Relief to ICICI Bank: ITAT directs to allow Depreciation claimed on Leased Assets continuing from Past Lease Transactions. [Read Order]

The Income Tax Appellate Tribunal (ITAT), Mumbai bench, directed to allow depreciation claims on leased assets continuing from past lease transactions hence granting relief to ICICI Bank.

The assessee, ICICI Bank Ltd, engaged in the business of banking and related activities. After filing the return, the case was selected for scrutiny. The AO observed that the assessee had claimed depreciation amounting to Rs. 387,34,77,774/-, which included depreciation on leased assets to the tune of Rs. 43,43,25,891/-.

The AO held that ownership of the assets in all leased transactions is not established by the assessee, and therefore, these transactions are finance transactions. Accordingly, the AO disallowed the depreciation claimed on leased assets.

Aggrieved, the assessee filed further appeal before the CIT(A), who allowed the appeal. Thereafter, the revenue filed a second appeal before the tribunal.

During the proceedings, Aarti Vissanji, Counsel for the assessee, argued that the assessee has not entered into any new lease transaction during the year. The issue of depreciation on leased assets is a recurring issue in the assessee’s case, and the Tribunal has been consistently allowing the depreciation.

Himanshu Sharma, Counsel for Revenue, supported the order of assessing officers. It was observed by the tribunal that a Co-ordinate Bench in the assessee’s own case for AY 2004-05 and 2005-06 has considered the similar issue and held that "in the impugned assessment year, there is no new lease transaction. The assessee has claimed depreciation on its own fixed assets, and depreciation claimed on leased assets were continuing from past lease transactions."

After reviewing the facts and records, the two-member bench of Padmavathy S (Accountant Member) and Amit Shukla (Judicial Member) observed that no new lease transactions are entered into by the assessee during the year and that the Co-ordinate Bench has been consistently holding the issue in favor of the assessee.

Therefore, the bench directed to allow depreciation claims on leased assets continuing from past lease transactions.

To Read the full text of the Order CLICK HERE

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