ICDS LIMITED Vs. DEPUTY COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) This appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as the Act , for short) has been filed by the assessee. The subject matter of the appeal pertains to the Assessment Years 1998-99 to 2000-01. The appeal was admitted by a Bench of this Court on the following substantial questions of law:

(2.) Facts leading to filing of this appeal briefly stated are that assessee is a public limited company which is engaged in the business of leasing and accepting deposits from the public. The assessee filed its return of income for Assessment Year 1998-99. The Assessing Officer, while computing the book profit under Section 115JA of the Act, did not allow lease equalization charges and by orders dated 11.02.2015 and 29.01.2015 passed orders of assessment for Assessment Years 1998-99 to 2000-01, respectively. The assessee thereupon filed an appeal against the orders of assessment. The Commissioner of Income Tax (Appeals), by orders dated 08.03.2016 for Assessment Years 1998-99 to 2000-01, has deleted the addition on account of lease equalization charges and allowed the appeal. The revenue filed appeal before the Income Tax Appellate Tribunal. The Tribunal, by a common order dated 02.05.2017, has confirmed the addition on account of lease equalization charges. In the aforesaid factual background, this appeal has been filed.

(3.) Learned counsel for the assessee submitted that the assessee can be charged only on real income which can be calculated after applying the prescribed accounting method as per guidance note of the Institute of Chartered Accountants of India (ICAI). It is further submitted that on conjoint reading of Section 145 of the Act with Section 211 of the Companies Act, 1956, it is evident that the assessee is entitled to make such a bifurcation and there is no illegality in the same. It is further submitted that lease equalization charges have to be taxed to the extent of real income and the method of calculating the income has to be followed by applying guidance note of ICAI. It is also submitted that the Tribunal has cited the first substantial question of law mentioned in the order dated 02.05.2017 passed in ITA Nos.1025-27/2016 and relying on the answer to substantial question of law No.2. In support of aforesaid submission, reliance has been placed on the decisions of High Court of Delhi in 'COMMISSIONER OF INCOME-TAX Vs. M/s.MGF INDIA LTD.' DATED 21.02.2018 PASSED IN ITA NO.378/2004 and 'PRAKASH LEASING LTD. Vs. DEPUTY COMMISSIONER OF INCOME-TAX,2012 208 TAXMANN 464'.