ACIT, CIRCLE- 1, LTU, NEW DELHI vs. INDIAN RAIL FINANCE CORP. LTD., NEW DELHI

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ITA 1746/DEL/2018Status: DisposedITAT Delhi01 September 2021AY 2013-145 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the issue of lease equalization charges and their treatment for book profit computation has been decided in favour of the assessee by the Hon'ble High Court of Delhi and affirmed by the Hon'ble Supreme Court. Therefore, the CIT(A)'s decision following these precedents was upheld.

What were the facts?

The Revenue appealed against the deletion of an addition of Rs. 3979.84 crores made by the Assessing Officer on account of capital recovery, which was treated as 'lease income' by classifying the lease as 'operational' instead of 'financial'. The assessee contended that this issue was already decided in their favour by the High Court.

What were the issues?

Whether lease equalization charges can be disallowed/deleted from the profit and loss account for computing book profit under Section 115JA of the Act, and whether a lease should be treated as operational or financial.

Which sections of the Income-tax Act were involved?

Section 115JA

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI ‘C’ BENCH,

Before: SHRI N.K. BILLAIYA, & SHRI KULDIP SINGH

For Appellant: Shri S. Krishnan, Adv
Hearing: 01.09.2021Pronounced: 01.09.2021

PER N.K. BILLAIYA, ACCOUNTANT MEMBER,

1.

This appeal by the revenue is preferred against the order of the Commissioner of Income Tax [Appeals] - 22, New Delhi dated 20.12.2017 pertaining to Assessment Year 2013-14.

3.

The solitary grievance of the Revenue is that the ld. CIT(A) erred in deleting the addition of Rs. 3979.84 crores on account of capital recovery as ‘lease income’ made by the Assessing Officer by treating the lease as ‘operational lease’ and not a ‘financial lease’.

4.

At the very outset, the ld. counsel for the assessee brought to our notice that the impugned grievance of the Revenue has already been decided by the Hon'ble High Court of Delhi in favour of the assessee and against the revenue.

5.

We find that similar additions were made in A.Ys 2004-05, 2006- 07 to 2011-12 and the matter travelled upto the Tribunal. The Tribunal decided the issue in favour of the assessee and against the Revenue. The revenue preferred appeal before the Hon'ble High Court of Delhi for A.Ys 2001-02, 2007-08 to 2009-10 with similar grounds of appeal. The Hon'ble High Court in 362 ITR 548 had the occasion to consider the following issue:

“whether the lease equalization charges can be disallowed/deleted from the assessee profit and loss account for computing book profit under Section 115JA of the Act?

6.

The Hon'ble Jurisdictional High Court decided the issue in favour of the assessee and against the Revenue.

7.

This quarrel was considered by the Hon'ble Supreme Court in the case of Virtual Soft Systems Ltd 404 ITR 409 wherein the Hon'ble Apex Court held that the decision of the Hon'ble High Court cannot be interfered with and in this judgment, the Hon'ble Supreme Court affirmed the order of the Hon'ble High Court of Delhi in the case of the assessee.

8.

We find that the ld. CIT(A) has decided the appeal in favour of the assessee by following the precedents as discussed hereinabove.

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

9.

In the result, the appeal filed by the Revenue in is dismissed.

The order is pronounced in the open court on 01.09.2021 in the presence of both the rival representatives.

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