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“depreciation on leased assets”

DepreciationSection 32Section 3267 judgments

The decision most relied on for depreciation on leased assets is ICDS Ltd. v. CIT (350 ITR 527), cited in 280 judgments on BharatTax.

Leading authorities on depreciation on leased assets

ICDS Ltd. v. CIT
350 ITR 527 · 2013 · Supreme Court
280
citing judgments

An assessee engaged in the business of hire purchase or leasing, being the lessor, is entitled to claim depreciation on assets leased out, even if the assets are registered in the name of the lessee and used by the lessee.

CIT v. Madras Auto Service (P) Ltd.
233 ITR 468 · 1998 · Supreme Court
246
citing judgments

Expenditure providing an enduring advantage, such as upfront lease rent for land, is revenue expenditure if no capital asset is acquired or generated, allowing for deduction under Section 37, even when capitalized in the books of account.

Rajshree Roadways v. Union of India
263 ITR 206 · 2003 · High Court
39
citing judgments

Lease rent paid by a lessee for assets they do not own and cannot alienate is considered revenue expenditure. The owner (lessor) is entitled to claim depreciation on such leased assets.

Krung Thai Bank v. JDIT
45 DTR 218 · 2010 · Reported
29
citing judgments

The case is cited for the principle that income from leasing of assets, if the lease is a finance lease, the depreciation allowance should be computed on the leased asset, not on the lease income.

CIT v. A.M. Constructions
259 ITR 69 · 2003 · High Court
26
citing judgments

The leasing company is considered the owner of an asset in a lease agreement and is therefore entitled to claim depreciation, including at a higher rate if the asset is hired out.

238 ITR 775 (AP); CIT v. Bansal Credits Ltd.
285 ITR 142 · 2006 · High Court
24
citing judgments

The leasing company is considered the owner of an asset under a lease agreement and is therefore entitled to claim depreciation, including at a higher rate for assets hired out. The court does not consider it necessary to delve into disputes about invoice issuance names when the lease agreement and related factors satisfy the ownership criteria.

CIT v. Appollo Finvest (I) Ltd.
382 ITR 33 · 2016 · High Court
19
citing judgments

Depreciation is allowable for assets if the assessee is the owner and uses the assets for business purposes, irrespective of whether the transaction is hire purchase or leasing.

Manipal Finance Corporation Limited v. ACTT Circle-1 Udupi
49 Taxmann.com 353 · 2014 · High Court
19
citing judgments

This case discusses the allowability of depreciation on leased assets in finance leases, a matter that has been addressed by the Supreme Court in ICDS Ltd vs CIT.

Judgments citing depreciation on leased assets

Ntt Global Data Centers & Cloud Infrastructure India Private Limited (Erstwhile Netmagic It Services Private Limited), Mumbai vs. DCIT-10 (3)(1), Mumbai

In the result the issue under consideration is remitted back to the file of Assessing Officer for statistical purpose

ITA 2784/MUM/2023[2015-16]Status: DisposedITAT Mumbai07 Feb 2024AY 2015-16

Bench: Shri Aby T Varkey, Hon'Ble & Shri S. Rifaur Rahman, Hon'Blentt Global Data Centers & Cloud V. National E-Assessment Centre Infrastructure India Private Limited {Now Known As National {Erstwhile Netmagic It Services Faceless Appeal Centre} Private Limited} Delhi 7Th Floor, Hiranandani Business Park Sakinaka S.O., Mumbai - 400072 Pan: Aaccn2366D (Appellant) (Respondent) Assessee Represented By : Shri Vijay Mehta, Shri Arpit Doshi & Ms. Payal Mehta Department Represented By : Shri S. Srinivasu

Section 37(1)

assessee claimed actual principal component of lease rental as deduction. As the assessee was not the legal owner it did not claim depreciation on leased assets. The assessing officer disallowed the principal amount on the contention that under finance lease, the lessee is the owner of the leased assets ... been interpreted by the Supreme Court in I.C.D.S. Ltd. supra and it has been held that the assessee is entitled to benefit of depreciation on leased assets under Section 32 of the Act. Thus, the questions of law involved in the appeal are no longer res integra and are squarely

