands allowed.”

ground before the ld. CIT(A), which reads as under:

“Without prejudice, that the Ld. Assessing Officer was not justified to restrict the claim of depreciation on set of boxes at 15% whereas rightly allowable at 80%”

that neither any new fact nor any new evidence is required to be produced for

10 ITA No. 315 & 316-c-2020 for AY 2016-17 & 2017-18 & C.O. Nos 1 & 2-C-2021 AY 2016-17 & 2017-18 – M/s Fastway Transmissions Pvt. Ltd, Chandigarh adjudicating the said ground. So, the ld. CIT(A) after hearing assessee

decided the aforesaid additional ground in favour of the assessee by following

the decision of the coordinate Bench in assessee’s appeals for the assessment

years 2013 to 2015-16. In our considered view, since there is no material

change in the facts of the present case and the issue involved is identical to the

issue involved in the assessee’s appeals for the assessment years 2013 to

2015-16, the ld. CIT(A) has rightly followed the decision of the coordinate

Bench and decided in favour of the assessee. Hence, we do not find any reason

to interfere with the findings of the ld. CIT(A). We accordingly uphold the

findings of the ld. CIT(A) and dismiss this ground of appeal of the Revenue.

CIT(A) in deleting the addition of Rs. 9,89,077/- out of the total interest

claimed by the assessee. The ld. Counsel for the assessee pointed out that this

ground of appeal is covered in favour of the assessee by the order of the ITAT

Chandigarh, in assessee’s own appeals for the assessment years 2012-13 to

2015-16 referred above. The ld. Counsel further submitted that since the ld.

CIT(A) has decided this issue in favour of the assessee by following the

decision of the Tribunal, there is no infirmity in the impugned order passed by

the ld. CIT(A).

favour of the assessee by the order of the Tribunal, however, supported the

11 ITA No. 315 & 316-c-2020 for AY 2016-17 & 2017-18 & C.O. Nos 1 & 2-C-2021 AY 2016-17 & 2017-18 – M/s Fastway Transmissions Pvt. Ltd, Chandigarh findings of the AO.

submissions made by the ld. Counsel. We notice that this issue came up before

the coordinate Bench in assessee’s appeals for the assessment years 2012-13

to 2015-16 and the coordinate Bench decided the same in favour of the

assessee holding as under:

“54. We have heard the rival contentions. We find merit in the contention of the Ld. counsel for assessee. The Ld. Counsel has demonstrated that there were sufficient own funds available with the assessee company in the form of share capital and reserves to the tune of Rs.105 crores and Rs.107 crores respectively to meet the advance given of Rs.3.20 crores. The issue is now squarely covered by the various decisions of the High Courts as well as of the apex court of the country including that of the Hon'ble Jurisdictional High Court in the case of ‘Bright Enterprises Pvt. Ltd Vs. CIT, Jalandhar’ (supra), ‘CIT Vs. Kapsons Associates’ (2016) 381 ITR 204 (P&H) and the latest decision of the Coordinate Bench of the Tribunal in the case of ‘ACIT Vs. Janak Global Resources Pvt Ltd’ ITA No. 470/Chd/2018 order dated 16.10.2018, holding that that if the assessee is possessed of sufficient own interest free funds to meet the investments / interest free advances, then, under the circumstances, presumption will be that interest free advances / investments have been made by the assessee out of own funds / interest free funds. Reliance in this respect can also be placed on the decision of the Hon'ble Supreme Court in the case of ‘Hero Cycles (P) Ltd Vs. CIT’ 379 ITR 347 (SC) and also on the latest decision of the

12 ITA No. 315 & 316-c-2020 for AY 2016-17 & 2017-18 & C.O. Nos 1 & 2-C-2021 AY 2016-17 & 2017-18 – M/s Fastway Transmissions Pvt. Ltd, Chandigarh Hon'ble Supreme Court in the case of ‘CIT (LTU) Vs. Reliance Industries Ltd.’ [2019] 410 ITR 466 (SC). Thus, as per the settled law no disallowance u/s 36(1)(iii) of the Act is warranted on this issue. This ground is accordingly allowed in favour of the assessee.”

assessee has shown capital work in progress amounting to Rs. 2,32,75,003 but

had not capitalized the interest on the same for the reason that the appellant

had huge interest free reserves and own funds. As pointed out by the ld.

CIT(A), ld. AR demonstrated during the appellate proceedings that the

assessee had share capital and reserves to the tune of Rs. 145.34 crore and Rs.

