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TaxTMI 
TaxTMI 
TaxTMI 
2024 (1) TMI 696
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....ear relevant to the assessment year 2013-14, the appellant filed the return of income declaring a loss of Rs. 44,60,60,034/- and the assessment order was passed u/s 143 of the Act at a loss of Rs. 36,79,91,729/- by making the following additions:- i) Firstly, the ld. AO observed that the fixed assets on which depreciation is claimed has in its block a new aircraft purchased during the year. The assessee had claimed that this aircraft was purchased during the year and put to use while the ld. AO taking into consideration the certificate of airworthiness, issued by the Director General of Civil Aviation, concluded that the aircraft was put to use for a period of less than 180 days and, thus, instead of depreciation @ 40%, the assessee was allowed depreciation @ 20% only. In this context, the ld. AO observed that the Director General of Civil Aviation had issued a certificate dated 21.09.2012 mentioning that the certificate of airworthiness of this aircraft shall be for a period from 18.10.2012 to 17.10.2015 and, therefore, the AO concluded that the aircraft was put to use only after 18.10.2012 and that made the aircraft put to use for a period less than 180 days. Accordingly, the a....
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....ade therein are illegal, bad in law and without jurisdiction. The CIT(A) erred in not deleting the additions made by the AO. 2. That the AO/CIT(A) has grossly erred on facts and in law in making/upholding the disallowance of Rs 6,85,73,493/- on account of depreciation claimed by the Appellant on the aircrafts acquired by the Appellant. This disallowance is illegal and should be deleted. 3. That the AO/CIT(A) has grossly erred on facts and in law in making/upholding the disallowance of Rs 31,21,556/- on account of alleged prior period expenses. This disallowance is illegal and should be deleted. 4. That the AO/CIT(A) has failed to appreciate that on the given facts and circumstances, the claim of expenses on deferred basis is allowable and permissible under the law. 5. That the AO/CIT(A) has grossly erred on facts and in law in making/upholding the disallowance of Rs. 8,81,697/- on account of prior period expenses that got crystallized during the year. This disallowance is illegal and should be deleted. 6. That without prejudice to the above, the aforementioned prior period expenses in ground no. 3 and 5 should be allowed as expenses to the year to which they relate. Disal....
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.... the assessee between 5th August to 7th August, 2012. It is submitted that these expenses are allowed by the AO. We are of the considered view that this establishes that even before the certificate of airworthiness was issued by the Director General of Civil Aviation on 21.09.2012 for a period from 18.10.2012 to 17.10.2015, the assessee was de facto and de jure owner of the aircraft. The aircraft certainly was not allowed to fly to carry passengers or cargo in the absence of this certification by the competent authority, but, that did not stop the assessee from holding it in its own name for the purpose of its business. The phrase, 'used for the purpose of business' in section 32 of the Act does not mean that the use should be by way of generating revenue only. The use here is in the context of the direct connection of the asset with the purpose of business which is initiated in the relevant year. Then Ld. AR is right to point out that the expense which were incurred for making the aircraft functional and ready to use during the year from India, when stand allowed, the same also establish that the certificate of airworthiness issued by the Director General of Civil Aviation, was on....
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....ment Year, if any particular machinery which is utilized for manufacture of that particular type of article is not actually used, the assessee should nevertheless be entitled to the benefit of depreciation notwithstanding the fact that such particular machinery was not at all used for the simple reason that the assessee made it ready for use but could not use for no fault on his part and over which he had no control. In the case before us, it has been established that the said aircraft was purchased for the business in the latter half of the Assessment Year and thus, the assessee became the owner and it was actually delivered to the assessee and landed at the New Delhi Airport Authority and the same was also made ready for use by insuring the same by the concerned insurance company. Thus, the assessee has proved that it was made ready for the use of business. In such a case, the authority below rightly granted depreciation @ 50% for the part use of the said aircraft in accordance with law." 4.5 Thus, the findings of the ld. tax authorities below on the issue are liable to be set aside and the ground is accordingly decided in favour of the assessee. 4.6. Ground No.3 and 4; The iss....
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....12 by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (hereinafter called the 'Act'). The Ld. Authorized Representative also submitted that the Ld. CIT (A) had erred in confirming the disallowance by making the observation that the lease agreement and invoices had not been furnished by the assessee without appreciating that the said documents had not been requisitioned by the Ld. CIT (A) during the course of appellate proceedings. 3.1 With respect to Ground No.2, it was submitted by the Ld. Authorized Representative that this ground challenges the action of the Ld. CIT (A) in upholding disallowance of Rs. 11,45,026/- made on account of regular repairs and maintenance of Aircraft after capitalizing the same and allowing depreciating thereon. The Ld.Authorized Representative submitted that an amount of Rs. 19,08,376/- had been incurred on repairs and maintenance of Aircrafts which had been disallowed by the Assessing Officering by treating the same as being capital in nature and capitalizing the same under the head on 'Aircrafts' and, thereafter, allowing depreciation @ 40% thereon. The Ld. Authorized Representative submitted that the repairs had been i....
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.... assessee had accepted that these are prior period expenses without appreciating that the same had crystallized in the present year. Thus, this issue is restored to the files of ld.CIT(A) to give a fresh opportunity of hearing to the assessee and consider the evidences of the assessee establishing that bills were received in the relevant assessment year and payments were made in the present assessment year. 4.9 Ground No.7: This issue arises out of disallowance of Rs. 9,35,472/- on account of expense of repair and maintenance for which the AO has observed that supporting invoice were not filed. The ld.CIT(A) has also observed that in the absence of supporting evidence, no interference is called for in the findings of the ld.AO. In this regard also the ld.AO has relied on the bills made available at page 71 of the paper book being submissions before the AO wherein it is mentioned that original invoices are being produced in support of the claim. At pages 78 and 79, the assessee has brought on record the invoice and the copy of cheque showing the payment against this invoice. In the light of the aforesaid facts, we are of the considered view that the ld.CIT(A) has fallen in error in....