Icici Bank Ltd., Mumbai vs. The Dy CIT -2(3)(1), Mumbai

In the result, appeal filed by the assessee is partly allowed

ITA 738/MUM/2021[2015-16]Status: DisposedITAT Mumbai25 Jan 2024AY 2015-16

Bench: Shri Prashant Maharishi, Am & Shri Sandeep Singh Karhail, Jm Icici Bank Ltd. The Dy. Commissioner Of Icici Bank Towers, Income-Tax 2(3)(1) Bandra Kurla Complex, Aaykar Bhavan, Vs. 5Th Floor, Room No.552, Badra (East), Mumbai-400 051 M.K. Road, Mumbai-400 020 (Appellant) (Respondent) Pan No. Aaaci1195H

For Appellant: Ms. Aarti Visanji, advFor Respondent: Shri Manoj Kumar Sinha, DR
Section 115JSection 143(3)Section 144C(3)Section 263Section 36(1)Section 48

total income and further same was also added to the computation of book profit under Section 115JB of the Act. iii. Disallowance of depreciation on leased assets of ₹27,31,73,482/- was allowed instead of depreciation claimed by the assessee of ₹7,74,20,633/-. iv. Disallowance of club

Housing Devp. Fin.Corpn. Ltd vs. The ADIT Cir. 1(1)

ITA 552/MUM/2004[98-99]Status: DisposedITAT Mumbai15 Jan 2024

Bench: Shri Amit Shukla () & Ms. Padmavathy S. ()

Section 144Section 14ASection 36(1)(viii)

provision for contingencies as expenditure incurred for earning of income from long term housing finance i.e., the eligible business. The AO has allocated depreciation on leased assets solely to the income from leasing The AO has allocated interest expenditure (other than foreign currency borrowings) to income from housing business

Icici Bank Ltd, Mumbai vs. Addl CIT RG (1), Mumbai

Appeals are partly allowed

ITA 4248/MUM/2014[2007-08]Status: DisposedITAT Mumbai09 Nov 2023AY 2007-08

Bench: Shri Amit Shukla () & Ms. Padmavathy S. ()

Section 10(15)Section 115JSection 234BSection 41(4)Section 88ESection 90

234D 10 (10.1 & 10.2) Provisions of section 115JB not applicable 11 General Revenue Ground No. Item of disallowance / addition Amount – Rs. 1 & 2 Depreciation on leased assets 43,43,25,891 2 Addition of non cash write back made under section 41(4) 56,19,378 3 Club Membership Fees ... requirement of a mark up. Accordingly, we delete the adjustment made in this regard. ITA No. 4158 Mum 2014 – Revenue's appeal. DEPRECIATION ON LEASED ASSETS 55. During the year under consideration, the assessee has claimed depreciation amounting to Rs. 387,34,77,774/- which included depreciation on leased assets

DCIT Cir 3(1), Mumbai vs. Icici Bank Ltd, Mumbai

Appeals are partly allowed

ITA 4158/MUM/2014[2007-08]Status: DisposedITAT Mumbai09 Nov 2023AY 2007-08

Bench: Shri Amit Shukla () & Ms. Padmavathy S. ()

Section 10(15)Section 115JSection 234BSection 41(4)Section 88ESection 90

234D 10 (10.1 & 10.2) Provisions of section 115JB not applicable 11 General Revenue Ground No. Item of disallowance / addition Amount – Rs. 1 & 2 Depreciation on leased assets 43,43,25,891 2 Addition of non cash write back made under section 41(4) 56,19,378 3 Club Membership Fees ... requirement of a mark up. Accordingly, we delete the adjustment made in this regard. ITA No. 4158 Mum 2014 – Revenue's appeal. DEPRECIATION ON LEASED ASSETS 55. During the year under consideration, the assessee has claimed depreciation amounting to Rs. 387,34,77,774/- which included depreciation on leased assets

Addl CIT RG 3(1), Mumbai vs. Icici Bank Ltd (in Respect of M.S, Icici Ltd Merged With M.S, Icici Bank Ltd), Mumbai

In the result, appeal of the assessee is partly allowed

ITA 8435/MUM/2010[2003-04]Status: DisposedITAT Mumbai21 Jul 2023AY 2003-04

Bench: Shri Vikas Awasthy& Shri Amarjit Singhआअसं.8435 /मुं/2010("न.व. 2003-04) The Dy.Commissioner Of Income-Tax ,Cir. 3(1), Room No.607, 6Th Floor, Aaykar Bhavan, M.K.Road, Mumbai – 400 020 ...... अपीलाथ"/Appellant बनाम Vs. Icici Bank Limited, Icici Bank Towers, Bandra-Kurla-Complex, Bandra(East), Mumbai 400 051. Pan: Aaaci-1195-H .....""तवाद"/Respondent

