TMI Blog2024 (1) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... Titan Aviation for providing ferry pilot support services to the assessee between 5th August to 7th August, 2012. As 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. 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 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see establishing that bills were received in the relevant assessment year and payments were made in the present assessment year. Disallowance on account of expense of repair and maintenance for which the AO has observed that supporting invoice were not filed - HELD THAT:- CIT(A) has also observed that in the absence of supporting evidence, no interference is called for in the findings of the 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 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 not sustaining the argument of the assessee that relevant evidences were filed before the AO which he had failed to take into consideration. Accordingly, this issue is also restored to the files of the ld.CIT(A) for taking into consideration the evidences of the assessee, after giving an opportunity of hearing and decide the issue afresh. Disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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 addition was made by way of disallowance of depreciation. ii) The ld. AO observed that the assessee has claimed deferred revenue expenditure written off amounting to Rs. 31,21,556/- which the assessee explained that the assessee company had taken on lease a helicopter in the earlier years and incurred expenditure amounting to Rs. 2.6 crores on account of engine improvement, repair overall check and compliance of DGCA guidelines during F.Y. 2009-10. Since the asset was taken on lease, the expenditure was amortized over the remaining lease period of the helicopter. Rs. 31,21,556/- being the remaining amount has been amortized during the relevant financial year. The ld. AO was not satisfied with the same and concluded that in the assessment year 2012- 13 also, the disallowance was made by the then AO and considered this expenditure to be incurred in earlier years. iii) The ld. AO then considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- 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. Disallowance of prior period expenses will lead to unjust enhancement of income and unjust enrichment of the State. 7. That the AO/CIT(A) has grossly erred on facts and in law in making/upholding the disallowance of Rs 9,35,472/- on account of expenses of repair and maintenance. This disallowance is illegal and should be deleted. 8. That the AO/CIT(A) has grossly erred on facts and in law in making/upholding the disallowance of Rs 36,912/- on account of interest on TDS. This disallowance is illegal and should be deleted. 9. That the AO and CIT(A) have passed the orders without giving a reasonable and a proper opportunity to the Appellant to be heard and present all evidences in its favor. The orders have been passed in violation of principles of natural justice. 10. That the explanations given, evidence produced and material placed and made available on record have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 only for the statutory compliances and to avoid legal liability, which is part of the business activity. 4.3 In this context we can take note of the Mumbai Bench order in case of JCIT vs. Essar Shipping [2006]102 ITD 71(MUM) wherein it was held:- 26. It is also a settled position of law that the 'user' of an asset need not be an 'active user' of the asset. The courts have held in a number of cases that it is sufficient that the assessee makes the asset ready for putting it to use. The Delhi High Court in the case of Capital Bus Service (P.) Ltd. v. CIT [1980] 123 ITR 404 has held that where an assessee puts assets ready for use that amounts to passive user and in such a case depreciation must be allowed, if claimed by the assessee. The Supreme Court has held in R.B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570 that the term 'owner& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 issue arises out of the deferred revenue expenditure incurred on account of leased aircraft engine improvement, repair and overall check up which have been considered by the coordinate Bench in the case of the assessee for AY 2012-13 vide ITA No.969/Del/2017, order dated 30.09.2020 wherein the issue has been restored to the AO for re-examining the same. It will be appropriate to reproduce the relevant findings of the said order in para 3 as follows:- 3.0 The Ld. Authorized Representative (AR) submitted that Ground No.1 challenges the disallowance of Rs. 92,63,156/- made on account of deduction for deferred revenue expenditure in respect of maintenance and overall check-up of helicopter EC145 taken on lease. It was submitted that this helicopter had been taken on lease India and the assessee had incurred an amount of approximately 2.6 Crores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 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 in the nature of repairing the 'Primary Adaptive Display', and 'Tail Rotor Blade Assembly'. The Ld. Authorized Representative submitted that the repairs of these two components parts do not increase the useful life of the Aircraft and that their replacement is in the nature of revenue expenditure. It was submitted that both these units were found faulty and were not required to be replaced as per the DCGA guidelines and therefore the same was not a capital expenditure. Reliance was placed on the judgment of the Hon'ble Apex Court in the case of New Shorrock Spinning and Manufacturing Co. Ltd. vs. CIT [1956] 30 ITR 338 (SC) and also in the case of Mr. Ballimal Naval Kishore vs. CIT reported in [1997] 224 ITR 414 (SC). Reliance was also placed on the judgment of the Hon'ble Delhi High Court in the case of CIT vs. Jag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 not sustaining the argument of the assessee that relevant evidences were filed before the AO which he had failed to take into consideration. Accordingly, this issue is also restored to the files of the ld.CIT(A) for taking into consideration the evidences of the assessee, after giving an opportunity of hearing and decide the issue afresh. 4.10. Ground No.8 : In regard to this ground arising out of the disallowance on account of interest on TDS, nothing substantial was argued by the ld. AR. We find that ld. CIT(A) observed that before the AO the assessee had surrendered this amount submitting that the interest on TDS has not been disallowed in the computation of income. It is also settled proposition of law that interest on TDS is not an allowable expenditure and, thus, there is no error in the findings of ld. tax authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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