Assistant Commissioner of Income-tax, V. M/s. Avinash Constructions, Pune

ITA 1160/PUN/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2522 (ITAT-PUNE)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-03-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 18-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Keywords: Depreciation

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , ! , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1160/PN/2015 #& & / ASSESSMENT YEAR : 2011-2012 ACIT, CIRCLE-2, PUNE . / APPELLANT V/S M/S. AVINASH CONSTRUCTIONS, ABIL HOUSE, 2, RANGE HILL CORNER, GANESHKHIND ROAD, PUNE 411007 PAN NO. AAEFA6458H . / RESPONDENT / ASSESSEE BY : SHRI NIKHIL PATHAK / REVENUE BY : SHRI PANKAJ GARG / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 25-05-2015 OF THE CIT(A)-III, PUNE RELATING TO ASS ESSMENT YEAR 2011-12. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF REAL ESTATE AND INFRASTRUCTURE DEVELOPM ENT EXECUTING THE WORK ON CONTRACT BASIS FOR GOVERNMENT AND OTHER C OMPANIES. IT FILED ITS RETURN OF INCOME ON 29-09-2011 DECLARING TOTAL IN COME OF RS.3,89,39,400/-. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT ASSESSEE HAS DEBITED AIRCRAFT EXPENSES OF RS .49,79,093/-. / DATE OF HEARING :16.03.2016 / DATE OF PRONOUNCEMENT:18.03.2016 2 ITA NO.1160/PN/2015 THE AO FURTHER NOTED THAT THE AO IN A.Y. 2010-11 HAS DIS ALLOWED THE ENTIRE EXPENDITURE UNDER THIS HEAD TREATING IT AS NOT RE LATED TO THE BUSINESS. FOLLOWING THE ORDER OF HIS PREDECESSOR FOR THE P RECEDING ASSESSMENT YEAR THE AO DISALLOWED THE ENTIRE EXPENDITURE OF RS.49,79,093/- INCURRED BY THE ASSESSEE ON ACCOUNT OF AIR CRAFT HIRING EXPENSES. 3. BEFORE CIT(A) IT WAS SUBMITTED THAT THE ASSESSEE DURING THE COU RSE OF HEARING BEFORE THE AO HAS FURNISHED ALL THE RELEVANT DET AILS INCLUDING COPY OF THE INVOICE OF POONAWALA AVIATION PVT. LTD. AND IVSE E GLOBAL, LOG BOOK ETC. FURTHER IDENTICAL ISSUE HAD COME UP BEFORE TH E CIT(A) IN THE PRECEDING ASSESSMENT YEAR AND THE LD.CIT(A) FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF SHRI AVINASH NIVRUTTIN BHOSALE V S. ADDL.CIT HAD RESTRICTED THE DISALLOWANCE TO 1/7 TH OF THE TOTAL EXPENDITURE INCURRED. 4. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) RESTRICTED SUCH DISALLOWANCE TO 1/7 TH OF SUCH EXPENDITURE BY OBSERVING AS UNDER : 4.2 I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPE LLANT AND PERUSED MATERIAL ON RECORD. THE APPELLANTS CASE IS FOUND TO BE SQUARELY COVERED BY THE DECISION OF THE ITAT PUNE GIVEN IN THE CASE OF SH RI AVINASH N. BHOSALE VS. ADDL.CIT, ITA NO.1425/PN/2008 FOR A.Y. 2005-06 W HEREIN IT HAS BEEN HELD THAT - 13. . . . . . IT IS CLEAR THAT SPECIAL BENCH DECISION IN THE CASE OF GULATHI SAREE CENTRE (SUPRA) OR THE DECISION IN THE CASE OF MA YUR KOTHARI (SUPRA) ARE IN THE CONTEXT OF THE PERSONAL CARS; WHERE AS THE PUNE BENCH DECISION IN THE CASE OF M/S KIRLOSKAR OIL ENGINES LTD (SUPRA) RELATES TO THE AVIATION VEHICLES, WHICH IS ALSO THE CASE OF THE ASSESSEE AN WHETHER IT IS THE CASE OF A HELICOPTER OR AIRCRAF T SHOULD NOT MAKE ANY DIFFERENCE. THUS, THE DECISION IN THE CASE OF GULA THI SAREE CENTRE (SUPRA) OR THE DECISION IN THE CASE OF MAYUR KOTHARI ( SUPRA) ARE DISTINGUISHABLE AS THE SUBJECT MATTER OF THESE APPEALS A RE THE DISALLOWANCE