SHETH CREATORS PVT. LTD., MUMBAI V. DY CIT CENT. CIR-4(2), MUMBAI

ITA 1857/MUM/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8183 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: G
• Assessment Year: 2017-2018
• Appeal Filed On: 21-10-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Opportunity of being heard; Earning of tax free income; Additional evidence; Rule 8D
• Section: 32; 43B; 143(3); 14A; 192; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER) ITA No. 1858/MUM/2020 Assessment Year: 2014-15 Sheth Creators Private Limited, Upper Basement, Site Office, Vasant Oasis, CTS No. 345A/1 to 3, 345A 5, Makwana Road, Andheri East, Mumbai-400059. Vs. Dy. CIT, Central Circle-4(2), 19 th Floor, Air India Building, Nariman Point, Mumbai-400021. PAN No. AAPCS 2976 M Appellant Respondent ITA No. 2012/MUM/2020 Assessment Year: 2014-15 Dy. CIT, Central Circle-4(2), Room No. 1918, 19 th Floor, Air India Building, Nariman Point, Mumbai-400021. Vs. M/s Sheth Creators Private Limited, 1203 & 1204 Hallmark Business Plaza, 12 th floor, Sant Dyaneshwar Marg, Kala-Nagar, Bandra (East), Mumbai-400051. PAN No. AAPCS 2976 M Appellant Respondent ITA No. 2620/MUM/2019 Assessment Year: 2015-16 Sheth Creators Private Limited, 101-A & 1202, 1 st & 12 th floor, Hallamark Business Plaza, Near Gurunanak Hospital, Sant Dyaneshwar Marg, Kalanagar, Vs. Dy. CIT, Central Circle-4(2), 18 th Floor, Air India Building, Nariman Point, Mumbai-400021. Bandra (E), Mumbai-400051. PAN No. AAPCS 2976 M Appellant Sheth Creators Private Limited, 101-A & 1202, 1 st & 12 Hallamark Business Plaza, Near Gurunanak Hospital, Bandra (E), Mumbai-400051. PAN No. AAPCS 2976 M Appellant Sheth Creators Private Limited, Upper Basement, Site Office, Vasant Oasis, CTS No. 345A/1 to 3, 345A 5, Makwana Road, Andheri East, Mumbai-400059. PAN No. AAPCS 2976 M Appellant Assessee by Revenue by Date of Hearing Date of pronouncement Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. PAN No. AAPCS 2976 M Respondent ITA No. 3696/MUM/2019 Assessment Year: 2016-17 Sheth Creators Private Limited, & 12 th floor, Plaza, Near Bandra (E), Vs. Dy. CIT, Central Circle 19 th Floor, Air India Building, Nariman Point, Mumbai-400021. PAN No. AAPCS 2976 M Respondent ITA No. 1857/MUM/2020 Assessment Year: 2017-18 Private Limited, Upper Basement, Site Office, Oasis, CTS No. 345A/1 to 3, 345A 5, Makwana Road, Vs. Dy. CIT, Central Circle 19 th Floor, Air India Building, Nariman Point, Mumbai-400021. PAN No. AAPCS 2976 M Respondent Assessee by : Mr. K. Gopal, AR : Mr. Hoshang B. Irani, DR Date of Hearing : 27/07/2022 Date of pronouncement : 12/08/2022 Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 2 Dy. CIT, Central Circle-4(2), Floor, Air India Building, 400021. Dy. CIT, Central Circle-4(2), Floor, Air India Building, 400021. , DR PER OM PRAKASH KANT, AM Out of the above captioned appeals, cross-appeals by the assessee and the dated 10/09/2020 of the -52 Mumbai [in short The remaining three appeals by the assessee are directed against three separate orders dated 27/03/2019 10/09/2020 passed by the Ld. CIT(A) for assessment year 2015 2016-17 and 2017-18 respectively. As common issue involved in these appeals, off by way of this consolidated order for convenience and avoid repetition of facts. 2. First, we take up the appeal of the assessee for assessment year 2015-16, as the Ld. CIT(A) has followed his finding in 2015 other assessment years. Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. ORDER PER OM PRAKASH KANT, AM Out of the above captioned appeals, the first two appeals are appeals by the assessee and the Revenue against the order dated 10/09/2020 of the Ld. Commissioner of Income 52 Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2014 The remaining three appeals by the assessee are directed against eparate orders dated 27/03/2019; 26/04/2019 by the Ld. CIT(A) for assessment year 2015 8 respectively. As common issue involved in these appeals, same were heard together and disposed way of this consolidated order for convenience and avoid we take up the appeal of the assessee for assessment year 16, as the Ld. CIT(A) has followed his finding in 2015 other assessment years. Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 3 the first two appeals are against the order Income-tax (Appeals) for assessment year 2014-15. The remaining three appeals by the assessee are directed against ; 26/04/2019 and by the Ld. CIT(A) for assessment year 2015-16; 8 respectively. As common issue-in-dispute are were heard together and disposed way of this consolidated order for convenience and avoid we take up the appeal of the assessee for assessment year 16, as the Ld. CIT(A) has followed his finding in 2015-16 for 2.1 The grounds raised by the assessee in assessment year 2015 16 are reproduced as under: “1. Confirming Disallowance of Rs.44,34,562/ 20% Depreciation claimed on Helicopter : 1.1. Commissioner of I.T. (A) erred in confirming disallowance of Rs. 44,34,562/- on account of 20% depreciation claimed on helicopter out of disallowance of 50% Depreciation made by appreciating the fact that the helicopter was not used for personal purpose. 1.2. Commissioner of I.T. (A) erred in not appreciating the the helicopter was only and business. 2. Addition u/s. of PF & ESIC of Rs.3,02,607/ 2.1. The Ld. AO erred in making an addition on account of delay in payment of PF & ESIC of that the appellant has deposited the employees' & ESIC before filing of income tax return due as per Section 139(1) of the I.T. Act. 2.2. The Ld. AO erred in not appreciating the Supreme Court in case of Alom Extrusion Ltd. 319 ITR 306 has held that if the employees contribution to PF & ESIC is paid before the filing of IT return than there would not be any disallowance under Section 2(24)(x) Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. raised by the assessee in assessment year 2015 16 are reproduced as under: 1. Confirming Disallowance of Rs.44,34,562/- on account of 20% Depreciation claimed on Helicopter : 1.1. Commissioner of I.T. (A) erred in confirming disallowance of Rs. on account of 20% depreciation claimed on helicopter out of disallowance of 50% Depreciation made by A.O. without appreciating the fact that the helicopter was not used for personal 1.2. Commissioner of I.T. (A) erred in not appreciating the the helicopter was only and exclusively used for the purpose of 2. Addition u/s. 2(24)(x) r.w.s. 36(1)(va) for delay in payment of PF & ESIC of Rs.3,02,607/- : 2.1. The Ld. AO erred in making an addition on account of delay in f PF & ESIC of ₹3,02,607/- without appreciating the fact that the appellant has deposited the employees' contribution to PF & ESIC before filing of income tax return due as per Section 139(1) 2.2. The Ld. AO erred in not appreciating the fact that the Hon'ble Supreme Court in case of Alom Extrusion Ltd. 319 ITR 306 has held that if the employees contribution to PF & ESIC is paid before the filing of IT return than there would not be any disallowance under Section 2(24)(x) r.w.s. 36(1)(va) of I.T. Act. Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 4 raised by the assessee in assessment year 2015- on account of 1.1. Commissioner of I.T. (A) erred in confirming disallowance of Rs. on account of 20% depreciation claimed on helicopter A.O. without appreciating the fact that the helicopter was not used for personal 1.2. Commissioner of I.T. (A) erred in not appreciating the fact that exclusively used for the purpose of 2(24)(x) r.w.s. 36(1)(va) for delay in payment 2.1. The Ld. AO erred in making an addition on account of delay in without appreciating the fact contribution to PF & ESIC before filing of income tax return due as per Section 139(1) fact that the Hon'ble Supreme Court in case of Alom Extrusion Ltd. 319 ITR 306 has held that if the employees contribution to PF & ESIC is paid before the filing of IT return than there would not be any disallowance under 3. Additional Disallowance U/s 14A of Rs.19,52,896/ 3.1. Commissioner of I.T. (A) erred in law and fact by confirming additional disallowance u/s. 14A of Rs. 19,52,896/ disallowance suo moto offered by the assessee of (equal to dividend income) without appreciating the fact that the investment was made in Liquid fund scheme India bulls mutual fund on short term basis hence section 14A is not applicable and accordingly no disallowances is to be made u/s 14A of the tax Act. 3.2. Without prejudice above, even if the disallowances is to be made is to be restricted to the exempt income received which the appellant has already disallowed in filed the return of 4. The appellant prays that: a. Disallowance claimed on Helicopter may be deleted. b. Addition made u/s.2(24)(x) r.w.s. 36(1)(va) for delay in payment of PF & ESIC of Rs.3,02,607/ c. To delete the Additional disallowance of Rs. 19,52 u/s. 14A r.w. Rule 8D. d. To allow the claim of the appellant that disallowance u/s 14A read with rule 8D should considering all facts stated in grounds of appeal & Rule should not be applied automatically. e. The Appellant ple amend any or all grounds of appeal before or at the time of hearing.” Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. 3. Additional Disallowance U/s 14A of Rs.19,52,896/- : 3.1. Commissioner of I.T. (A) erred in law and fact by confirming additional disallowance u/s. 14A of Rs. 19,52,896/- over and above disallowance suo moto offered by the assessee of ₹21,32 (equal to dividend income) without appreciating the fact that the investment was made in Liquid fund scheme India bulls mutual fund on short term basis hence section 14A is not applicable and accordingly no disallowances is to be made u/s 14A of the 3.2. Without prejudice above, even if the disallowances is to be made is to be restricted to the exempt income received which the appellant has already disallowed in filed the return of income. 4. The appellant prays that: a. Disallowance of Rs. 44,34,562/- on account of 20% Depreciation claimed on Helicopter may be deleted. b. Addition made u/s.2(24)(x) r.w.s. 36(1)(va) for delay in payment of PF & ESIC of Rs.3,02,607/- may be deleted. c. To delete the Additional disallowance of Rs. 19,52,896/ u/s. 14A r.w. Rule 8D. d. To allow the claim of the appellant that disallowance u/s 14A read with rule 8D should be calculated by considering all facts stated in grounds of appeal & Rule should not be applied automatically. e. The Appellant plead before Honorable ITAT to add, alter or amend any or all grounds of appeal before or at the time of Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 5 : 3.1. Commissioner of I.T. (A) erred in law and fact by confirming over and above 21,32,592/- (equal to dividend income) without appreciating the fact that the investment was made in Liquid fund scheme India bulls mutual fund on short term basis hence section 14A is not applicable and accordingly no disallowances is to be made u/s 14A of the income 3.2. Without prejudice above, even if the disallowances is to be made is to be restricted to the exempt income received which the income. on account of 20% Depreciation b. Addition made u/s.2(24)(x) r.w.s. 36(1)(va) for delay in payment ,896/- made u/s. 14A r.w. Rule 8D. d. To allow the claim of the appellant that be calculated by considering all facts stated in grounds of appeal & Rule should not ad before Honorable ITAT to add, alter or amend any or all grounds of appeal before or at the time of 3. The briefly stated facts of the case are that the assessee filed its return of income on 01/11/2015 declaring total income of ₹1,14,61,700/-. The selected for scrutiny and the statutory notices under the Act, 1961 (in short ‘the assessment completed under section 143(3) of the 31/10/2017 the Assessing Officer and assessed total income under regular provisions of the ₹2,08,45,550/- and computed book profit under section 115 JB the Act at ₹52,25,837/ than the normal assessed income the assessed income under regular provisions. 