For Appellant: Ms. Aarti Visanji, AdvocateFor Respondent: Shri P.C. Chhotaray, Spl. Counsel
Section 10Section 10(15)Section 23Section 36Section 36(1)(vii)Section 80M

facts and in the circumstances of the case and in law, the Id. CIT(A) erred in deleting the additions of depreciation on leased assets amounting to Rs.232,25,76,303/- 7. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred ... purposes in similar terms. 27. In ground No.6 of appeal, the Revenue has assailed the findings of CIT(A) in deleting addition of depreciation on lease assets. The ld.Counsel for the assessee stated at the outset that this is a recurring issue, The Tribunal in assessee’s own case

Icici Bank Ltd, Mumbai vs. Addl CIT RG 3(1), Mumbai

In the result, appeal of the assessee is partly allowed

ITA 8420/MUM/2010[2003-04]Status: DisposedITAT Mumbai21 Jul 2023AY 2003-04

Bench: Shri Vikas Awasthy& Shri Amarjit Singhआअसं.8435 /मुं/2010("न.व. 2003-04) The Dy.Commissioner Of Income-Tax ,Cir. 3(1), Room No.607, 6Th Floor, Aaykar Bhavan, M.K.Road, Mumbai – 400 020 ...... अपीलाथ"/Appellant बनाम Vs. Icici Bank Limited, Icici Bank Towers, Bandra-Kurla-Complex, Bandra(East), Mumbai 400 051. Pan: Aaaci-1195-H .....""तवाद"/Respondent

For Appellant: Ms. Aarti Visanji, AdvocateFor Respondent: Shri P.C. Chhotaray, Spl. Counsel
Section 10Section 10(15)Section 23Section 36Section 36(1)(vii)Section 80M

facts and in the circumstances of the case and in law, the Id. CIT(A) erred in deleting the additions of depreciation on leased assets amounting to Rs.232,25,76,303/- 7. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred ... purposes in similar terms. 27. In ground No.6 of appeal, the Revenue has assailed the findings of CIT(A) in deleting addition of depreciation on lease assets. The ld.Counsel for the assessee stated at the outset that this is a recurring issue, The Tribunal in assessee’s own case

Asst CIT Cir 2(2)(1), Mumbai vs. State Bank of India, Mumbai

In the result, the appeal by the Revenue is partly allowed for statistical purposes

ITA 4564/MUM/2016[2009-10]Status: DisposedITAT Mumbai06 Jun 2023AY 2009-10

Bench: Shri B.R. Baskaran & Shri Sandeep Singh Karhail

For Appellant: S/Shri P.J. Pardiwala a/w Ninad PatadeFor Respondent: Ms. Surabhi Sharma
Section 142(1)Section 143(2)Section 143(3)Section 14ASection 250Section 36(1)Section 36(1)(vii)Section 36(1)(viia)

income not yielding any exempt income during the year will not be considered for the purpose of computing disallowance under section 14A. 4. Depreciation on leased assets of Rs.9,43,69,363 4.1 The learned CIT(A) erred in upholding the action of the Assessing Officer in disallowing the appellant ... ground of appeal no. 6 and 7. 14. The issue arising in ground no. 4, raised in assessee’s appeal, is pertaining to depreciation on leased assets. 15. The brief facts of the case, pertaining to this issue, are: During the assessment proceedings, referring to the addition made on this

State Bank of India, Mumbai vs. Addl CIT RG 2(2), Mumbai

In the result, the appeal by the Revenue is partly allowed for statistical purposes

ITA 3645/MUM/2016[2009-10]Status: DisposedITAT Mumbai06 Jun 2023AY 2009-10

Bench: Shri B.R. Baskaran & Shri Sandeep Singh Karhail

For Appellant: S/Shri P.J. Pardiwala a/w Ninad PatadeFor Respondent: Ms. Surabhi Sharma
Section 142(1)Section 143(2)Section 143(3)Section 14ASection 250Section 36(1)Section 36(1)(vii)Section 36(1)(viia)

income not yielding any exempt income during the year will not be considered for the purpose of computing disallowance under section 14A. 4. Depreciation on leased assets of Rs.9,43,69,363 4.1 The learned CIT(A) erred in upholding the action of the Assessing Officer in disallowing the appellant ... ground of appeal no. 6 and 7. 14. The issue arising in ground no. 4, raised in assessee’s appeal, is pertaining to depreciation on leased assets. 15. The brief facts of the case, pertaining to this issue, are: During the assessment proceedings, referring to the addition made on this