OUT OF THE CLAIMS INVOLVING THE PERSONAL CARS. FURTHER, WE MAY MENTIONED THAT THE REVENUE IS NO FAIR IN ADOP TING 20% (1/5 TH OF THE CLAIM) IN RESPECT OF THE BELL HELICOPTOR AND IN ADOPTING 30% 3 ITA NO.1160/PN/2015 (NEARLY 1/3 TH OF THE CLAIM) IN RESPECT OF THE CESSNA AIRCRAFT AND I N OUR OPINION, IT CONSTITUTES AN ARTIFICIAL DIFFERENCE. IT IS ALSO RELEVANT TO MENTION THAT THE SECTION 38(2) REFERS TO THE EXPRESSIO N FAIR AND NEITHER OF THE IT AUTHORITIES IE AO OR CIT(A) HAVE U NDERTAKEN ANY EXERCISE TO ESTABLISH THE SAID FAIRNESS IN ADOPTING THE S AID PERCENTAGES. . . . . . . . . . . . . . . . . . 14. IN VIEW OF THE EXISTENCE OF THE PUNE BENCH DECISI ON, WHICH IS BINDING, WE ARE OF THE OPINION, THAT THE OFFER OF T HE ASSESSEE TO RESTRICT THE DISALLOWANCE TO 1/7 TH OF THE CLAIMS IN RESPECT OF BOTH BELL HELICOPTOR AND THE CESSNA AIRCRAFT, IS REASONABLE AND F AIR. ACCORDINGLY, THE AO IS DIRECTED. THUS, THE ORIGINAL G ROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 4.3 IN VIEW OF THE ABOVE FACTS AND THE DECISION OF PU NE ITAT IN THIS REGARD, WHICH WAS ALSO FOLLOWED WHILE ADJUDICATING SIM ILAR ISSUE IN APPELLANTS CASE FOR A.Y. 2010-11, THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE DISALLOWANCE TO 1/7 TH . ACCORDINGLY, GROUND NO.2 OF APPEAL RAISED BY THE APPELLANT IS PARTLY ALLOWED. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. THE LD.CIT(A) ORDER IS CONTRARY IN LAW AND TO TH E FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD.CIT(A) ERRED IN RESTRICTING THE DISALLOWANC E ON ACCOUNT OF DEPRECIATION ON HELICOPTER TO 1/7 TH INSTEAD OF 1/4 TH AS DISALLOWED (ACTUALLY 1/7 TH OF THE EXPENDITURE). 3. THE APPELLANT PRAYS THAT THE ORDER OF THE LD.CIT( A) TO THE EXTENT OF THE ABOVE ISSUE BE HELD TO BE BAD IN LAW AND QUASHED A ND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND O R OMIT ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURSE OF APPELLAT E PROCEEDINGS. 6. WE FIND THE REVENUE HAS TAKEN THE GROUND FOR DISALLOWA NCE ON ACCOUNT OF DEPRECIATION ON HELICOPTER. HOWEVER, THE AO H AS NOT DISALLOWED ANY DEPRECIATION ON HELICOPTER AND HAS DISALLOWED THE ENTIRE EXPENDITURE INCURRED ON HELICOPTER, WHICH HAS BEEN RESTR ICTED TO 1/7 TH BY THE CIT(A). 4 ITA NO.1160/PN/2015 7. AFTER HEARING BOTH THE SIDES WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). WE FIND THE CIT(A) WHILE RESTRICTING THE DISALLOWANCE TO 1/7 TH OF THE AIRCRAFT HIRE EXPENDITURE HAS FOLLOWED THE DECISION O F THE TRIBUNAL IN THE CASE OF SHRI AVINASH N. BHOSALE (SUPRA) AS WE LL AS THE DECISION OF HIS PREDECESSOR IN ASSESSEES CASE FOR A.Y. 201 0-11. NOTHING CONTRARY WAS BROUGHT TO OUR NOTICE BY THE LD. DEPART MENTAL REPRESENTATIVE SO AS TO A TAKE CONTRARY VIEW THAN THE VIEW TAKEN BY THE LD.CIT(A). IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) RESTRICTIN G THE DISALLOWANCE TO 1/7 TH OF THE HELICOPTER EXPENSES. ACCORDINGLY, SAME IS UPHELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18-03-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED : 18 TH MARCH, 2016. ) *#,! -! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT (A) - I I I, PUNE 4. 5. 6. THE CIT-III, PUNE $ ''(, (, / DR, ITAT, B PUNE; - / GUARD FILE. / BY ORDER , // TRUE COPY // // $ ' //TRUE C /0 ' ( / SR. PRIVATE SECRETARY (, / ITAT, PUNE