63.52 crore respectively to meet the capital work in progress. Since, there is

no material change in the facts of the present case, the Ld. CIT(A) has rightly

deleted the addition made by the AO by following the decision of the

coordinate Bench. In our considered view, the findings of the ld. CIT(A) are in

accordance with the decision of the coordinate Bench rendered in the

assessee’s own appeals for the assessment years 2012-13 to 2015-16 discussed

above. Hence, we find no merit in the contention of the Revenue. Accordingly,

we uphold the findings of the ld. CIT(A) and dismiss this ground of appeal of

the Revenue.

of the ld. CIT(A) in deleting the addition made by the AO u/s 14A. The ld.

13 ITA No. 315 & 316-c-2020 for AY 2016-17 & 2017-18 & C.O. Nos 1 & 2-C-2021 AY 2016-17 & 2017-18 – M/s Fastway Transmissions Pvt. Ltd, Chandigarh counsel for the assessee pointed out that this issue is covered by the decision

of the Chandigarh Tribunal in assessee’s appeal for the assessment years

2014-15 and 2015-16. Since the ld. CIT(A) has decided the issue in favour of

the assessee, by following the decision of the Tribunal, there is no merit in the

contention of the Revenue.

this issue in favour of the assessee in assessee’s appeals. However, the ld. DR

supported the findings of the AO.

order passed by the coordinate Bench in assessee’s appeal referred above. As

pointed out by the ld. CIT(A) the assessee had no exempt income, during the

previous year, however, the AO computed the disallowance of Rs.

1,83,17,325/- u/s 14 A read with rule 8D of the Income Tax Rules. The Ld.

CIT(A) by following the decision of the Tribunal in assessee’s appeals

referred above, deleted the addition. We notice that this issue came up before

the coordinate Bench for consideration in assessee’s appeals for the

assessment years 2014-15 and 2015-16 and the Bench deleted the addition

made u/s 14A of the Act holding as under:

“76. Ground No.11: Vide ground No.11 the assessee has agitated the confirmation of disallowance made by the AO u/s 14A of the Act in respect of the expenditure incurred for earning of tax-exempt income.

14 ITA No. 315 & 316-c-2020 for AY 2016-17 & 2017-18 & C.O. Nos 1 & 2-C-2021 AY 2016-17 & 2017-18 – M/s Fastway Transmissions Pvt. Ltd, Chandigarh The Ld. Counsel for the assessee has submitted that the assessee did not earn any tax exempt income during the year. Hence, no disallowance u/s 14A was warranted.

favour of the assessee in assessee’s own appeals for the assessment years

2014-15 and 2015-16. Since, the findings of the ld. CIT(A) are in accordance

with the decision of the coordinate Bench in assessee’s appeals referred above,

we do not find any reason to interfere with the findings of the ld. CIT(A).

Accordingly, we uphold the findings of the ld. CIT(A) and dismiss this ground

15 ITA No. 315 & 316-c-2020 for AY 2016-17 & 2017-18 & C.O. Nos 1 & 2-C-2021 AY 2016-17 & 2017-18 – M/s Fastway Transmissions Pvt. Ltd, Chandigarh of appeal of the Revenue.

Cross objection Nos. 1/Chd/2021:-

The assessee has challenged the findings of the ld. CIT(A) by

filing Cross Objection on the following grounds:

“That order passed u/s 250(6) of the Income Tax Act, 1961 (in short 'the Act') by the Ld. CIT(A)-1, Chandigarh is against law and facts on the file in as such as he was not justified to uphold the action of the Ld. Assessing Officer in not allowing lease rental on set top boxes amounting to Rs 9,91,34,741/- (A.Y. 2016- 17) and Rs. 50,23,75,476/- (A.Y. 2017-18) taken on lease by the appellate company from M./s Cisco Systems Capital India Pvt. Ltd.”

the decision of the Tribunal rendered in assessee’s own appeals for the

assessment years 2012-13 to 2015-16. The ld. Counsel fairly admitted that the

Tribunal has decided the identical issue against the assessee in assessee’s own

appeals for the earlier years.

coordinate Bench. The assessee had claimed depreciation on the custom duty

component and all incidental costs for acquiring assets from CISCO. The AO

observing that since the assessee has claimed depreciation it cannot claim

deduction u/s 37 of the Act for the amount of lease rent paid to CISCO. The

16 ITA No. 315 & 316-c-2020 for AY 2016-17 & 2017-18 & C.O. Nos 1 & 2-C-2021 AY 2016-17 & 2017-18 – M/s Fastway Transmissions Pvt. Ltd, Chandigarh ld. CIT(A) confirmed the action of the AO by following the decision of the