4. On further appeal, the Ld. CIT(A) allowed part relief. Aggrieved with the additions/disallowance sustained by the Ld. CIT(A), the assessee is in appea reproduced above. Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. briefly stated facts of the case are that the assessee filed its return of income on 01/11/2015 declaring total income of The return of income filed by the assessee was selected for scrutiny and the statutory notices under the the Act’) were issued and complied with. In the assessment completed under section 143(3) of the Assessing Officer made additions/disallowances and assessed total income under regular provisions of the and computed book profit under section 115 JB 837/-. Since the tax on the book profit was less normal assessed income, therefore, tax was computed on the assessed income under regular provisions. On further appeal, the Ld. CIT(A) allowed part relief. Aggrieved with the additions/disallowance sustained by the Ld. CIT(A), the assessee is in appeal before the Tribunal, raising the grounds Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 6 briefly stated facts of the case are that the assessee filed its return of income on 01/11/2015 declaring total income of of income filed by the assessee was selected for scrutiny and the statutory notices under the Income-tax ) were issued and complied with. In the assessment completed under section 143(3) of the Act on made additions/disallowances and assessed total income under regular provisions of the Act at and computed book profit under section 115 JB of . Since the tax on the book profit was less tax was computed on On further appeal, the Ld. CIT(A) allowed part relief. Aggrieved with the additions/disallowance sustained by the Ld. CIT(A), the , raising the grounds as 5. Before us, the assessee has filed a paperbook containing pages 1 to 130. 6. In the ground No. of ₹44,34,562/- for depreciation at the rate of 20 helicopter, sustained by the Ld. CIT(A). 7. The facts qua the issue in dispute are that to be engaged in the business assessee claimed depreciation of which was purchased by the Association of M/s Varna Aviation, in which assessee is one of the four members. The other members of the AOP are, M/s Piramal Enterprises Private Limited, M/s Real Gold India Ltd. The Members understanding (MOU) member shall own one fourth of the said helicopter and were required to share the operation and maintenan Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. the assessee has filed a paperbook containing pages No. 1, the assessee has challenged for depreciation at the rate of 20 sustained by the Ld. CIT(A). the issue in dispute are that the assessee claimed engaged in the business of construction and real estate. assessee claimed depreciation of ₹2,21,72,810/-, on a helicopter, which was purchased by the Association of Person , in which assessee is one of the four members. The other members of the AOP are, M/s Piramal Enterprises Private Limited, M/s Real Gold Developers LLP and M/s Serum Institute of Members of the AOP entered into an memorandum of understanding (MOU), on 24/02/2011, according to which each member shall own one fourth of the said helicopter and were required to share the operation and maintenance cost Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 7 the assessee has filed a paperbook containing pages has challenged disallowance for depreciation at the rate of 20% on the the assessee claimed of construction and real estate. The , on a helicopter, Person (AOP) namely , in which assessee is one of the four members. The other members of the AOP are, M/s Piramal Enterprises Private and M/s Serum Institute of of the AOP entered into an memorandum of on 24/02/2011, according to which each member shall own one fourth of the said helicopter and were ce cost as per the terms mentioned in Memorandum logbook maintained in respect of various trips undertaken by the helicopter. Thus, the could not demonstrate use of the helicopte exclusively for the purpose of the business, therefore 50% of the depreciation claimed by the assessee personal use of the helicopter ₹1,10,86,405/-. The Tribunal, Pune Bench in 1542/PN/08 and Poonawala 370/PN/2010). 8. Before the Ld. CIT(A), the assessee contended that (i) the helicopter was purchased for facilitating the trips of the directors/partners of co attend business meetings, conferences etc used helicopter for going to Pune, Nasik and Aurangabad Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. terms mentioned in Memorandum. The assessee failed to produce logbook maintained in respect of various trips undertaken by the the Assessing Officer concluded that could not demonstrate use of the helicopter for wholly exclusively for the purpose of the business, therefore 50% of the depreciation claimed by the assessee on helicopter as personal use of the helicopter, which was worked out to Assessing Officer relied on the decision of the , Pune Bench in the case of Avinash Bhosale (ITA 1542/PN/08 and Poonawala Finvest & Agro P. Before the Ld. CIT(A), the assessee contended that the helicopter was purchased for facilitating the trips of the directors/partners of co-owners for their attend business meetings, conferences etc used helicopter for going to Pune, Nasik and Aurangabad Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 8 . The assessee failed to produce logbook maintained in respect of various trips undertaken by the concluded that the assessee for wholly and exclusively for the purpose of the business, therefore, he disallowed on helicopter as for , which was worked out to relied on the decision of the of Avinash Bhosale (ITA No. . Ltd. (ITA No. Before the Ld. CIT(A), the assessee contended that the helicopter was purchased for facilitating the trips of their businesses, attend business meetings, conferences etc. The assessee used helicopter for going to Pune, Nasik and Aurangabad etc. for identifying land and also for the business meetings. (ii) the co-owners have funded the acquisition of the helicopter on the equal basis and accordingly share of cost of helicopter of the fixed assets thereon. No depreciation has been claimed by the AOP on the helicopter. (iii) The disallowance of depreciation at the rate of 50% by the Assessing Officer used for personal purpose by the directors was not justified as the helicopter was operated from Mumbai Sangali, Nagpur are not the places 8.1 The assessee filed a copy of the logbook of the helicopter as additional evidence, which was forwa Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. for identifying land and also for the business owners have funded the acquisition of the helicopter on the equal basis and accordingly share of cost of helicopter of ₹11,54,83,388/- was shown under fixed assets and depreciation has b . No depreciation has been claimed by the AOP on the helicopter. The disallowance of depreciation at the rate of 50% by Assessing Officer on the presumption that same was used for personal purpose by the directors was not s the helicopter was operated from Mumbai Sangali, Nagpur-Nanded; Mumbai -Aurangabad etc, which are not the places where the person go for personal trip. The assessee filed a copy of the logbook of the helicopter as additional evidence, which was forwarded by the Ld. CIT(A) to the Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 9 for identifying land and also for the business owners have funded the acquisition of the helicopter on the equal basis and accordingly share of was shown under depreciation has been claimed . No depreciation has been claimed by the AOP on The disallowance of depreciation at the rate of 50% by on the presumption that same was used for personal purpose by the directors was not s the helicopter was operated from Mumbai- Aurangabad etc, which where the person go for personal trip. The assessee filed a copy of the logbook of the helicopter as rded by the Ld. CIT(A) to the Assessing Officer. The pointed out discrepancies the assessment proceeding and the logbook provided during the remand proceeding. Further the that name of the persons who travelled in various trips provided in the logbook produced in remand proceeding and therefore he was unable to ascertain the purpose of the trips and the passengers for establishing b Assessing Officer also pointed out that the same business, having almost same volume any such type of the expens concluded that the assessee failed to establish the depreciation expenses as incurred wholly and exclusively for the purpose of the business of the assessee. 8.2 The assessee in the rejoinder submitted that though there was multiple projects in earlier ye Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. . The Assessing Officer in his reman pointed out discrepancies in the details of travelling supplied the assessment proceeding and the logbook provided during the remand proceeding. Further the Ld. Assessing Officer that name of the persons who travelled in various trips provided in the logbook produced in remand proceeding and therefore he was unable to ascertain the purpose of the trips and the passengers for establishing business use of the helicopter. The also pointed out that other assessee having almost same volume, were any such type of the expenses. In view of the observations concluded that the assessee failed to establish the depreciation incurred wholly and exclusively for the purpose of the business of the assessee. The assessee in the rejoinder submitted that though there was multiple projects in earlier years, however in the year under Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 10 in his remand report the details of travelling supplied during the assessment proceeding and the logbook provided during the Assessing Officer pointed out that name of the persons who travelled in various trips were not provided in the logbook produced in remand proceeding and therefore he was unable to ascertain the purpose of the trips and the usiness use of the helicopter. The Ld. other assessees engaged in were not incurring es. In view of the observations, he concluded that the assessee failed to establish the depreciation incurred wholly and exclusively for the purpose of the The assessee in the rejoinder submitted that though there was ars, however in the year under consideration due to change in regulation for development, partners in joint ventures, unsuccessful closure of land transactions et assessee could not have any project. The assessee mentioned name of the few properties, be closed. Regarding name of passengers in the logbook, it was submitted that same was maintained by the pilot as per the aviation norms prescribed by the director general of civil aviation was not mandatory to mention the name of the passenger in the logbook, therefore assessee was unable to provide name of the passengers who travelled. The assessee also relied on the decision of the Tribunal in the case of the assessee for assessment year 2013 14, wherein the Tribunal that no trips were under 8.3 In background of the above facts, the Ld. CIT(A), restricted the disallowance of depreciation to 20% of the depreciation the assessee as against 50% depreciation disallowed by the Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. consideration due to change in regulation for development, partners in joint ventures, unsuccessful closure of land transactions et assessee could not have any project. The assessee mentioned name of the few properties, the transactions in respect of which could not be closed. Regarding name of passengers in the logbook, it was submitted that same was maintained by the pilot as per the aviation norms prescribed by the director general of civil aviation t mandatory to mention the name of the passenger in the logbook, therefore assessee was unable to provide name of the passengers who travelled. The assessee also relied on the decision of in the case of the assessee for assessment year 2013 Tribunal has upheld the finding of the Ld. CIT(A) undertaken for