M/S Maharashtra Apex Corporation Limited, Manipal vs. Deputy Commissioner of Income Tax Circle-1, Udupi

In the result, all the appeals filed by the assessee stands allowed for statistical purposes

ITA 246/BANG/2018[2000-01]Status: DisposedITAT Bangalore28 Sept 2022AY 2000-01

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Anil Kumar, CA
Section 244ASection 260ASection 43

assessment year 1998-99 to 2000 01 restored the matter to the assessing officer on the issue of depreciation on leased assets, to decide afresh based on the guidelines of the Hon’ble Supreme Court in case of Asea Brown Boveri Ltd. vs. Industrial Finance Corporation of India reported

M/S Maharashtra Apex Corporation Limited, Manipal vs. Deputy Commissioner of Income Tax Circle-1, Udupi

In the result, all the appeals filed by the assessee stands allowed for statistical purposes

ITA 244/BANG/2018[1999-00]Status: DisposedITAT Bangalore28 Sept 2022AY 1999-00

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Anil Kumar, CA
Section 244ASection 260ASection 43

assessment year 1998-99 to 2000 01 restored the matter to the assessing officer on the issue of depreciation on leased assets, to decide afresh based on the guidelines of the Hon’ble Supreme Court in case of Asea Brown Boveri Ltd. vs. Industrial Finance Corporation of India reported

M/S Maharashtra Apex Corporation Limited, Manipal vs. Deputy Commissioner of Income Tax Circle-1, Udupi

In the result, all the appeals filed by the assessee stands allowed for statistical purposes

ITA 242/BANG/2018[1998-99]Status: DisposedITAT Bangalore28 Sept 2022AY 1998-99

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Anil Kumar, CA
Section 244ASection 260ASection 43

assessment year 1998-99 to 2000 01 restored the matter to the assessing officer on the issue of depreciation on leased assets, to decide afresh based on the guidelines of the Hon’ble Supreme Court in case of Asea Brown Boveri Ltd. vs. Industrial Finance Corporation of India reported

M/S Maharashtra Apex Corporation Ltd, Manipal vs. Deputy Commissioner of Income Tax Circle-1, Udupi

In the result, all the appeals filed by the assessee stands allowed for statistical purposes

ITA 241/BANG/2018[1997-98]Status: DisposedITAT Bangalore28 Sept 2022AY 1997-98

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Anil Kumar, CA
Section 244ASection 260ASection 43

assessment year 1998-99 to 2000 01 restored the matter to the assessing officer on the issue of depreciation on leased assets, to decide afresh based on the guidelines of the Hon’ble Supreme Court in case of Asea Brown Boveri Ltd. vs. Industrial Finance Corporation of India reported

M/S Maharashtra Apex Corporation Limited, Manipal vs. Deputy Commissioner of Income Tax Circle-1, Udupi

In the result, all the appeals filed by the assessee stands allowed for statistical purposes

ITA 240/BANG/2018[1996-97]Status: DisposedITAT Bangalore28 Sept 2022AY 1996-97

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Anil Kumar, CA
Section 244ASection 260ASection 43

assessment year 1998-99 to 2000 01 restored the matter to the assessing officer on the issue of depreciation on leased assets, to decide afresh based on the guidelines of the Hon’ble Supreme Court in case of Asea Brown Boveri Ltd. vs. Industrial Finance Corporation of India reported

M/S Maharashtra Apex Corporation Limited, Manipal vs. Deputy Commissioner of Income Tax Circle-1, Udupi

In the result, all the appeals filed by the assessee stands allowed for statistical purposes

ITA 239/BANG/2018[1995-96]Status: DisposedITAT Bangalore28 Sept 2022AY 1995-96

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Anil Kumar, CA
Section 244ASection 260ASection 43

assessment year 1998-99 to 2000 01 restored the matter to the assessing officer on the issue of depreciation on leased assets, to decide afresh based on the guidelines of the Hon’ble Supreme Court in case of Asea Brown Boveri Ltd. vs. Industrial Finance Corporation of India reported

DCIT Circle- 3(3)(1), Mumbai vs. M/S Reliance Corporate It Park Ltd., Navi Mumbai

