2014 (5) TMI 1215 - HC - Income Tax

Claim not set out in the return of income - Disallowance of Additional claim for proportionate initial rent paid and other expenses incurred on aircraft acquired on finance lease - assessee company failed to make the said claim through a revised return as provided in the Act - ITAT allowed the claim - HELD THAT - AO was in error in not allowing the assessee to raise the claim merely because it was not set out in the return of income or referred thereunder. This view taken by the Assessing Officer is not in consonance with the law laid down by this Court in the case of Commissioner of IncomeTax V/s. Pruthvi Brokers and Shareholders P. Ltd. 2012 (7) TMI 158 - BOMBAY HIGH COURT - the refusal of the Assessing Officer to consider the claim is erroneous in law. Assessing Officer is now directed and in terms of the Division Bench order to allow the assessee to raise this claim. However the claim shall be considered on its own merits and in accordance with law by the Assessing Officer. He shall to do so within a period of three months from the date of the receipt of the copy of this order. All contentions of both sides in relation to this claim are kept open. Assessing Officer shall also follow the same exercise as is directed by our order in M/S. JET AIRWAYS (I) LTD. 2014 (5) TMI 707 - BOMBAY HIGH COURT and in relation to the claim for depreciation on the aircrafts taken on hirepurchase by the assessee. He shall apply the same circular of 1943 as is referred by our order passed in the companion appeals to complete the exercise within the time stipulated therein.

Summary

Issues:
1. Whether certain additions made by the ITAT should be deleted.
2. Whether the ITAT was justified in allowing an additional claim not raised in other appeals.

Analysis:
1. The judgment deals with an appeal related to Income Tax for the assessment year 2005-06. The court noted that the facts and circumstances were similar to other appeals involving the same assessee. The court admitted the appeal on substantial questions of law regarding the deletion of certain additions made by the ITAT. The questions included the deletion of aircraft redelivery charges, heavy maintenance expenses, and frequent flyer expenses. The court held that the appeal raised limited questions of law and admitted it for further consideration.

2. The court addressed an additional question not raised in other appeals, concerning the allowance of a claim for proportionate initial rent paid and other expenses incurred on an aircraft acquired on finance lease. The court referred to a previous case law to establish that the Assessing Officer erred in not allowing the claim solely because it was not included in the return of income. The court directed the Assessing Officer to consider the claim within three months, following the law and considering the merits of the claim. The court kept all contentions open for both parties regarding this claim.

3. Additionally, the court directed the Assessing Officer to follow the same exercise as in other appeals related to depreciation on aircraft taken on hire purchase by the assessee. The court instructed the Assessing Officer to apply a specific circular from 1943 referred to in the previous orders to complete the exercise within the stipulated time frame. The judgment emphasized compliance with the law and proper consideration of claims by the Assessing Officer.