coordinate Bench in assessee’s appeals for the assessment years 2012-13 to

2015-16. The findings of the coordinate Bench read as under:-

“27. Considering the above clauses of the lease deed in question and in the light of proposition settled through various decisions of the higher courts and highest court of the country that when the terms of the contract looked into with the relevant circumstances that are determinative of the nature of the such contracts, we have no hesitation to hold that the transaction in the present case is that of a loan/Finance. After going through the various terms of the deed, we find that the only role of the lessor in the present arrangement is to finance the transaction of purchase of equipment, with the lessee selecting the equipment to be supplied by the dealer, using it for its expected economic life, paying back the entire cost of the equipment over the lease tenure and exercising all rights of ownership over the asset and also bearing the risks of losses, damages, etc. associated with the ownership of the asset and no option to the lessee to terminate the lease and return the asset before the end of the lease term. Thus, it is neither a lease, nor a hire purchase agreement, but a loan/finance arrangement between the parties. So far as the contention of the Ld. Counsel for the assessee that the title of the asset remains with the lessor is concerned, we find from the clauses of the agreement that the said title is retained for the purpose of security for recovery of principal amount. So far as the contention of the Ld. counsel for the assessee that in view of the mandatory requirement for the companies Act as per Companies Act to follow the Accounting Standard AS-19, the lease transaction with CISCO was booked as Finance Lease is concerned, though

17 ITA No. 315 & 316-c-2020 for AY 2016-17 & 2017-18 & C.O. Nos 1 & 2-C-2021 AY 2016-17 & 2017-18 – M/s Fastway Transmissions Pvt. Ltd, Chandigarh the law is well settled that the entries in the books of account are not determinative of the nature of the transaction , however we do not agree with the contention that the assessee in this case was mandatorily required to treat the lease as Finance lease in the books of account. We agree with the submission of the Ld. DR that AS-19 only defines the nature of the lease transaction; however, it does not mandate that every lease transaction is to be treated as finance lease in the books of account. The assessee in this case, fully knowing the facts and as per the actual intentional between the parties relating to the nature of the transaction, out of its own will, has treated the transaction in question as finance lease. However, we have already held that said treatment by the assessee of the transaction in question as per AS-19 has no relevance so far as the claim of deductions under Income Tax Act is concerned. The contention of the Ld. Counsel for the assessee that the lessor, CISCO had been allowed depreciation on the assets by the ITAT from A.Y 2008-09 to 2010-11, thus proving that its ownership of the assets stood accepted by the Revenue, in our view, is of no consequence since the present lease agreement was entered into on 07-12-2011, relating to A.Y. 2012-13 which is a subsequent assessment year. Even otherwise on going through the orders of the ITAT in the case of CISCO it is revealed that the issue before the Co-ordinate Bench of the ITAT related only to the rate of depreciation to which the assessee was eligible on the leased assets and the question regarding entitlement of claim of depreciation was never before it. Therefore, it cannot be said that the ITAT had decided the allowability of claim of CISCO of being owner of the asset. Even otherwise, if the CISCO has retained some ownership rights over the assets for the purpose of security of the loan amount and therefore, assuming, for the sake of

18 ITA No. 315 & 316-c-2020 for AY 2016-17 & 2017-18 & C.O. Nos 1 & 2-C-2021 AY 2016-17 & 2017-18 – M/s Fastway Transmissions Pvt. Ltd, Chandigarh arguments that the assets are not fully owned by the assessee, even then the provisions of section 32 will be attracted as it provides for claim of depreciation on assets owned fully or partly by an assessee. The contention of the Ld. Counsel that the Ld. CIT(A) himself has mentioned, “there is no doubt about the genuineness of the lease agreement”, in our view, is of no help to the assessee. The impugned order is to be read as a whole, and a single line or word cannot be chosen to interpret a different meaning. What the Ld. CIT(A) has conveyed is that though the execution of the lease deed is not doubted but the real intention behind the deed is to be gathered from the various clauses of the deed and facts and circumstances of the case. Thus, we have no hesitation in holding that the arrangement in the present case was a loan / finance arrangement in the guise of a lease agreement. 28. However, the controversy does not end here. Though the assessee is held to be the owner of the asset, however, the next question that arise is whether the asset is held by the assessee as business/trading asset or as a capital asset. The assessee, admittedly, further gives on hire the STBs to various consumers and installs those in their premises. The consumers deposit refundable security amount almost equal to the cost of the STBs to the assessee. Assessee charges monthly rent from the consumers for three years. After the expiry of three years, the STBs become the property of the consumers and at the same time the security deposit gets forfeited and appropriated to the income of the assessee, which is also offered/subjected to income tax. The transaction with consumers, thus, apparently appears to be of a “hire- purchase”, the assessee being the lesser cum seller, the detail of the transaction we will discuss in the later part of the order. However, the question that will arise at this stage as to an asset, held or further given on hire-

