TMI Blog2017 (12) TMI 1857X X X X Extracts X X X X X X X X Extracts X X X X ..... s based on provision of Schedule XIV of the Companies Act, 1956 which deals with the rate of depreciation. CIT (A) vide impugned order has thrashed the issue at length to reach at the conclusion that the provision for obsolescence of spares is not an ad hoc provision but on the basis of actual uses of aircraft on hourly basis and maintenance is due after the prescribed hours of uses. It is ascertained liability which is charged as per airline industry practice and standard norms. CIT (A) has rightly deleted an addition made by the AO on account of the provision for obsolescence of spares, being genuine expenditure to run the airline business. So, finding no illegality or perversity in the impugned order, present appeal filed by the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for obsolescence of spares of Rs.3,49,38,968/- has escaped assessment for AY 2006-07 and thereby issued notice u/s 142 (1). AO, being not satisfied with the reply filed by the assessee company, proceeded to conclude that the provision for obsolescence of spares is not allowable expenditure as the same were provisions and are not actual expenditure during the year under assessment and thereby made an addition thereof to the total income of the assessee company 5. Assessee carried the matter by way of filing appeal before the ld. CIT (A) who has deleted the addition made by the AO. Feeling aggrieved, the Revenue has come up before the Tribunal by challenging the impugned order passed by ld. CIT (A). 6. We have heard the ld. Authorized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .10.2010. 11. AO made disallowance of Rs.3,49,38,968/- for two reasons : one that it was not actual expenditure incurred by the assessee company; and two that this liability was unascertainable in the hands of the assessee company. However, the assessee company had filed detailed reply to the queries raised by the assessee company that this is not an ad hoc provision but is on account of uses of the aircraft on hourly basis for which the maintenance is due after the prescribed hours. Before ld. CIT (A), the assessee company also relied upon the decision rendered by the coordinate Bench of the Tribunal in M/s. Jet Airways (I) Ltd. (supra). 12. The coordinate Bench of the Tribunal while dealing with identical issue has held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture incurred by the assessee. The stores and spares which go obsolescence due to usage and normal wear and tear have a useful life over the life of the aircraft beyond a year. If such expenses are claimed on actual basis on the purchase of such inventory, assessee s claim will have been much larger and the assessee s claim, in our view, in the light of the table extracted above, is very much reasonable and deserves to be accepted in the light of the method of accounting regularly followed by it. The Assessing Officer may ensure that the assessee does not claim more than the actual cost as deduction in; the form of annual write off to the profit and loss account. In view of the fact that we have accepted the main contention of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