personal purpose by the assessee. In background of the above facts, the Ld. CIT(A), restricted the disallowance of depreciation to 20% of the depreciation the assessee as against 50% depreciation disallowed by the Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 11 consideration due to change in regulation for development, partners in joint ventures, unsuccessful closure of land transactions etc. the assessee could not have any project. The assessee mentioned name the transactions in respect of which could not be closed. Regarding name of passengers in the logbook, it was submitted that same was maintained by the pilot as per the aviation norms prescribed by the director general of civil aviation, wherein it t mandatory to mention the name of the passenger in the logbook, therefore assessee was unable to provide name of the passengers who travelled. The assessee also relied on the decision of in the case of the assessee for assessment year 2013- upheld the finding of the Ld. CIT(A) taken for personal purpose by the assessee. In background of the above facts, the Ld. CIT(A), restricted the disallowance of depreciation to 20% of the depreciation claimed by the assessee as against 50% depreciation disallowed by the Assessing Officer. The relevant observation of the Ld. CIT(A) are reproduced as under: “5.6 The assessment order, remand report as well as the rejoinder to the remand report have been d in the claim of the assessee that the element of personal use is not present considering that the helicopter trips undertaken are not to places which are tourist destinations. However, there is also merit in the contention of the AO that in absence of the names of the passengers, it is not possible to ascertain as to whether the trips have been undertaken solely and exclusively for the purpose of the business of the assessee. The assessee contends that as per DGCA guidelines, it is not mandatory to mention the names of the passengers in the log book which is to be maintained by the pilot. However, since, the assessee wants to claim depreciation on helicopter on the ground that it was used wholly and exclusively for the purpose of its business, the onus was on the assessee to maintain the names of the passengers who had undertaken the various helicopter trips. As regards the reliance of the assessee on the decision of the FAA for A.Y. 2013 Hon'ble ITAT deleting the entire disallowance made by the AO out of depreciation on helicopter, it is noted that the FAA, in course of the appellate proceedings, had duly examined the log book of the relevant year before concluding that the element of non business/personal use, is not existent. Moreover, the FAA in his order has specifically noted that the decision for the said year cannot be said to have laid a precedent considering that the same Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. . The relevant observation of the Ld. CIT(A) are reproduced as under: 5.6 The assessment order, remand report as well as the rejoinder to the remand report have been duly considered. There is some merit in the claim of the assessee that the element of personal use is not present considering that the helicopter trips undertaken are not to places which are tourist destinations. However, there is also merit in on of the AO that in absence of the names of the passengers, it is not possible to ascertain as to whether the trips have been undertaken solely and exclusively for the purpose of the business of the assessee. The assessee contends that as per DGCA nes, it is not mandatory to mention the names of the passengers in the log book which is to be maintained by the pilot. However, since, the assessee wants to claim depreciation on helicopter on the ground that it was used wholly and exclusively for pose of its business, the onus was on the assessee to maintain the names of the passengers who had undertaken the various helicopter trips. As regards the reliance of the assessee on the decision of the FAA for A.Y. 2013-14 which has been upheld by the 'ble ITAT deleting the entire disallowance made by the AO out of depreciation on helicopter, it is noted that the FAA, in course of the appellate proceedings, had duly examined the log book of the relevant year before concluding that the element of non iness/personal use, is not existent. Moreover, the FAA in his order has specifically noted that the decision for the said year cannot be said to have laid a precedent considering that the same Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 12 . The relevant observation of the Ld. CIT(A) are 5.6 The assessment order, remand report as well as the rejoinder to uly considered. There is some merit in the claim of the assessee that the element of personal use is not present considering that the helicopter trips undertaken are not to places which are tourist destinations. However, there is also merit in on of the AO that in absence of the names of the passengers, it is not possible to ascertain as to whether the trips have been undertaken solely and exclusively for the purpose of the business of the assessee. The assessee contends that as per DGCA nes, it is not mandatory to mention the names of the passengers in the log book which is to be maintained by the pilot. However, since, the assessee wants to claim depreciation on helicopter on the ground that it was used wholly and exclusively for pose of its business, the onus was on the assessee to maintain the names of the passengers who had undertaken the various helicopter trips. As regards the reliance of the assessee on the 14 which has been upheld by the 'ble ITAT deleting the entire disallowance made by the AO out of depreciation on helicopter, it is noted that the FAA, in course of the appellate proceedings, had duly examined the log book of the relevant year before concluding that the element of non- iness/personal use, is not existent. Moreover, the FAA in his order has specifically noted that the decision for the said year cannot be said to have laid a precedent considering that the same has been arrived at after factual verification of the log maintained for the relevant year. 5.7 It is observed that the Hon'ble ITAT, Pune, has dealt with this issue in the cases of Avinash Bhosale (supra) and Poonawala Finvest & Agro P.Ltd. (supra) wherein disallowance of 1/7th of the aircraft expenses has been Oil Engine (supra), the Hon'ble ITAT, Pune has upheld the disallowance of aircraft expenses to the extent of 15%. There is some merit in the contention of the assessee that there is no element of personal use sin destinations. However in absence of the names of the passengers who have undertaken the helicopter trips, it cannot be fully ascertained as to whether the assessee has used the helicopter wholly and exclusiv will meet the ends of justice if 20% of the assessee's claim of depreciation on helicopter is disallowed as related to non purposes. Accordingly, Ground No. 1 of the appeal is partly allowed. 9. Before us the submissions made before the Ld. CIT(A) including the order of the Tribunal in the case of the assessee for 2013 submitted that in assessment year 2013 provided and on the basis of which the Ld. CIT(A) concluded that there was no personal trip by the assessee, but in the year under Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. has been arrived at after factual verification of the log maintained for the relevant year. 5.7 It is observed that the Hon'ble ITAT, Pune, has dealt with this issue in the cases of Avinash Bhosale (supra) and Poonawala Finvest & Agro P.Ltd. (supra) wherein disallowance of 1/7th of the aircraft expenses has been upheld. Similarly, in the case of Kirloskar Oil Engine (supra), the Hon'ble ITAT, Pune has upheld the disallowance of aircraft expenses to the extent of 15%. There is some merit in the contention of the assessee that there is no element of personal use since the trips have not been undertaken to tourist destinations. However in absence of the names of the passengers who have undertaken the helicopter trips, it cannot be fully ascertained as to whether the assessee has used the helicopter wholly and exclusively for the purpose of its business. Therefore, it will meet the ends of justice if 20% of the assessee's claim of depreciation on helicopter is disallowed as related to non purposes. Accordingly, Ground No. 1 of the appeal is partly allowed. Before us the Ld. counsel of the assessee relied on the submissions made before the Ld. CIT(A) including the order of the in the case of the assessee for 2013-14. Whereas the in assessment year 2013-14, the logbook was ed and on the basis of which the Ld. CIT(A) concluded that there was no personal trip by the assessee, but in the year under Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 13 has been arrived at after factual verification of the log-book 5.7 It is observed that the Hon'ble ITAT, Pune, has dealt with this issue in the cases of Avinash Bhosale (supra) and Poonawala Finvest & Agro P.Ltd. (supra) wherein disallowance of 1/7th of the upheld. Similarly, in the case of Kirloskar Oil Engine (supra), the Hon'ble ITAT, Pune has upheld the disallowance of aircraft expenses to the extent of 15%. There is some merit in the contention of the assessee that there is no element ce the trips have not been undertaken to tourist destinations. However in absence of the names of the passengers who have undertaken the helicopter trips, it cannot be fully ascertained as to whether the assessee has used the helicopter ely for the purpose of its business. Therefore, it will meet the ends of justice if 20% of the assessee's claim of depreciation on helicopter is disallowed as related to non-business purposes. Accordingly, Ground No. 1 of the appeal is partly allowed.” of the assessee relied on the submissions made before the Ld. CIT(A) including the order of the 14. Whereas the Ld. DR 14, the logbook was ed and on the basis of which the Ld. CIT(A) concluded that there was no personal trip by the assessee, but in the year under consideration details of the passenger travels is not available and therefore lower authorities are justified in sustaining disallo of depreciation on helicopter. 10. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. It is undisputed that the helicopter has been purchase in the name of AOP M/s Varna Aviation assessee. The said AOP did not claim depreciation on the helicopter. It is the four co-owners who claimed respective share of the depreciation in their books of accounts including the assessee. There is no dispute as far as cla The only dispute is whether the helicopter was put to use wholly and exclusively for the purpose of the business. assessment year 2013 order of the Ld. CIT(A depreciation made by the Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. consideration details of the passenger travels is not available and authorities are justified in sustaining disallo of depreciation on helicopter. