A. The management of M/s. KKT Private limited, Chennai planned to acquire 5 JCB machines for business purposes. The total depreciation on such…
CA Final · Direct Tax Laws and International Taxation · PYQS · November 2024
A. The management of M/s. KKT Private limited, Chennai planned to acquire 5 JCB machines for business purposes. The total depreciation on such machines is around 30lacs for one year. However, a choice is made by the management of the company by acquiring the machines on lease over outright purchase. The lease rentals are 36lacs per annum. The company claims deduction for lease rentals. Would the lease rent payment, being higher than the depreciation, be disallowed as expense under GAAR provisions?
Suggested Answer and Working Notes:
(ii) A. GAAR provisions would not apply in this case as the assessee, M/s KKT Private Limited merely makes a selection of acquiring the machine on lease over outright purchase, out of the options available to him under the provisions of the Act for which he is eligible and satisfies the stipulated conditions, if any. Even if choice of such option results in lower tax liability, the same is a result of tax planning.
Topics: Double Taxation Relief, Profits and Gains of Business or Profession, Non-Resident Taxation
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