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IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 24.07.2018CORAM: THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMAND THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYANTax Case Appeal Nos.200, 204, 205 and 206 of 2018andC.M.P.Nos.3365, 3366 and 3367 of 2018 Commissioner of Income Tax,Trichy...Appellant in all appealsVsThe Lakshmi Vilas Bank Ltd.,Salem Road Kathaparai,Karur...Respondent in all appealsTax Case Appeals filed u/s.260-A of the Income TaxAct, 1961, against the orders of Income Tax AppellateTribunal Madras 'A' Bench, dated 29.01.2016 in ITANo.1620/Mds/2014,ITANo.1206/Mds/2014,ITANo.1207/Mds/2014 and ITA No.1208/Mds/2014 for theAssessment Years 2000-01, 2001-02, 2001-02 and 2002-03against the order of commissioner of Income Tax (Appeals)Tiruchirapalli made in ITA Nos.387/07-08 and 283/11-12 CIT(A)/TRY,DT.28/02/2014,463/10-11DT.29/01/2014,463/10-11,DT.29/01/2014 and 389/07-08/CIT(A)/TRY DT.29/01/2014Respectively against the order of the AssistantCommissioner of income Tax ,Tiruchirapalli,Additionalcommissioner of Income Tax Tiruchirapalli ,Additionalcommissioner of Income Tax Tiruchirapalli ,AssistantcommissionerofIncomeTax,CompantyCircleI,Tiruchirapalliorderdt.31.12.2007,15/12/2010,15.12.2010 and 31.12.2007 respectively made inPAN GIR.NO.AAA CT 4291P .For Appellant:Mr.T.RavikumarFor Respondent :Mr.Vijayaraghavanfor M/s.Subbaraya Aiyar Padmanabhan & Ramamani****** https://hcservices.ecourts.gov.in/hcservices/ [Judgment of the Court was made by T.S.SIVAGNANAM, J] These appeals, at the instance of the revenue,challenges a common order passed by the Income Tax AppellateTribunal Madras ‘A’ Bench dated 29.01.2016 in ITANo.1620/Mds/2014, ITA No.1206/Mds/2014, ITA No.1207/Mds/2014and ITA No.1208/Mds/2014 for the Assessment Years 2000-01,2001-02, 2001-02 and 2002-03. 2. The appeals have been filed raising the followingsubstantial question of law: ‘Whether on the facts and in the circumstances ofthe case and the grounds raised herein theTribunal was right in holding the assessee isentitled for deduction of Lease EqualizationCharges?’ 3. We have heard Mr.T.Ravikumar, learned counsel forthe appellant and Mr.Vijayaraghavan, learned counsel forthe assessee. 4. Sofaras the above question is concerned, theAssessing Officer, while dealing with the issue, pointedout that the assets involved in are vehicles purchased andgiven on lease for a period of time and the assessee is notable to explain in its letter or during discussion how theassessee is eligible for depreciation even after transferof asset to lessee at the end of the lease period i.e., 6years. Further, the Assessing Officer pointed out that thisfact is to be appreciated in the light of assesseeamortizing total depreciation available for the assetduring its useful time (ten years) over a period of 6 yearsitself under the heading ‘Lease Equalization Charges’. 5. The assessee preferred appeal before theCommissioner of Income Tax (Appeals) and while dealing withthe issue, the Commissioner of Income Tax (Appeals)concurred with the view taken by the Assessing Officer andpointed out that the assessee has claimed leaseequalization charges based on guidance note issued byInstitute of Chartered Accountants of India and that theAssessing Officer clearly mentioned in that order that theaccounting practice cannot override any provisions ofIncome Tax Act. Further, it was pointed out that Section 29of the I.T.Act provides that income under the head profitsand gains, business and profession shall be computed inaccordance with the provisions contained in the Section 32to 43C and none of the provisions provides for anydeduction for equalization charges. Thus, it was held thatthe revenue expenditure in the hands of the lessee cannot become capital receipt in the hands of the lessor. Thus, itwas held that the Assessing Officer has correctlydisallowed lease equalization charges and confirmed. Whenthe assessee carried the matter to the Tribunal, theTribunal, after taking into consideration the