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. It is undisputed that the helicopter has been purchase in the name of Aviation, having four members including the assessee. The said AOP did not claim depreciation on the helicopter. owners who claimed respective share of the depreciation in their books of accounts including the assessee. There is no dispute as far as claim of ownership vis-à-vis the depreciation. The only dispute is whether the helicopter was put to use wholly and exclusively for the purpose of the business. The assessment year 2013-14 in ITA No. 5450/Mum/2016 upheld the order of the Ld. CIT(A) deleting the disallowance of 50% depreciation made by the Assessing Officer, observing as under: Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 14 consideration details of the passenger travels is not available and authorities are justified in sustaining disallowance We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. It is undisputed that the helicopter has been purchase in the name of g four members including the assessee. The said AOP did not claim depreciation on the helicopter. owners who claimed respective share of the depreciation in their books of accounts including the assessee. There the depreciation. The only dispute is whether the helicopter was put to use wholly The Tribunal in No. 5450/Mum/2016 upheld the ) deleting the disallowance of 50% , observing as under: “8. We have heard the rival submissions of both the parties and perused the material on record. We find that the purchase of helicopter and its use in the observed that there might be some personal use of helicopter and thus making disallowance of 50% of deprecation without any basis which is nothing but a conclusion drawn on the basis of presumption, conjunctures and CIT(A) has taken a very correct and reasoned view of the matter after calling for and examining the necessary records primarily the helicopter's technical log book recording the finding of facts that no trips were taken violation of rule 46A by the Id CIT(A) as he has co extensive powers to call for the records and examine the same in order to decide the matter before him. Accordingly, ground No.1 & 2 are dismissed. 10.1 The assessee has also filed a copy of the order of the Ld. CIT(A) for assessment year 2013 the paperbook. The relevant finding of the Ld. CIT(A) is reproduced as under: “7. I have considered the facts of the ca contentions of the assessee as also the order of the AO. It appears that the AO has disallowed the claim towards depreciation on the grounds that the assessee has not been able to prove that asset has been used wholly and exclusively fo this regard has also relied upon ITAT Pune judgment in case of Avinash Bhosale in ITA no 1524/08. I have considered the entire Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. We have heard the rival submissions of both the parties and perused the material on record. We find that the purchase of helicopter and its use in the business was not disputed by the AO but observed that there might be some personal use of helicopter and thus making disallowance of 50% of deprecation without any basis which is nothing but a conclusion drawn on the basis of presumption, conjunctures and surmises. On the other hand, the Ld. CIT(A) has taken a very correct and reasoned view of the matter after calling for and examining the necessary records primarily the helicopter's technical log book recording the finding of facts that no trips were taken for personal trips by the assessee. Thus there is no violation of rule 46A by the Id CIT(A) as he has co extensive powers to call for the records and examine the same in order to decide the matter before him. Accordingly, ground No.1 & 2 are dismissed. The assessee has also filed a copy of the order of the Ld. CIT(A) for assessment year 2013-14, which is available on page 9 to 18 of . The relevant finding of the Ld. CIT(A) is reproduced 7. I have considered the facts of the case, submissions and contentions of the assessee as also the order of the AO. It appears that the AO has disallowed the claim towards depreciation on the grounds that the assessee has not been able to prove that asset has been used wholly and exclusively for business purposes. The AO in this regard has also relied upon ITAT Pune judgment in case of Avinash Bhosale in ITA no 1524/08. I have considered the entire Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 15 We have heard the rival submissions of both the parties and perused the material on record. We find that the purchase of business was not disputed by the AO but observed that there might be some personal use of helicopter and thus making disallowance of 50% of deprecation without any basis which is nothing but a conclusion drawn on the basis of surmises. On the other hand, the Ld. CIT(A) has taken a very correct and reasoned view of the matter after calling for and examining the necessary records primarily the helicopter's technical log book recording the finding of facts that no for personal trips by the assessee. Thus there is no violation of rule 46A by the Id CIT(A) as he has co extensive powers to call for the records and examine the same in order to decide the matter before him. Accordingly, ground No.1 & 2 are dismissed.” The assessee has also filed a copy of the order of the Ld. CIT(A) n page 9 to 18 of . The relevant finding of the Ld. CIT(A) is reproduced se, submissions and contentions of the assessee as also the order of the AO. It appears that the AO has disallowed the claim towards depreciation on the grounds that the assessee has not been able to prove that asset has r business purposes. The AO in this regard has also relied upon ITAT Pune judgment in case of Avinash Bhosale in ITA no 1524/08. I have considered the entire gamut of facts. During the year the assessee company made an Association of Person (AOP) in the na along with M/s. Piramal Enterprises Pvt.Ltd., M/s. Real Gold Developers Ltd. and M/s. Serum Institute India to purchase a helicopter, as the assessee had to frequently travel to Nashik, Pune and Aurangabad for business purposes. T understanding for purchasing a helicopter on co and for sharing its operation & maintenance cost was entered between the parties on 24th February, 2011 and was amended on 23rd October, 2012. The co the helicopter on equal basis and also to share the operational expenses on equal basis. Therefore, the share of assessee in the cost of helicopter is Rs. 11,54,83,388/ Fixed Assets and depreciation was clai appears that M/s. Varva Aviation had not claimed any depreciation on the helicopter in its books of account and income tax return filed by it. The assessee had submitted before the AO that the helicopter was used only for business year under consideration the helicopter was operated from Delhi Jaipur, Jaipur- not the places where any person would go for personal trip. Apart from this the helicop Therefore assumption made by the AO that the helicopter was used for personal purpose appears to be incorrect. The assessee in this regard also produced aircraft technical log book' of helicopter containing precise hours and destinations etc. This logbook has been duly signed by the pilot flying the helicopter. From the records it appears that the helicopter has flown between Pune and Mumbai. These are not the Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. gamut of facts. During the year the assessee company made an Association of Person (AOP) in the name of M/s. Varva Aviation along with M/s. Piramal Enterprises Pvt.Ltd., M/s. Real Gold Developers Ltd. and M/s. Serum Institute India to purchase a helicopter, as the assessee had to frequently travel to Nashik, Pune and Aurangabad for business purposes. The memorandum of understanding for purchasing a helicopter on co-ownership basis and for sharing its operation & maintenance cost was entered between the parties on 24th February, 2011 and was amended on 23rd October, 2012. The co-owners agreed to fund the acquisition of the helicopter on equal basis and also to share the operational expenses on equal basis. Therefore, the share of assessee in the cost of helicopter is Rs. 11,54,83,388/-, which was shown under the head Fixed Assets and depreciation was claimed accordingly. It also appears that M/s. Varva Aviation had not claimed any depreciation on the helicopter in its books of account and income tax return filed by it. The assessee had submitted before the AO that the helicopter was used only for business purposes. More particularly during the year under consideration the helicopter was operated from Delhi Indore, Indore-Aurangabad and Baramati which are not the places where any person would go for personal trip. Apart from this the helicopter was also used for Pilot training etc. Therefore assumption made by the AO that the helicopter was used for personal purpose appears to be incorrect. The assessee in this regard also produced aircraft technical log book' of helicopter containing precise details of use of helicopter flying time and flying hours and destinations etc. This logbook has been duly signed by the pilot flying the helicopter. From the records it appears that the helicopter has flown between Pune and Mumbai. These are not the Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 16 gamut of facts. During the year the assessee company made an me of M/s. Varva Aviation along with M/s. Piramal Enterprises Pvt.Ltd., M/s. Real Gold Developers Ltd. and M/s. Serum Institute India to purchase a helicopter, as the assessee had to frequently travel to Nashik, Pune he memorandum of ownership basis and for sharing its operation & maintenance cost was entered between the parties on 24th February, 2011 and was amended on acquisition of the helicopter on equal basis and also to share the operational expenses on equal basis. Therefore, the share of assessee in the cost , which was shown under the head med accordingly. It also appears that M/s. Varva Aviation had not claimed any depreciation on the helicopter in its books of account and income tax return filed by it. The assessee had submitted before the AO that the helicopter purposes. More particularly during the year under consideration the helicopter was operated from Delhi- Aurangabad and Baramati which are not the places where any person would go for personal trip. Apart ter was also used for Pilot training etc. Therefore assumption made by the AO that the helicopter was used for personal purpose appears to be incorrect. The assessee in this regard also produced aircraft technical log book' of helicopter details of use of helicopter flying time and flying hours and destinations etc. This logbook has been duly signed by the pilot flying the helicopter. From the records it appears that the helicopter has flown between Pune and Mumbai. These are not the places where the assessee would like to go for personal visits. On many occasions it has flown for pilot training, maintenance and ground etc. A few flights are in nature of ferrying the helicopter from place of purcghase. None of the flight appears to be of personal nature. Therefore I am not in a position to agree with the Ld AO that the asset was not used for business purposes. The AO in this regard also relied upon the Hon'ble Pune ITAT judgment in case of Avinash Bhosale wherein disallowance of depreciatio extent of 30% was confirmed on account of personal use of chopper etc. However the facts of the present case are slightly different. In the instant case, from perusal of logbook it does not look like that the helicopter was used for any non busine purposes. Therefore I am of the view that no disallowance is called for in respect of depreciation on the facts of the present case. Consequently the ground taken by the assessee is allowed. 10.2 Thus the Tribunal issue on the facts of that particular year personal use of the helicopter consideration, we have to examine personal use of helicopter. 