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

आदेश / O R D E R Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 27/02/2015 of Ld. Commissioner of Income Tax, Mumbai allowing depreciation to the assessee on vehicles given on lease when the vehicles were not registered in the name of the assessee and were directly delivered to the parties using such vehicles. 2. During hearing of this appeal the learned D.R., Shri Kailash Kanojiya, advanced arguments which are identical to the grounds raised, defending the addition made by the learned Assessing Officer. None was present for the assessee in spite of issuance of registered AD notice. The assessee neither presented itself nor moved any adjournment petition. It seems that the assessee is not interested to pursue its appeal, therefore, we have no option but to proceed ex-parte, qua the assessee and tend to dispose of this appeal on the basis of material available on record. 2.1 We have considered the submissions of learned D.R. and perused the material available on record. The facts in brief are that the assessee claimed to have given vehicles on operating lease basis on which depreciation was claimed on the leased vehicles. The vehicles were registered in the name of the parties who are using them and not in the name of the assessee. The learned Assessing Officer raised a query to the assessee with respect to its claim. The learned Assessing Officer disallowed the claim of depreciation. The claim of the assessee before the learned CIT(A) is as under: -

It was submitted that the maintenance service charges are estimated at the beginning of the leasing contract for the entire contract period and the same is recovered in equal instalments over the period of the leasing contract from the customers are deferred. It is an advance money received against future obligations. Maintenance charge (which includes also the profit margin on maintenance cost) is recognized in line with the normal maintenance cost incurred over the tenure of the contract on a suitable basis as per AS-9. The achieve the matching cost and revenue, statistical formulae is used to determine the proportionate revenue to be recognized in a financial period and then a difference of this with revenue actually billed in the year is found out. This difference amount represents the maintenance income against which costs will be incurred in future. Hence, such amount is not considered as income of the year/period. This is in accordance with AS-9. Reliance was placed by him on the decision in the case of Asst. CIT vs. Mahindra Holiday Resorts (India) Ltd. (2010) 5 taxmann.com 55, CIT vs. Woodward Governor India Ltd. (2010) 195 Taxman 328 (Del), D.E. Sasoon and Company Ltd. vs CIT, 261 ITR 27 (SC), Calcutta Company Ltd. vs CIT, 37 ITR 1 (SC), Bharat Earth Moviers Ltd. vs CIT, 245 ITR 428 (SC), CIT vs BHEL, 239 ITR 756, CIT vs Bank of India, 218 ITR 371 and CIT vs IBM, 161 ITR 673 (Bom).