19 ITA No. 315 & 316-c-2020 for AY 2016-17 & 2017-18 & C.O. Nos 1 & 2-C-2021 AY 2016-17 & 2017-18 – M/s Fastway Transmissions Pvt. Ltd, Chandigarh purchase by an assessee who is in the business of letting & selling a particular type of good (STBs) on hire- purchase basis which is essential to and integral part of main business of ‘broadcasting of channels’ of the assessee, is to be treated as business/trading asset of the assessee eligible for claim of deduction of expenditure u/37 of the Act or as a capital asset of the assessee eligible for claim of deduction of depreciation under section 32 of the Act. Since, no arguments have been advanced on this issue by any of the parties, hence, in view of the discussion made in earlier paras of this order, we proceed to decide the next controversy treating the asset as a capital asset in the hand of the assessee. The assessee, therefore, is entitled only to claim interest paid as part of the said lease rentals as expenditure u/s 36 (1) (iii) of the Income Tax Act. The assessee, in view of the discussion made above, is not entitled to claim the principal component of alleged lease rent paid as ‘revenue expenditure’ u/s 37(1) of the Act. However, the assessee is also entitled to claim depreciation on the said assets purchased from borrowed capital.” 4. Since, the findings of the ld. CIT(A) are in accordance with the decision

of the coordinate Bench rendered in assessee’s appeals for the assessment

years 2012-13 to 2015-16, we do not find any reason to interfere with the

findings of the ld. CIT(A). Hence, we uphold the findings of the ld. CIT(A)

and dismiss the Cross Objection filed by the assessee.

ITA No.316/Chd/2020 for A.Y. 2017-18

Ground No 1 to 4 of this appeal are identical to Ground No. 1 to 5 of the

20 ITA No. 315 & 316-c-2020 for AY 2016-17 & 2017-18 & C.O. Nos 1 & 2-C-2021 AY 2016-17 & 2017-18 – M/s Fastway Transmissions Pvt. Ltd, Chandigarh Revenue’s appeal for the assessment year 2016-17 aforesaid. We have

dismissed the identical ground raised by the Revenue in its appeal for the

assessment year 2016-17. Since there is no material change in the facts of the

present case except the addition made by the AO, we do not find any reason to

take a different view. Hence, consistent with our findings in Revenue’s appeal

for the AY 2016-17 we dismiss ground No 1 to 4 of the present appeal for the

same reasons.

Revenue’s appeal for the assessment year 2016-17 aforesaid. We have

dismissed the identical ground raised by the Revenue in its appeal for the

assessment year 2015-16. Since there is no change in the facts of the present

case except the addition made by the AO, we dismiss ground No 5 of the

present appeal for the same reasons.

Revenue’s appeal for the assessment year 2016-17 aforesaid. We have

dismissed the identical ground raised by the Revenue in its appeal for the

assessment year 2015-16. Since there is no change in the facts of the present

case except the addition made by the AO, we dismiss ground No 6 of the

present appeal of the Revenue for the same reasons.

Cross objection Nos. 2/Chd/2021:-

21 ITA No. 315 & 316-c-2020 for AY 2016-17 & 2017-18 & C.O. Nos 1 & 2-C-2021 AY 2016-17 & 2017-18 – M/s Fastway Transmissions Pvt. Ltd, Chandigarh Ground raised by the assessee in the present Cross Objection is identical

to the Ground raised by the assessee in its Cross objection raised in its CO No

1/Chd/2021 for the assessment year 2016-17. We have dismissed the Cross

Objection No 1/Chd/2021 filed by the assessee. Since there is no material

change in facts of the present case, we do not find any reason to take a

different view. Hence, consistent with our findings in the Cross Objection for

AY 2016-17, we dismiss the present Cross for the same reasons.

In the result, appeals filed by the Revenue and Cross objections filed by

the assessee are dismissed.

Order pronounced on 24.03.2021.

Sd/- Sd/- ( N.K. SAINI) (R.L.NEGI) उपा�य� /Vice President �याियक सद�य सद�य/ Judicial Member उपा�य� उपा�य� उपा�य� �याियक �याियक �याियक सद�य सद�य Dated : 24.03.2021 “आर.के.” आदेशक�"ितिलिपअ#ेिषत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. "$यथ�/ The Respondent 3. आयकरआयु&/ CIT 4. आयकरआयु& (अपील)/ The CIT(A) 5. िवभागीय"ितिनिध, आयकरअपीलीयआिधकरण, च*डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड�फाईल/ Guard File आदेशानुसार/ By order, सहायकपंजीकार/ Assistant Registrar