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TMI Blog2013 (4) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... is affirmed by the Hon'ble Jurisdictional High Court in CIT Vs. SRC Aviation Pvt.Ltd. - 2012-TIOL-724-HC-DEL-IT. Copies of both these orders are placed before us. The assessee is deriving income from running of the aircrafts. It claimed depreciation at the rate of 40% on such aircrafts. However, the Assessing Officer allowed the depreciation only at the rate of 15% on the ground that the depreciation at the rate of 40% is available only for aeroplanes and not for aircrafts. We find that identical issue is considered by the ITAT Delhi 'G' Bench in the case of SRC Aviation Pvt.Ltd. - 2011-TIOL-605-ITAT-DEL, wherein ITAT held as under:- "5. Ld. CIT has invoked his powers u/s 263 in the case of the assessee on the ground that depreciation @ 40% has been claimed by the assessee on the 'Beechcraft Super King Air B-200C' aircraft owned by it and grant of depreciation @ 40% in place of eligible depreciation @ 20% tantamount to an error on the part of the Assessing Officer. The reason given by ld. CIT for holding so is that the Assessing Officer had not investigated this issue and had not made any inquiries in this regard. He also did not ask the assessee to justify its claim regarding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry and plant' being eligible for depreciation @ 30%. At the same time, it also provides depreciation for 'aeroplanesaeroengines' under the same block of assets, namely, 'Plant and machinery' and these are eligible for depreciation @ 40%. Taking recourse to such segregation, ld. CIT has observed that the intention of the legislature is to differentiate between 'aircraft' and 'aeroplane' and as old Appendix-I has differentiated between the 'aeroplaneaeroengines' and 'aeroplane-aircraft' and different rates of depreciation have been prescribed, therefore, the contention of the assessee cannot be accepted that the aircraft owned by the assessee is an 'aeroplane', hence, eligible for higher depreciation. According to ld. CIT, these two terms have different meanings and are eligible for different rates of depreciation. To support this proposition ld. CIT has referred to the decision of Hon'ble Bombay High Court in the case of CIT vs. Kirlosker Oil Engines 230 ITR 88 (Bom) and referring to the observations therein ld. CIT has held that the assessee is eligible for depreciation on aircraft @ 25% which is applicable to 'Machinery and plant' and grant of depreciation @ 40% made the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iginal assessment proceedings, the Assessing Officer had inquired this point. The assessee had placed on record a copy of letter dated 1st October, 2007 in which the assessee had given the explanation to the Assessing Officer regarding depreciation being eligible @ 40% in place of 25%. When such copy of letter was placed before us, the same was given to the learned DR to take the comments of Assessing Officer as in the assessment order it was not pointed out that whether or not such letter was filed by the assessee. During the course of hearing the learned DR has placed before us copy of correspondence received from the concerned Assessing Officer in which the Assessing Officer though has admitted that such copy is found on record, but, at the same time, he has mentioned that the same was not as per the chronology of the fixed dates and the assessee was never required to submit explanation regarding the allowability or otherwise of depreciation @ 40%. The learned DR, relying upon the said observations of the Assessing Officer, pleaded that it is not certain that whether during the course of assessment proceedings the assessee was required to submit such details. Therefore, relying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the above part of this order, it is the case of the learned DR that powers u/s 263 have rightly been exercised by ld. CIT and his order should be upheld. 11. We have carefully considered the rival submissions in the light of the material placed before us. Ld. CIT while invoking the power u/s 263 has mainly relied upon the earlier description of depreciation rate which was applicable for assessment years 1984-85 to 1987-88 in which the aeroplane as aircraft and aeroplane as aeroengines were treated differently for the purpose of computing depreciation. From such description of different rates of depreciation, it is the case of ld. CIT that aircraft owned by the assessee cannot be termed to be aeroplane which only is entitled for higher depreciation under the rates of depreciation applicable for the years under consideration as described in Appendix-I. For this purpose, ld. CIT has also relied upon the decision of Hon'ble Bombay High Court in the case of CIT vs. Kirlosker Oil Engines (supra). In our opinion, such reliance by the CIT on the decision of Hon'ble Bombay High Court is misplaced as in that case the assessee was owner of the aircraft and it claimed depreciation @ 40% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... described in the relevant Appendix-I create exceptions about the items described under Items (ii), (iii) and (viii). Item (iii) describe 'aeroplanes-aeroengines'. Thus, it will mean that any aeroplanes owned by the assessee will be eligible for depreciation @ 40% as applicable to the relevant assessment years. If the vessel owned by the assessee falls under the broad head 'aeroplane', then, it will be eligible for depreciation @ 40%. For that purpose, we have to analyse whether the aircraft owned by the assessee falls under the head 'aeroplane' and simply if it falls within the species of 'aeroplane' and it is an aircraft whether it can be considered for depreciation under the head 'Machinery and plant.' It has been held by Hon'ble Bombay High Court in the aforementioned case that no aircraft can ever be termed as 'aero-engines' because aero-engine is not an aircraft or aeroplane at all. It is only a power unit of aircraft and this is clear from the following observations of their lordships in the said decision:- " In Chambers' Science and Technology Dictionary, the word "aircraft" has been described only as a "mechanically driven heavier-than-air flying machine with wings of fix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urfaces (wings or airfoils). Such craft include gliders and 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 justificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eported in 2012-TIOL-724-HC-DEL-IT and held as under:- "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 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 CIT that the aircraft of the assessee should not be described as 'aeroplane' simply for the reason that 'aeroplane' is a machine much bigger, heavier and powerful than an aircraft which travels in the air more than an aircraft. But, for that reason the aircraft owned by the assessee cannot be thrown out of the category of 'aeroplane' and the aircraft owned by the assessee cannot be considered only as 'Plant and Machinery' which is a term distinct to such type of aircraft; In many cases the department is considering such aircraft as 'aeroplane' and granting depreciation to the respective assessees @ 40% and such contention of the assessee is based on the information given by the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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