TaxTMI 
TaxTMI 
TaxTMI 
2019 (8) TMI 1951
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....wing ground No. 1: - "1. On the facts and circumstances of the case, and in law the learned CIT(A) erred in confirming disallowance made by the assessing officer (AO) of immigration fine for Rs. 47,72,826/- paid by the appellant in the course of carrying its business activities." 3. This issue is covered by the decision of assessee's own case for AY 2008-09 in ITA No. 2182/Mum/2012 vide order dated 19.07.2019, wherein the Tribunal adjudicate the issue vide Paras 10 to 17 as under: - "10. We have heard rival contentions and gone through the facts and circumstances of the case. We noted that penalty or fine paid at the foreign airport is ordinarily an amount paid in settlement of charges in respect of offence/guilt on the part of the passenger which is neither accepted nor proved. Consideration for payment of such penalty or fine is in respect of any offence/guilt which is neither proved nor accepted and is in the nature damages paid for settlement of disputes to avoid bad reputation and safeguard business interest. In AY.1993-94 such disallowance was considered by CIT(A). However, unfortunately the CIT(A) erroneously considered the activity of the assessee as il....
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....n Airport and also checked by the Immigration Authorities of the Govt. of India at the Airport of departure. 12. From the above it will be obvious that the assessee has neither carried on any illegal activity nor committed any breach of law. However, in accordance with the International Air Transport laws the assessee becomes liable to pay such penalties/fines to the Immigration Authority of foreign countries and such penalty or fines in the nature of expenses incurred wholly and exclusively for the purpose of business of the assessee and in the course of ordinarily carrying out its business activity. 13. We also noted the fact that the penalties/fines arise not on account of any infraction of law/non-compliance of the requirements of the Immigration Authorities by the assessee but the passengers and such penalties/fines borne by the assessee can also be considered in the nature of business loss allowable to the assessee u/s 28 of the Act itself while computing assessee's income from business. 14. It is further noted that infraction of law as such and that too not by the assessee but by the passengers carried by the assessee should not however be pres....
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....Air transportation of passengers. 16. From the above stated facts, it will be obvious that the penalty/fine paid by the assessee has been incurred on carrying out an operation of the assessee's business and it is incidental to the business operations. Reliance in this case is placed on the decision of CIT Vs. Howrah & Co. Pvt. Ltd. (1989) 44 Taxman 409 (Cal). 17. Further in the case of Ramchand Shrinarayan Vs. CIT (1978) [111 ITR 263] It was held by the Hon'ble Supreme Court that if there is a direct and proximate nexus between the business operations and the Loss and it is incidental to its business operation and doing all that is incidental for profit earning, such losses would be allowable as a business loss u/s.28 of the Act. We noted that on the above mentioned facts in the assessee's case the penalty/fine paid at the foreign airports has a direct and proximate nexus between the business operations and the loss (penalty or fine) and such penalty or fine is incidental to the carrying on of the assessee's business in ordinary course of business and hence it is allowable to the assessee as a 'business loss' also. We order accordingly. 4. Respe....
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....ecorded a clear finding of fact that there was no exempt income earned by the assessee. While holding so, the Authorities relied on the judgment of the Delhi High Court in Income Tax Appeal No. 749/2014, which holds that the expression "does not form part of the total income" in Section 14A of the Income Tax Act, 1961 envisages that there should be an actual receipt of the income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. The Income Tax Appellate Tribunal held that the provisions of Section 14A of the Income Tax Act, 1961 would not apply to the facts of this case as no exempt income was received or receivable during the relevant previous year. It is not the case of the Assessing Officer that any actual income was received by the assessee and the same was includible in the total income. In the facts of the case, the Authorities held that since the investments made by the assessee in the sister concerns were not the actual income received by the assessee, they could not have been included in the total income." Hence, this issue is decided in favour of ....
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.... assessee stated that this issue is squarely covered in favour of assessee by the decision of the Co-ordinate Bench of this Tribunal in assessee's own case for AY.2007-08 in ITA No. 5204/Mum/2011, dt.01-04-2016, vide para 6, as under: 6. The last ground pertains to deleting the disallowance of Rs. 455.28 lakhs made on account of frequent flier program (FFP). The ld. DR defended the disallowance made by the Assessing Officer, whereas, the ld. Counsel for the assessee contended that the impugned issue is covered by the decision of the Tribunal in the case of Jet Airways Ltd. (ITA No. 3201/Mum/2003 and 6084/Mum/2003) order dated 30/05/2006. This factual matrix was not controverted by the ld. DR. 6.1. We have considered the rival submissions and perused the material available on record. There is uncontroverted finding that the liability in respect of FFP miles accrues simultaneously with a passenger undertaking travel on a fare paying ticket, therefore, it cannot be a contingent liability. Following the aforesaid decision of the Tribunal dated 30/05/2006 and further in the absence of any contrary facts/decision and the case laws relied upon in para 7.5 of the impugned....
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....ention to page 24 of the paper book with respect to rejections/refunds and we found the explanation of the assessee to be correct. Considering the facts and the explanation of the assessee, this ground is allowed. The appeal of the assessee, is, therefore, allowed. 13. Respectfully following the earlier year decision in assessee's own case i.e. AY 2007-08, we allow this issue of assessee's appeal. 14. The only issue in Revenue's appeal is as regards the order of CIT(A), confirming the addition made by the AO on account of excess provision for obsolescence or write back the provisions, amounting to Rs. 34,75,00,000/-. For this, Revenue has raised following Ground Nos. 1 & 2: "1. Whether on the facts and in the circumstances and in law, the Ld. CIT(A) erred in directing the Assessing Officer to delete the addition of Rs.34,75,000/- made by the AO on account of excess provisions for obsolescence without appreciating the fact that the provision made is contingent liability and was not incurred by the Assessee? 2. Whether on the facts and in the circumstances and in law, the Ld. CIT(A) erred in directing the Assessing Officer to delete the addition of Rs....
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....cts are identical, hence the decision of my Ld. Predecessor is reproduced from the appellate order for Assessment year 07-08 as under: "In ground No.2, the appellant has challenged the action of the assessing officer against addition of Rs. 42,87,36,908/- credited to the P&L Account for the year ended 31st March 2007 in respect of transfer from provision for obsolescence. 3.1 The facts are that the appellant is engaged in the business of international air transport of passengers and cargo, in accordance with the consistently followed accounting practice based on the method advised by International Air Transport Association has provided for 'Provision for Obsolescence' of air-craft related stores 0nd spare parts. This matter is disclosed in the significant accounting policies in the Audited Accounts, It is further stated by the Counsel of the assessee that the appellant has regularly made provision was always disallowed by the appellant in Computation of Income submitted with Return of Income of determine "Business Income" as per I.T. Act, 1961. 3.2 It is further submitted that if it is observed at the close of the year that the final balance for p....