factualposition, took note of the decision of the Mumbai Bench ofthe Tribunal and held as follows: ‘However, we are of the opinion that whileallowing the deduction of account of leaseequalization charges for the purpose of computingtotal income under the Income Tax Act, thedifference between the annual lease charges ofthe leased assets and depreciation allowed underthe Income Tax Act should be taken intoconsideration and not the difference between theannual lease charges and depreciation claimed bythe assessee as per the Companies Act, 1956. Theabove ratio has been laid down on similar factsand circumstances in the case of InfrastructureLeasing & Financial Services Ltd. v. DCIT 146 ITD297.’Thus, by following the decision of the Mumbai Benches ofthe Tribunal, the matter was remitted back to the AssessingOfficer to verify and allow the claim of the assessee fordeduction on account of lease equalization charges inaccordance with law. Accordingly, the appeal filed by theassessee was allowed for statistical purpose for all theAssessment Years under appeal. The question would bewhether a substantial question of law would arise forconsideration in the light of the order passed by theTribunal. The Honourable Supreme Court in the decision inHero Vinoth (Minor) v. Seshammal [2006 (5) SCC 545] broughtout the distinction between the question of law and asubstantial question of law. It is pointed out thatquestion of law raised will not be considered as asubstantial question of law if it stands already decided bya Larger Bench of the High Court concerned or by the PrivyCouncil or by the Federal Court of by the Supreme Court. Asubstantial question of law will also arise in a contrarysituation, where the legal position is clear, either onaccount of express provisions of law or binding precedents,but the Court below has decided the matter, either ignoringor acting contrary to such legal principle. In the secondtype of cases, the substantial question of law arises notbecause the law is still debatable, but because thedecision rendered on a material question, violates thesettled position of law. It is further pointed out that theSupreme Court should satisfied that the case involves asubstantial question of law and not a mere question of lawand also the substantial question of law has to be distinguished from a substantial question of fact. In theinstant case, we find that the question raised before us isclearly factual and the Tribunal, rightly remitted thematter for fresh decision in accordance with law. 6. Mr.T.Ravikumar, learned standing counsel appearingfor the revenue, submitted that the before the AssessingOfficer, the assessee did not produce any records. 7. While considering the matter on remand, necessarilythe assessee has to produce records. So far as theprocedure of assessment in concerned, the Assessing Officeris the best person to decide all the modalities so as toensure fairness in procedure and adequate opportunity tothe assessee. In the instant case, this problem does notarise in the light of submission of Mr.Vijayaraghavan,learned counsel appearing for the assessee, that alreadythe order passed by the Tribunal has been given effect toin terms of the directions issued by it. Thus, for the above said reasons, these Tax CaseAppeals are dismissed as no substantial question of lawarises for consideration. No costs. Connected miscellaneouspetitions are closed. gm Sd/- Assistant Registrar(CO) //True Copy// Sub Assistant Registrar TO,1.The Income Tax Appellate Tribunal Madras 'A' Bench,Chennai. Thus, for the above said reasons, these Tax CaseAppeals are dismissed as no substantial question of lawarises for consideration. No costs. Connected miscellaneouspetitions are closed. gm Sd/- Assistant Registrar(CO) //True Copy// Sub Assistant Registrar TO,1.The Income Tax Appellate Tribunal Madras 'A' Bench,Chennai. 3.The Additional commissioner of Income Tax, Tiruchirapalli 4.The Assistant commissioner of Income Tax ,Companty CircleI,Tiruchirapalli Tax Case Appeal Nos.200, 204, 205 and 206 of 2018ASK(16/11/2018)