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| The Tax Publishers2022 TaxPub(DT) 5846 (Chen-Trib) INCOME TAX ACT, 1961
Section 37(1)
Entire lease rent would be taxable in the hands of lessor and lessor would be entitled for depreciation on leased assets notwithstanding the accounting of transactions as finance transaction by the lessor. Accordingly, AO was directed to allow deduction of principal portion of leased assets. The depreciation, if any, as claimed by assessee on such assets, would stand reversed.
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Business expenditure - Principal portion of leased assets - Allowability in the hands of lessee -
Assessee procured certain assets on finance lease and capitalized the same in its books of account. However, in the computation of income, it claimed principal portion of lease paymens amounting to R. 15.98 lakhs. AO held the same to be capital in nature and added the same to the income of assessee. Held: Entire lease rent would be taxable in the hands of lessor and lessor would be entitled for depreciation on leased assets notwithstanding the accounting of transactions as finance transaction by the lessor. Accordingly, AO was directed to allow deduction of principal portion of leased assets. The depreciation, if any, as claimed by assessee on such assets, would stand reversed.
Relied:Simpson & General Finance Co. Ltd. v. Dy. CIT [TCA No. 124 to 130 of 2014] : 2014 TaxPub(DT) 2076 (Mad-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2011-12 & 2013-14
INCOME TAX ACT, 1961
Section 14A Rule 8D(2)(iii)
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