TaxTMI 
TaxTMI 
2012 (9) TMI 296
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...., 1. Whether the deletion of disallowance under Section 14A was justified? 2. Whether the depreciation deductible under the head " Plant & Machinery ", particularly the relevant entry "Aeroplane-Aeroengines" prescribing 40% depreciation was applicable and justifiably applied by the Tribunal and the Commissioner(Appeals) in the facts of this case? 3. Whether in the facts of the present case the cash payment claimed as deductible as expenditure incurred, was correctly allowed by application of Rule 6DD(k) of Income Tax Rules? 3. The assessee is engaged in the business of airchartering/air taxi services. The Commissioner of Income Tax, invoking his powers under Section 263 of Income Tax Act, 1961 (Act, for short) held that depreciation granted to the extent of 40% on account of its acquiring "Beechcraft Super King Air B-200C‟ was wrongly granted and the correct depreciation ought to have been 20%. In respect of this and the other items such as the disallowance under Section 14A (expenditure claimed) as well as the amount under Section 40A(3), the assessee felt aggrieved and approached the Income Tax Appellate Tribunal ("Tribunal‟, for short). 4. So fa....
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....licable for the relevant assessment years in the case of that assessee had described depreciation in respect of aeroplanes under Item D(1) and E(1) which read as under:- " D(1) Aeroplanes - Aircraft, aerial photographic apparatus (NESA) E(1) Aeroplanes - Aero engines (NESA)." 12. Under D(1) the rate of depreciation was described as 30% and under E(1) it was described as 40%. Referring to the above mentioned rates, it was observed by the Hon‟ble Bombay High Court that the aforementioned two items are quite different and distinct. That both the items are given under the heading "aeroplanes.‟ Item D(1) described the rates of depreciation on "aircraft and aerial photographic apparatus‟, whereas the Item E(1) describe the rate of depreciation of aero engines. As the assessee was admittedly claiming depreciation on aircraft, it was held that it will fall under item D(1) which have specific one and, therefore, the assessee will be entitled for depreciation @ 30% and the depreciation @ 40% is applicable only on aero engines and the aero engines is not covered under aircrafts. But the position under the Appendix-I which is applicable in the case of the assessee is di....
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....sailplanes, conventional airplanes, short takeoff and landing (STOL) airplanes, and vertical takeoff and landing (VTOL) aircraft." 16.2 The international Civil Aviation Organisation (ICAO) in its Aviation Glossary Terms & Definitions has defined "Aircraft‟ and "Aeroplane‟ as under:- "Aircraft - An aircraft is any machine that can derive support in the atmosphere from the reactions of the air other than the reactions of the air against the earth‟s surface (ICAO Annex.1, Annex 6 Part I). Aeroplane - A power driven heavier than air aircraft, deriving its lift in flight chiefly from aerodynamic reactions on surfaces which remain fixed under given conditions of flight (ICAO Annex I, Annex 6)" 17. A combined reading of all these definitions will be that aeroplane in comparison to aircraft has a fixed wings and is powered by propellers or jets. Though both the definitions have been given by the ld. CIT in his order, but he has ignored the submission of the assessee that aircraft owned by it has fixed wings and is powered by propellers or jets on the ground that it should be heavier than the aircraft. We find no justification in such observations of ld. CIT....
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....for airplane, covered by the Entry III(3)(i) in the head "Plant & Machinery". We see no warrant for such a restrictive interpretation. Even with regard to the history of the entry all that can be inferred is that "aircraft" is a broader description which includes all manner of craft or means of transport aided by flight, (such as balloons, planes etc.) within the Depreciation Rule. For the reasons best known, the rule making authority confined and narrowed definition to "aeroplane". This conclusion is also supported by the fact that other entries in Rule III(3) of the depreciation table extend to entire vehicles such as commercially pliable buses, cars etc. They do not confine the scope of depreciation only to parts of such vehicles. 10. In view of the above discussion, this Court is satisfied that the Tribunal‟s judgment does not disclose any error as regards interpretation of Entry III(3)(i) of the Depreciation Rules. Its upholding the depreciation allowable in the present case to the tune of 40% cannot be termed as unjustified or unwarranted. 11. On the third issue, the Tribunal concluded that the charges payable and claimed by the assessee were in respect of the rou....