In the result, the appeal by the Revenue is dismissed in terms of our aforesaid findings

ITA 1195/MUM/2020[2012-13]Status: DisposedITAT Mumbai05 Sept 2022AY 2012-13

Bench: Shri Pramod Kumar & Shri Sandeep Singh Karhail

For Appellant: Shri Nimesh Vora a/wFor Respondent: Shri Chetan M. Kacha, Sr. AR
Section 250

without major modifications being made. Therefore, he came to the conclusion that in finance lease whether or not the lessor claimed depreciation on leased assets, but the lessee is entitled to claim depreciation. The AO further noted that the accounting treatment of the M/s. Reliance Corporate I.T. Park ... assessee for earlier two years is not disputed by the revenue. In fact, even after lease from 31/12/2008, the assessee continued to claim depreciation on leased asset for AY 2009-10 and 2010-11 and same has been allowed in assessment under section

Cisco Systems Capital (India) Private Limited, Bengaluru vs. Joint Commissioner of Income Tax, Circle- 2(1)(1), Bangalore

In the result, the assessee’s appeal is partly allowed for statistical purposes

ITA 321/BANG/2022[2017-18]Status: DisposedITAT Bangalore21 Jul 2022AY 2017-18

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Rajan Vora, A.RFor Respondent: Shri G. Manoj Kumar, D.R
Section 115JSection 142(1)Section 143(2)Section 143(3)Section 144C(5)

Court in the case of M/s ICDS Ltd(Supra) and it has been held that the assessee is entitled to the benefit of depreciation on leased assets under section 32 or the Act of 1961 and therefore, the substantial question of law involved in the present appeal is no longer

M/S. Ibm India Private Limited, Bangalore vs. Asst. Commissioner of Income Tax, Bangalore

In the result, the appeals filed by the assessee for AY 2010-11 and 2011-12 are treated as partly allowed

ITA 773/BANG/2016[2010-11]Status: DisposedITAT Bangalore18 Jul 2022AY 2010-11

Bench: Shri N.V. Vasudevan & Shri B.R. Baskaranit(Tp)A Nos.773 & 2041/Bang/2016 Assessment Years :2010-11 & 2011-12

For Appellant: Shri Ajay Rotti, C.A (A.R)For Respondent: Shri Dilip, Advocate, Standing
Section 10ASection 143(3)

furnish any details in this regard. Accordingly, we confirm the disallowance made by the AO. 21. Ground No.7 relates to the disallowance of depreciation on leased assets. In the earlier year, we have restored this issue to the file of AO with the direction to follow the decision rendered

M/S.Ibm India Private Limited, Bangalore vs. Assistant Commissioner of Income-Tax, Bangalore

In the result, the appeals filed by the assessee for AY 2010-11 and 2011-12 are treated as partly allowed

ITA 2041/BANG/2016[2011-12]Status: DisposedITAT Bangalore18 Jul 2022AY 2011-12

Bench: Shri N.V. Vasudevan & Shri B.R. Baskaranit(Tp)A Nos.773 & 2041/Bang/2016 Assessment Years :2010-11 & 2011-12

For Appellant: Shri Ajay Rotti, C.A (A.R)For Respondent: Shri Dilip, Advocate, Standing
Section 10ASection 143(3)

furnish any details in this regard. Accordingly, we confirm the disallowance made by the AO. 21. Ground No.7 relates to the disallowance of depreciation on leased assets. In the earlier year, we have restored this issue to the file of AO with the direction to follow the decision rendered

DCIT, Bangalore vs. M/S Ibm India (P) Limited, Bangalore

In the result, the appeals filed by the assessee for AY 2010-11 and 2011-12 are treated as partly allowed

ITA 1228/BANG/2016[2010-11]Status: DisposedITAT Bangalore18 Jul 2022AY 2010-11

Bench: Shri N.V. Vasudevan & Shri B.R. Baskaranit(Tp)A Nos.773 & 2041/Bang/2016 Assessment Years :2010-11 & 2011-12

For Appellant: Shri Ajay Rotti, C.A (A.R)For Respondent: Shri Dilip, Advocate, Standing
Section 10ASection 143(3)

furnish any details in this regard. Accordingly, we confirm the disallowance made by the AO. 21. Ground No.7 relates to the disallowance of depreciation on leased assets. In the earlier year, we have restored this issue to the file of AO with the direction to follow the decision rendered