- (1.) HEARD learned counsel for the parties.
(2.) FOLLOWING questions have been framed while admitting the appeals : - A. Whether the ITAT on the facts and in the circumstances of the case, was justified in allowing the claim of expenses on lease -rent as revenue expenditure when lease agreement seen in proper perspective pointed to an agreement of hire - purchase rather than an agreement of lease which necessiated the expenditure to be treated as capital expenditure? B. Whether on the facts and in the circumstances of the case the lease agreement was not hire purchase deal in disguise made by the Assessee for the purpose of avoidance of tax? Learned counsel for the appellant submitted that the lease agreement is a camouflage and in fact it is a hire - purchase agreement. The Assessing Officer has given cogent reason for holding the agreement to be hire purchase agreement and, therefore, was justified in rejecting the claim of the assessee as an expenditure. It is also submitted that from the earlier agreement and subsequently entered agreement it is clear that there are material changes in the terms and conditions of the agreement and the assessee has been given right to purchase the Air Conditioner on payment of nominal price of Rs. 1/ - only, therefore, the Tribunal has committed serious error of law in holding that it was a lease agreement and not the hire -purchase agreement. Learned counsel for the appellant also submitted that the petitioner claimed benefit because of the subsidy given to the school in question under the provisions of Section 40A(9) of the Income Tax Act, 1961.
(3.) LEARNED senior counsel for the respondent -assessee Shri Biren Poddar submitted that in fact both the questions are not the questions of law but both are questions of fact. It is submitted that once, after appreciation and consideration of the entire fact including the terms and conditions of the agreement in question the Tribunal held that it is a lease agreement, then it involves no question of law and in alternative, the agreement clearly contains one stipulation that the party, providing Air Conditioner shall maintain the Air Conditioner during the period of lease. Therefore, in view of this condition as well as in view of the fact that option has been given to the assessee to purchase the Air Conditioner, which the assessee had not exercised during the relevant assessment year, then the transaction of sale is not completed. It is also submitted that sale is not certain and it cannot be presumed that the assessee shall buy the Air Conditioner upon expiry of the term of lease and it will choose to buy in future then sale will complete in any future year and not in current year..;