10.3 The assessee has claimed deprec provisions of section 32 of the that in respect of depreciation of building, machinery, plant or Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. es where the assessee would like to go for personal visits. On many occasions it has flown for pilot training, maintenance and ground etc. A few flights are in nature of ferrying the helicopter from place of purcghase. None of the flight appears to be of ersonal nature. Therefore I am not in a position to agree with the Ld AO that the asset was not used for business purposes. The AO in this regard also relied upon the Hon'ble Pune ITAT judgment in case of Avinash Bhosale wherein disallowance of depreciatio extent of 30% was confirmed on account of personal use of chopper etc. However the facts of the present case are slightly different. In the instant case, from perusal of logbook it does not look like that the helicopter was used for any non business purposes or personal purposes. Therefore I am of the view that no disallowance is called for in respect of depreciation on the facts of the present case. Consequently the ground taken by the assessee is allowed. Tribunal in assessment year 2013-14 has decided the that particular year, and held that there was no personal use of the helicopter. Therefore, in the year under consideration, we have to examine personal use of helicopter. The assessee has claimed depreciation on helicopter within the provisions of section 32 of the Act. The section 32 (1) has prescribed that in respect of depreciation of building, machinery, plant or Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 17 es where the assessee would like to go for personal visits. On many occasions it has flown for pilot training, maintenance and ground etc. A few flights are in nature of ferrying the helicopter from place of purcghase. None of the flight appears to be of ersonal nature. Therefore I am not in a position to agree with the Ld AO that the asset was not used for business purposes. The AO in this regard also relied upon the Hon'ble Pune ITAT judgment in case of Avinash Bhosale wherein disallowance of depreciation to the extent of 30% was confirmed on account of personal use of chopper etc. However the facts of the present case are slightly different. In the instant case, from perusal of logbook it does not look like that ss purposes or personal purposes. Therefore I am of the view that no disallowance is called for in respect of depreciation on the facts of the present case. Consequently the ground taken by the assessee is allowed.” 14 has decided the , and held that there was no Therefore, in the year under consideration, we have to examine personal use of helicopter. iation on helicopter within the . The section 32 (1) has prescribed that in respect of depreciation of building, machinery, plant or furniture, being tangible asset, which are owned, wholly or partly by the assessee and used for the purpose of the business or profession deduction shall be allowed percentage on the written down value as prescribed under Rule 1962. Under the rules, the assessee has claimed (1/4 share of the depreciation on the helicopter. 10.4 The section 38(2) of the machinery, plant of furniture is not exclusively used for the of the business of profession, then depreciation under section 32 shall be restricted to Assessing Officer may determine having regard to the user of such building machinery plant of furniture for the purp profession. 10.5 The Tribunal in the case of also invoking section 38(2) of the Assessing Officer is Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. furniture, being tangible asset, which are owned, wholly or partly by the assessee and used for the purpose of the business or profession deduction shall be allowed percentage on the written down value as Rule 5(1) and Appendix-I of Income Under the rules, the assessee has claimed (1/4 share of the depreciation on the helicopter. The section 38(2) of the Act prescribe that where any building machinery, plant of furniture is not exclusively used for the of the business of profession, then depreciation under section 32 shall be restricted to fair proportionate part thereof, which the may determine having regard to the user of such building machinery plant of furniture for the purpose of business or in the case of Avinash Nivrutti Bhosale (supra) also invoking section 38(2) of the Act, held in principle that is under obligation to determine the Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 18 furniture, being tangible asset, which are owned, wholly or partly by the assessee and used for the purpose of the business or profession deduction shall be allowed percentage on the written down value as Income-tax Rules, Under the rules, the assessee has claimed (1/4 th ) one fourth that where any building, machinery, plant of furniture is not exclusively used for the purpose of the business of profession, then depreciation under section 32 proportionate part thereof, which the may determine having regard to the user of such ose of business or Nivrutti Bhosale (supra) held in principle that under obligation to determine the fair proportion having regard to the use of such machinery and for that purpose reliable data has to be supplied either by the assessee or to be garnered by the Tribunal is reproduced as under: “10. We have heard t paper books made available to us. Undisputed facts are that the assessee used both Bell helicopter as well as the Cessna aircraft for the mixed use and therefore, there is no dispute on the invoking of the provisions of dispute that the AO restricted the disallowance art 1/7th of the claim. The same is evidenced by filing the copies of the assessment orders for the AYs pages 128 to 145 of the paper book. For the instant year, the AO adopted 30% as against 1/7th in the past and therefore the issue travelled to the Tribunal for the first time for the instant AY. Before, it is adequately made out that the 1/7th is reasonable. Therefore the issue in dispute is whether the disallowance on accounts of aviation expenses and the depreciation of both Bell Helicoptor and the Cessna Aircraft should be restricted to 1/7th of the claim or no 11. In this regard, we have perused the provisions of the Act which reads as under. Building, etc, partly used for business, etc, or not exclusively so used Section 38(1) Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. proportion having regard to the use of such machinery and for that purpose reliable data has to be supplied either by the assessee or to be garnered by the Assessing Officer. The relevant finding of the is reproduced as under: 10. We have heard the parties and perused the orders and the paper books made available to us. Undisputed facts are that the assessee used both Bell helicopter as well as the Cessna aircraft for the mixed use and therefore, there is no dispute on the invoking of ns of section 38(2) of the Act. Further, there is no dispute that the AO restricted the disallowance art 1/7th of the claim. The same is evidenced by filing the copies of the assessment orders for the AYs 2002-03 to AYs 2004-05. They are placed at pages 128 to 145 of the paper book. For the instant year, the AO adopted 30% as against 1/7th in the past and therefore the issue travelled to the Tribunal for the first time for the instant AY. Before, quately made out that the 1/7th is reasonable. Therefore the issue in dispute is whether the disallowance on accounts of aviation expenses and the depreciation of both Bell Helicoptor and the Cessna Aircraft should be restricted to 1/7th of the claim or no 11. In this regard, we have perused the provisions of section 38(2) the Act which reads as under. Building, etc, partly used for business, etc, or not exclusively so Section 38(1).... Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 19 proportion having regard to the use of such machinery and for that purpose reliable data has to be supplied either by the assessee or to . The relevant finding of the he parties and perused the orders and the paper books made available to us. Undisputed facts are that the assessee used both Bell helicopter as well as the Cessna aircraft for the mixed use and therefore, there is no dispute on the invoking of of the Act. Further, there is no dispute that the AO restricted the disallowance art 1/7th of the claim. The same is evidenced by filing the copies of the assessment 05. They are placed at pages 128 to 145 of the paper book. For the instant year, the AO adopted 30% as against 1/7th in the past and therefore the issue travelled to the Tribunal for the first time for the instant AY. Before, quately made out that the 1/7th is reasonable. Therefore the issue in dispute is whether the disallowance on accounts of aviation expenses and the depreciation of both Bell Helicoptor and the Cessna Aircraft should be restricted to 1/7th of the claim or not. section 38(2) of Building, etc, partly used for business, etc, or not exclusively so (2) Where any building, machinery, plant or furniture is not exclusively used for the purposes of the business or profession, the deductions under sub of section 30, clauses (i) and (ii) of section (1) of section 32 part thereof which the Assessing Officer may determine, having regard to the user of such building, machinery , plant or furniture for the purposes of the business or profession." From the above, it is evident that the re proportionate part thereof which the Assessing Officer may determine, having regard to the user of such ....., machinery , plant or ..... for the purposes of the business or profession'. If the requirement of the law that the A. having regard to the user of such machinery for determining the same, there is need for reliable data either supplied by the assessee or garnered by the A.O. Neither is available in this case. 10.6 In the case of Poonawa disallowance for depreciation and other expenses on helicopter toward non-business use have been upheld by the Similarly in the case of 1039 & 1040 for AY 1995 the expenses of aircraft for nonbusiness use have been upheld by the Tribunal, Pune Bench. Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. (2) Where any building, machinery, plant or furniture is not exclusively used for the purposes of the business or profession, the deductions under sub-clause (ii) of clause (a) and clause (c) , clauses (i) and (ii) of section 31 and clause (ii) of sub section 32 shall be restricted to a fair proportionate part thereof which the Assessing Officer may determine, having regard to the user of such building, machinery , plant or furniture for the purposes of the business or profession." From the above, it is evident that the restriction should be a 'fair proportionate part thereof which the Assessing Officer may determine, having regard to the user of such ....., machinery , plant or ..... for the purposes of the business or profession'. If the requirement of the law that the A.O is under obligation to determine having regard to the user of such machinery for determining the same, there is need for reliable data either supplied by the assessee or garnered by the A.O. Neither is available in this case.” In the case of Poonawala Finvest & Agro P. Ltd disallowance for depreciation and other expenses on helicopter business use have been upheld by the Similarly in the case of Kirloskar Oil Engine Ltd. 1039 & 1040 for AY 1995-96 & 1996-97, disallowance of a part of the expenses of aircraft for nonbusiness use have been upheld by , Pune Bench. Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 20 (2) Where any building, machinery, plant or furniture is not exclusively used for the purposes of the business or profession, the clause (ii) of clause (a) and clause (c) and clause (ii) of sub- restricted to a fair proportionate part thereof which the Assessing Officer may determine, having regard to the user of such building, machinery , plant or furniture striction should be a 'fair proportionate part thereof which the Assessing Officer may determine, having regard to the user of such ....., machinery , plant or ..... for the purposes of the business or profession'. If the O is under obligation to determine having regard to the user of such machinery for determining the same, there is need for reliable data either supplied by the assessee Ltd. (supra) also disallowance for depreciation and other expenses on helicopter business use have been upheld by the Tribunal. Ltd. vide ITA No. , disallowance of a part of the expenses of aircraft for nonbusiness use have been upheld by 10.7 In view of above stat undisputed that if the helicopter has been used for non purposes then fair proportionate of depreciation has to be restricted in terms of section 38(2) of the issue-in-dispute finally precipitate as personal use/non-business use trips of the helicopter have been carried out for the purpose of the business of the assessee as well as other three co and exclusively. 