Law: Income Tax Act, 1961

Section: 260A

Section 37(1), read with section 145, of the Income-tax Act, 1961 - Business expenditure - Allowability of (Lease equalisation charges) - Assessment years 1996-97 to 1999-2000 - Assessee had given certain assets on lease and shown gross lease rentals as income in profit and loss account - It claimed deduction of lease equalisation charges from lease rental income - It submitted that treatment in accounts had been given as per guidance note on accounting for leases issued by ICAI - Assessing Officer disallowed deduction of lease equalisation charges from lease rental income - For some assessment years, Tribunal allowed deduction of lease equalisation charges from lease rental income - For remaining assessment years, Tribunal disallowed deduction of lease equalisation charges from lease rental income holding that assessee was wrong in employing guidance note issued by ICAI for computing income from lease rent - Whether notwithstanding fact that opinion of ICAI was expressed in guidance note, which had not attained a mandatory status, would not be a ground to discard books of account of assessee or method of accounting for lease followed by assessee and disallowing deduction of lease equalisation charges from lease rental income - Held, yes [Para 14] [In favour of assessee] Words and Phrases : Word 'May' employed in sub-section (2) of section 145 of Income-tax Act, 1961 CASE REVIEW Jt. CIT v. Pact Securities & Financial Ltd. [2003] 86 ITD 115 (Hyd.) (para 15) partly affirmed. CASES REFERRED TO CIT v. Virtual Soft Systems Ltd. [2012] 341 ITR 593/205 Taxman 257/18 taxmann.com 119 (Delhi) (para 6), Prakash Leasing Ltd. v. Dy. CIT [2012] 208 Taxman 464/23 taxmann.com 3 (Kar.) (para 6), CIT v. Bilahari Investment (P.) Ltd. [2008] 299 ITR 1/168 Taxman 95 (SC) (para 12) and Challapalli Sugars Ltd. v. CIT [1975] 98 ITR 167 (SC) (para 12). JUDGMENT Dilip B. Bhosale, J. - The first four appeals, under section 260A of the Income-tax Act, 1961 (for short "the Act"), are preferred by the Revenue. Out of which, first two appeals are against the orders dated July 30, 2002, and November 29, 2002, in I.T.A. Nos. 142/Hyd/2002 and 141/Hyd/2002, respectively, and the remaining…