10.8 From the orders of the lower authorities and the paperbook and other documents pr that in the year under consideration connected the trips with its offices or business locations under consideration no assessee. The assessee has not submitted any evidence of conducting meeting with any customers or for buying land or for Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. In view of above statutory provisions and precedents undisputed that if the helicopter has been used for non proportionate of depreciation has to be restricted in terms of section 38(2) of the Act. In the instant case before us t dispute finally precipitate as to whether business use of the helicopter or otherwise trips of the helicopter have been carried out for the purpose of the business of the assessee as well as other three co From the orders of the lower authorities and the paperbook and other documents produced by the assessee before us n the year under consideration the assessee has nowhere connected the trips with its offices or business locations under consideration no real estate project was carried out by the ssessee has not submitted any evidence of conducting meeting with any customers or for buying land or for Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 21 utory provisions and precedents, it is undisputed that if the helicopter has been used for non-business proportionate of depreciation has to be restricted In the instant case before us the whether there was any or otherwise the trips of the helicopter have been carried out for the purpose of the business of the assessee as well as other three co-owners wholly From the orders of the lower authorities and the paperbook duced by the assessee before us, we find he assessee has nowhere connected the trips with its offices or business locations. In the year project was carried out by the ssessee has not submitted any evidence of conducting meeting with any customers or for buying land or for attending any conference except making a general statement. assessee has filed a photo copy of logbook before the Ld. CIT(A) and claimed that same was maintained by the pilot of the helicopter as per the Rules of civil aviation authority. This logbook does not contain name of the persons who travelled and therefore it is not an evidence to substantiate whether the and exclusively for the purpose of the business of the assessee only. It is to be particularly noted here that co shared the funds for purchase of the helicopter as well as for running and maintenance expenses of the helicopter, but it is nowhere clear how the said helicopter has been owners in proportion of the expenses shared. Even, it is not clear from the logbook presented by the assessee, used the helicopter for which trip. It is the onus of the assessee demonstrate with evidences as to out of the tota the logbook, which particular trip Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. attending any conference except making a general statement. assessee has filed a photo copy of logbook before the Ld. CIT(A) and e was maintained by the pilot of the helicopter as of civil aviation authority. This logbook does not contain name of the persons who travelled and therefore it is not an evidence to substantiate whether the helicopter was used wholly lusively for the purpose of the business of the assessee only. It is to be particularly noted here that co-owners claimed to the funds for purchase of the helicopter as well as for running and maintenance expenses of the helicopter, but it is owhere clear how the said helicopter has been used by the co owners in proportion of the expenses shared. Even, it is not clear from the logbook presented by the assessee, as which co the helicopter for which trip. It is the onus of the assessee demonstrate with evidences as to out of the total trips recorded in , which particular trips was in relation to his business Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 22 attending any conference except making a general statement. The assessee has filed a photo copy of logbook before the Ld. CIT(A) and e was maintained by the pilot of the helicopter as of civil aviation authority. This logbook does not contain name of the persons who travelled and therefore it is not an helicopter was used wholly lusively for the purpose of the business of the assessee only. owners claimed to have the funds for purchase of the helicopter as well as for running and maintenance expenses of the helicopter, but it is used by the co- owners in proportion of the expenses shared. Even, it is not clear which co-owner the helicopter for which trip. It is the onus of the assessee to l trips recorded in was in relation to his business and who travelled in the trip. The assessee has filed a copy of the MO among the members of AOP i.e. co available on page43 to 52 of the paperbook. The clause 19 of the said MOU reads as under: “19. The Helicopter shall be Mumbai based, accordingly who so ever uses the Craft Mumbai (Round trip). Flight schedule shall be calculated to the Co owners on daily/weekly basis. 10.9 According to the above clause user of the helicopter has been charged for the flight including return details i.e. which trips have been undertaken by which co must be available with the AOP. For determination of fair proportion of depreciation in case business purposes, it is details of trips carried by the specific business purpose along with the persons and places travelled Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. and who travelled in those trips along with the specific purpose of The assessee has filed a copy of the MO among the members of AOP i.e. co-owners of the helicopter available on page43 to 52 of the paperbook. The clause 19 of the said MOU reads as under: The Helicopter shall be Mumbai based, accordingly who so ever uses the Craft shall be charged for the flight including return to Mumbai (Round trip). Flight schedule shall be calculated to the Co owners on daily/weekly basis.” to the above clause user of the helicopter has been charged for the flight including return to Mumbai, and therefore all which trips have been undertaken by which co must be available with the AOP. For determination of fair proportion of depreciation in case, particularly use of the helicopter for non business purposes, it is essential either the assessee provide all the carried by the specific business purpose along with the persons and places travelled, duly supported with documentary Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 23 along with the specific purpose of The assessee has filed a copy of the MOU entered into owners of the helicopter, which is available on page43 to 52 of the paperbook. The clause 19 of the The Helicopter shall be Mumbai based, accordingly who so shall be charged for the flight including return to Mumbai (Round trip). Flight schedule shall be calculated to the Co- to the above clause user of the helicopter has been to Mumbai, and therefore all which trips have been undertaken by which co-owner, must be available with the AOP. For determination of fair proportion use of the helicopter for non- essential either the assessee provide all the carried by the specific business purpose along with , duly supported with documentary evidences or the Assessing Officer the office of the concerned civil aviation authority or concerned administrations responsible for maintaining records of helicopter landing management. proportion of the non then restrict the depreciation which could be allowed in te section 38(2) of the Act depreciation (i.e. 1/4 assessee. 10.10 In absence of such evidence restore this issue back to file of the afresh after examining the documentary evidence either presented by the Assessing Officer through inquiries which he deemed fit in the fa needless to mention that adequate opportunity of being heard Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. Assessing Officer has to carry out inquiries from ice of the concerned civil aviation authority or concerned administrations responsible for maintaining records of helicopter management. The Assessing Officer should determine the proportion of the non-business use by the all four co then restrict the depreciation which could be allowed in te section 38(2) of the Act. Subsequently, compute the proportion of i.e. 1/4 th amount) which could be allowed to the In absence of such evidences, we feel it app restore this issue back to file of the Assessing Officer fresh after examining the documentary evidence either presented Assessing Officer or gathered by the Assessing Officer through inquiries which he deemed fit in the facts of the case. It is needless to mention that adequate opportunity of being heard Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 24 has to carry out inquiries from ice of the concerned civil aviation authority or concerned administrations responsible for maintaining records of helicopter should determine the business use by the all four co-owners, and then restrict the depreciation which could be allowed in terms of he proportion of amount) which could be allowed to the , we feel it appropriate to Assessing Officer for deciding fresh after examining the documentary evidence either presented Assessing Officer cts of the case. It is needless to mention that adequate opportunity of being heard shall be afforded to the assessee assessee is accordingly allowed for statistical purposes. 11. The ground No. 2 of the appeal relat ₹3,02,607/- for delayed payment of provident fund (PF) and Employees State Insurance Corporation (ESIC). upheld the disallowance in view of the decision of the Hon’ble Gujarat High Court in the case of Transport Corporation 366 ITR 170 delayed payments of employees contribution of PF and ESIC cannot be allowed as deduction although same is before due date of the filing of return of income but paid after d relevant enactment governing PF and ESIC. 12. Before us the amendment has been brought to of the Act by way of Finance employees contribution to PF and ESIC after due date prescribed Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. be afforded to the assessee. The ground No. 1 of the appeal of the assessee is accordingly allowed for statistical purposes. The ground No. 2 of the appeal relates to addition of for delayed payment of provident fund (PF) and Employees State Insurance Corporation (ESIC). The upheld the disallowance in view of the decision of the Hon’ble Gujarat High Court in the case of CIT Vs. Gujarati State Road Corporation 366 ITR 170, wherein it is held that the delayed payments of employees contribution of PF and ESIC cannot deduction although same is before due date of the return of income but paid after due date prescribed under relevant enactment governing PF and ESIC. Before us the Ld. counsel of the assessee submitted that amendment has been brought to section 36(1)(va) and section 4 by way of Finance Act, 2021, wherein payment of oyees contribution to PF and ESIC after due date prescribed Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 25 of the appeal of the assessee is accordingly allowed for statistical purposes. es to addition of for delayed payment of provident fund (PF) and The Ld. CIT(A) upheld the disallowance in view of the decision of the Hon’ble Gujarati State Road , wherein it is held that the delayed payments of employees contribution of PF and ESIC cannot deduction although same is before due date of the ue date prescribed under of the assessee submitted that section 36(1)(va) and section 43B , 2021, wherein payment of oyees contribution to PF and ESIC after due date prescribed under relevant enactment, has been made in however said amendment has been held prospective by the Tribunal, Mumbai Bench in the case of Tourism Development Corporation [ITA No. 6426/M/2017] (AY 2012-13), order dated 27.07.2021 13. The Ld. DR on the other hand submitted that amendment is clarificatory in the nature and therefore same should be treated as retrospective in nature. 14. We have heard rival dispute and perused t amendment made under section 36(1)(va) and 43B has been held prospective by the Tribunal is reproduced as under: “16. Before us, the learned CIT DR Ms. Mamta Bansal stated that there is no question of allowance of differential payment of ₹65,462/- which has never been paid by the assessee and the amount which are not paid by the assessee amounting to Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. ant enactment, has been made ineligible for deduction, however said amendment has been held prospective by the , Mumbai Bench in the case of DCIT v. Maharashtra ent Corporation [ITA No. 6426/M/2017] (AY 13), order dated 27.07.2021. on the other hand submitted that amendment is in the nature and therefore same should be treated as retrospective in nature. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record amendment made under section 36(1)(va) and 43B has been held prospective by the Tribunal(supra). The relevant finding of the is reproduced as under: 16. Before us, the learned CIT DR Ms. Mamta Bansal stated that there is no question of allowance of differential payment of which has never been paid by the assessee and the amount which are not paid by the assessee amounting to Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 26 eligible for deduction, however said amendment has been held prospective by the DCIT v. Maharashtra ent Corporation [ITA No. 6426/M/2017] (AY on the other hand submitted that amendment is in the nature and therefore same should be treated as submission of the parties on the issue in he relevant material on record. The amendment made under section 36(1)(va) and 43B has been held (supra). The relevant finding of the 16. Before us, the learned CIT DR Ms. Mamta Bansal stated that there is no question of allowance of differential payment of which has never been paid by the assessee and the amount which are not paid by the assessee amounting to ₹1,28,798/- being claimed on account of employees contribution of provident fund. The balance amount of the due date as prescribed under the provident fund Act. She stated that the Assessing Officer clearly brought out the amount amount paid. Now, the learned CIT DR further stated that there is an amendment in the Provisions of Section 36(va), wherein explanation 2 was added by the Finance Act 2021, with effect from 01.04.2021 and the relevant explanation read as under: “[Explanation- that the provisions of section 43B shall not apply and shall be deemed never to have been applied for the purposes of determining the “due date” under this clause;] 17. The learned CIT DR explanation and normal presumption is that these provisions have been in the Act from the very inception, once it is clarificatory for this, she relied on CIT v. Podar Cement (Pvt.) Ltd. [1997] 226 ITR 625 (SC) and C 308 (SC). 18. On the other hand, the learned Counsel for the assessee relied on the decision of Hyderabad Bench of ITAT in the case of Salzgitter Hydraulics (P.) Ltd. Vs. ITO (2021) 128 taxmann.com 192 (Hyderabad – provident fund contribution received from employees deposited by assessee before the due date of filing of return under section 139(1) of the Act but after the due date prescribed in the rel provident Fund Act is to be allowed despite the fact that legislation has not only incorporated necessary amendment in section Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. being claimed on account of employees contribution of provident fund. The balance amount of ₹9,08,873/- was paid after the due date as prescribed under the provident fund Act. She stated that the Assessing Officer clearly brought out the amount amount paid. Now, the learned CIT DR further stated that there is an amendment in the Provisions of Section 36(va), wherein explanation 2 was added by the Finance Act 2021, with effect from 01.04.2021 and the relevant explanation read as under: - -2- For the removal of doubts, it is hereby clarified that the provisions of section 43B shall not apply and shall be deemed never to have been applied for the purposes of determining the “due date” under this clause;] 17. The learned CIT DR stated that this is only clarificatory explanation and normal presumption is that these provisions have been in the Act from the very inception, once it is clarificatory for this, she relied on CIT v. Podar Cement (Pvt.) Ltd. [1997] 226 ITR 625 (SC) and CIT vs. Gold Coin Health Food (P.) Ltd [2008] 304 ITR 18. On the other hand, the learned Counsel for the assessee relied on the decision of Hyderabad Bench of ITAT in the case of Salzgitter Hydraulics (P.) Ltd. Vs. ITO (2021) 128 taxmann.com 192 Trib.) dated 15.06.2021, wherein it is held that the provident fund contribution received from employees deposited by assessee before the due date of filing of return under section 139(1) of the Act but after the due date prescribed in the relevant statute of provident Fund Act is to be allowed despite the fact that legislation has not only incorporated necessary amendment in section Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 27 being claimed on account of employees contribution of was paid after the due date as prescribed under the provident fund Act. She stated that the Assessing Officer clearly brought out the amount due and amount paid. Now, the learned CIT DR further stated that there is an amendment in the Provisions of Section 36(va), wherein explanation 2 was added by the Finance Act 2021, with effect from For the removal of doubts, it is hereby clarified that the provisions of section 43B shall not apply and shall be deemed never to have been applied for the purposes of determining stated that this is only clarificatory explanation and normal presumption is that these provisions have been in the Act from the very inception, once it is clarificatory for this, she relied on CIT v. Podar Cement (Pvt.) Ltd. [1997] 226 ITR IT vs. Gold Coin Health Food (P.) Ltd [2008] 304 ITR 18. On the other hand, the learned Counsel for the assessee relied on the decision of Hyderabad Bench of ITAT in the case of Salzgitter Hydraulics (P.) Ltd. Vs. ITO (2021) 128 taxmann.com 192 Trib.) dated 15.06.2021, wherein it is held that the provident fund contribution received from employees deposited by assessee before the due date of filing of return under section 139(1) evant statute of provident Fund Act is to be allowed despite the fact that legislation has not only incorporated necessary amendment in section 36(1)(va) of the Act by inserting explanation 2 as well as explanation 5 to section 43B vide Finance Act, 2021 w 01.04.2021, wherein it is clarified that the provisions of section shall not apply and shall be deemed to have been applied to a sum received by assessee from any of his employees covered by section 2(24)(x) of the Act because this explanat not retrospective. The relevant Para 2 of the case reads as under: “2. Coming to the sole substantive issue of ESI/PF disallowance of Rs. 1,09,343/- is that the same has bee 139(1) return and after the due date prescribed in the corresponding statutes; respectively. I notice in backdrop that the legislature has not only incorporated necessary amendments in Sections 36(va) 2021 to this effect but also the CBDT has issued Memorandum of Explanation that the same applies w.e.f. 1 not an issue that the forergoing legislative amendments have proposed employers contributi against employee u/s 36 (va) of the Act; respectively. However, keeping in mind the fact that the same has been clarified to be applicable only with prospective effect from 1 the impugned disallowance is no latest developments even if the Revenue's case is supported by the following case law.” 19. In view of the above, amendments incorporated in section 36(1)(va) and 43B of the Act by the Finance Act, 2021 by inserting explanation 2 and explanation 5 to the respective provisions, are prospective in Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. 36(1)(va) of the Act by inserting explanation 2 as well as explanation 5 to section 43B vide Finance Act, 2021 with effect from 01.04.2021, wherein it is clarified that the provisions of section shall not apply and shall be deemed to have been applied to a sum received by assessee from any of his employees covered by section 2(24)(x) of the Act because this explanations are prospective and not retrospective. The relevant Para 2 of the case reads as under: “2. Coming to the sole substantive issue of ESI/PF disallowance of and Rs. 3,52,622/-, the assessee's and revenue's stand is that the same has been paid before the due date of filing sec. 139(1) return and after the due date prescribed in the corresponding statutes; respectively. I notice in this factual backdrop that the legislature has not only incorporated necessary amendments in Sections 36(va) as well as 43B vide Finance Act, 2021 to this effect but also the CBDT has issued Memorandum of Explanation that the same applies w.e.f. 1-4-2021 only. It is further not an issue that the forergoing legislative amendments have proposed employers contributions; disallowances u/s 43B as against employee u/s 36 (va) of the Act; respectively. However, keeping in mind the fact that the same has been clarified to be applicable only with prospective effect from 1-4-2021, I hold that the impugned disallowance is not sustainable in view of all these latest developments even if the Revenue's case is supported by the following case law.” 19. In view of the above, we are of the view that the legislative amendments incorporated in section 36(1)(va) and 43B of the the Finance Act, 2021 by inserting explanation 2 and explanation 5 to the respective provisions, are prospective in Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 28 36(1)(va) of the Act by inserting explanation 2 as well as ith effect from 01.04.2021, wherein it is clarified that the provisions of section shall not apply and shall be deemed to have been applied to a sum received by assessee from any of his employees covered by section ions are prospective and not retrospective. The relevant Para 2 of the case reads as under: - “2. Coming to the sole substantive issue of ESI/PF disallowance of , the assessee's and revenue's stand n paid before the due date of filing sec. 139(1) return and after the due date prescribed in the this factual backdrop that the legislature has not only incorporated necessary as well as 43B vide Finance Act, 2021 to this effect but also the CBDT has issued Memorandum of 2021 only. It is further not an issue that the forergoing legislative amendments have ons; disallowances u/s 43B as against employee u/s 36 (va) of the Act; respectively. However, keeping in mind the fact that the same has been clarified to be 2021, I hold that t sustainable in view of all these latest developments even if the Revenue's case is supported by the we are of the view that the legislative amendments incorporated in section 36(1)(va) and 43B of the the Finance Act, 2021 by inserting explanation 2 and explanation 5 to the respective provisions, are prospective in application with effect from 01.04.2021. infirmity in the order of Commissioner of Income Tax (Appeals). Hence, the appea 15. Therefore, respectfully following the same, the addition for delayed payment of PF/ESIC amounting to be deleted. The ground of the appeal of the assessee is acco allowed. 16. The ground No. ₹19,52,896/- in terms of section 14A of the Officer observed receipt of dividend income of the investments. He further observed that from India Bulls Housing Finance Ltd ₹667,54,75,664/- as on 31/03/2015 as compared to balance of ₹55,00,81,034/- on 31.03.2014 said term loan was utiliz direct nexus between the investment and borrowed funds. The Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. application with effect from 01.04.2021. Hence, we find no infirmity in the order of Commissioner of Income Tax (Appeals). Hence, the appeal of the Revenue is dismissed.” (emphasized supplied externally) respectfully following the same, the addition for delayed payment of PF/ESIC amounting to ₹3,02,607/ be deleted. The ground of the appeal of the assessee is acco The ground No. 3 of the appeal relates to disallowance of in terms of section 14A of the Act. The observed receipt of dividend income of ₹21,32, the investments. He further observed that assessee has taken loan from India Bulls Housing Finance Ltd., balance of which was of as on 31/03/2015 as compared to balance of on 31.03.2014. According to the Assessing Officer said term loan was utilized for making investment and thus there is direct nexus between the investment and borrowed funds. The Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 29 Hence, we find no infirmity in the order of Commissioner of Income Tax (Appeals). (emphasized supplied externally) respectfully following the same, the addition for 607/-is directed to be deleted. The ground of the appeal of the assessee is accordingly disallowance of . The Assessing 21,32,592/- from assessee has taken loan , balance of which was of as on 31/03/2015 as compared to balance of Assessing Officer estment and thus there is direct nexus between the investment and borrowed funds. The assessee paid interest of therefore this interest expenditure is directly attributable to the dividend income and therefore he expenditure and after assessee, made addition for the net amount of CIT(A) also upheld the disallowance. 17. Before us the Ld. counsel disallowance under section 14A the extent of exempted income earned. He further submitted that assessee has already offered tax on the trading activity of this investment and therefore Supreme Court in the case of (2018) 402 ITR 640 (SC) between the taxable and exempt income. Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. assessee paid interest of ₹40,85,488/- in respect of this loan and therefore this interest expenditure is directly attributable to the dividend income and therefore he disallowed the said interest expenditure and after subtracting the suo moto disallowance by the assessee, made addition for the net amount of ₹19,52, CIT(A) also upheld the disallowance. Ld. counsel of the assessee submitted th under section 14A of the Act should be restricted to the extent of exempted income earned. He further submitted that assessee has already offered tax on the trading activity of this investment and therefore in view of the decision of the Hon’ble Supreme Court in the case of Maxxop Investment (2018) 402 ITR 640 (SC), interest expenses need to be apportioned between the taxable and exempt income. Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 30 in respect of this loan and therefore this interest expenditure is directly attributable to the sallowed the said interest disallowance by the 19,52,896/-. The Ld. of the assessee submitted that the should be restricted to the extent of exempted income earned. He further submitted that assessee has already offered tax on the trading activity of this in view of the decision of the Hon’ble Investment Ltd. vs CIT , interest expenses need to be apportioned 18. The Ld. DR on the other hand submitted that in v direct nexus of the interest expenditure with the exempted income, same has been correctly disallowed by the lower authorities. 19. We have heard rival submission of the party dispute and perused the relevant material on record. the assessee, the Assessing Officer the interest expenditure which is having direct nexus with the borrowed funds invested in the investments, which are eligible for yielding dividend income. The assessee has earned taxable as well as exempted income from and therefore following the decision of the Hon’ble Supreme Court in the case of Maxxop have to be apportioned portion of the interest expense only be disallowed in the case of the assessee. Accordingly, we set aside the finding of the Ld. CIT(A) on the issue in dispute and Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. on the other hand submitted that in v direct nexus of the interest expenditure with the exempted income, same has been correctly disallowed by the lower authorities. We have heard rival submission of the party dispute and perused the relevant material on record. Assessing Officer has made disallowance only for the interest expenditure which is having direct nexus with the borrowed funds invested in the investments, which are eligible for yielding dividend income. The assessee has submitted that it has earned taxable as well as exempted income from said and therefore following the decision of the Hon’ble Supreme Court Maxxop Investment Ltd (supra), interest expenses have to be apportioned between the taxable and exempt income and portion of the interest expense, related to exempted income can only be disallowed in the case of the assessee. Accordingly, we set aside the finding of the Ld. CIT(A) on the issue in dispute and Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 31 on the other hand submitted that in view of the direct nexus of the interest expenditure with the exempted income, same has been correctly disallowed by the lower authorities. on the issue in dispute and perused the relevant material on record. In the case of has made disallowance only for the interest expenditure which is having direct nexus with the borrowed funds invested in the investments, which are eligible for submitted that it has said investments and therefore following the decision of the Hon’ble Supreme Court interest expenses the taxable and exempt income and related to exempted income can only be disallowed in the case of the assessee. Accordingly, we set aside the finding of the Ld. CIT(A) on the issue in dispute and restore this issue of dis to the file of the Ld. direction above. The ground of the appeal of the assessee is accordingly allowed for statistical purposes. 20. The ground No. 4 grounds. Since, we have therefore, the ground No. 4 is separate ground. ITA No. 1858/MUM/2020 Assessment Year: 2014 21. The ground of appeal for AY 2014 1. Confirming Disallowance of Rs.84,36,022/ Depreciation claimed on Helicopter : 1.1. Commissioner of I.T. (A) erred in confirming disallowance of Rs. 84,36,022/- on account out of disallowance of 50% Depreciation made by A.O. without appreciating the fact that the helicopter was not used for personal purpose. 1.2. Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. restore this issue of disallowance in terms of section 14 Ld. Assessing Officer for deciding direction above. The ground of the appeal of the assessee is accordingly allowed for statistical purposes. No. 4 is only a prayer in respect of the all the we have already adjudicated above therefore, the ground No. 4 is dismissed as infructuous being not a ITA No. 1858/MUM/2020 2014-15 The ground of appeal for AY 2014-15 are reproduced as under: 1. Confirming Disallowance of Rs.84,36,022/- on account of 20% Depreciation claimed on Helicopter : 1.1. Commissioner of I.T. (A) erred in confirming disallowance of Rs. on account of 20% depreciation claimed on helicopter out of disallowance of 50% Depreciation made by A.O. without appreciating the fact that the helicopter was not used for personal Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 32 allowance in terms of section 14A of the Act deciding in view of our direction above. The ground of the appeal of the assessee is er in respect of the all the 3 above grounds, dismissed as infructuous being not a 15 are reproduced as under: on account of 20% 1.1. Commissioner of I.T. (A) erred in confirming disallowance of Rs. of 20% depreciation claimed on helicopter out of disallowance of 50% Depreciation made by A.O. without appreciating the fact that the helicopter was not used for personal 1.3. Commissioner of I.T. (A) erred in not appreciating the fact that the helicopter was only and exclusively used for the purpose of business. 2. Addition u/s.2(24)(x) r.w.s. 36(1)(va) for delay in payment of PF & ESIC of Rs.3,91,257/ 2.1. The Ld. AO erred in making an addition on account of delay in payment of PF & ESIC fact that the appellant has deposited the employees' PF & ESIC before filing of income tax return due as per Section 139(1) of the I.T. Act. 2.2. The Ld. AO erred in not appreciating the fact that Supreme Court in case of Alom Extrusion Ltd. 319 ITR 306 has held that if the employees contribution to PF & ESIC is paid before the filing of IT return than there would not be any disallowance under Section 2(24)(x) r.w.s. 36(1)(va) of I.T. Ac 3. The appellant prays that: a. Disallowance of Rs. 84,36,022/ claimed on Helicopter may be deleted. b. Addition made u/s.2(24)(x) r.w.s. 36(1)(va) for delay in payment of PF & ESIC of Rs.3,91,257/ c. The Appellant plead before Honorable ITAT to add, alter or amend any or all grounds of appeal before or at the time of hearing. Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. 1.3. Commissioner of I.T. (A) erred in not appreciating the fact that he helicopter was only and exclusively used for the purpose of Addition u/s.2(24)(x) r.w.s. 36(1)(va) for delay in payment of PF & ESIC of Rs.3,91,257/- : 2.1. The Ld. AO erred in making an addition on account of delay in payment of PF & ESIC of Rs. 3,91,257/- without appreciating the fact that the appellant has deposited the employees' contribution to PF & ESIC before filing of income tax return due as per Section 139(1) of the I.T. Act. 2.2. The Ld. AO erred in not appreciating the fact that the Hon'ble Supreme Court in case of Alom Extrusion Ltd. 319 ITR 306 has held that if the employees contribution to PF & ESIC is paid before the filing of IT return than there would not be any disallowance under Section 2(24)(x) r.w.s. 36(1)(va) of I.T. Act. 3. The appellant prays that: Disallowance of Rs. 84,36,022/- on account of 20% Depreciation claimed on Helicopter may be deleted. b. Addition made u/s.2(24)(x) r.w.s. 36(1)(va) for delay in payment of PF & ESIC of Rs.3,91,257/- may be deleted. Appellant plead before Honorable ITAT to add, alter or amend any or all grounds of appeal before or at the time of hearing. Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 33 1.3. Commissioner of I.T. (A) erred in not appreciating the fact that he helicopter was only and exclusively used for the purpose of Addition u/s.2(24)(x) r.w.s. 36(1)(va) for delay in payment 2.1. The Ld. AO erred in making an addition on account of delay in without appreciating the contribution to PF & ESIC before filing of income tax return due as per Section the Hon'ble Supreme Court in case of Alom Extrusion Ltd. 319 ITR 306 has held that if the employees contribution to PF & ESIC is paid before the filing of IT return than there would not be any disallowance under on account of 20% Depreciation b. Addition made u/s.2(24)(x) r.w.s. 36(1)(va) for delay in payment Appellant plead before Honorable ITAT to add, alter or amend any or all grounds of appeal before or at the time of hearing. ITA No. 2012/MUM/2020 Assessment Year: 2014 21.1 Now, we take the cross appeal of Revenue are reproduced as under: “1. "Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in directing the AO to restrict the disallowance of Rs 2,10,90,055/ claimed on helicopter to 20% of such expenditure for which documentary evidences in the form of log book, user of helicopter has been submitted during the course of assessment proceedings to prove that personal element of expenditure was not involved therein." 2. "Whether, on the fact and circumstances of the the Ld. CIT(A), was justified in deleting the entire business promotions expenses of Rs 19,56,530/ not substantiate such expenses with documentary evidence to demonstrate as to whether these expenditure had b wholly and exclus 22. The ground No. 1 of the appeal of the depreciation on helicopter. Since this ground is identical to the ground No. 1 of the appeal of the assessee for assessment of 2015 Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. ITA No. 2012/MUM/2020 2014-15 Now, we take the cross-appeal for AY 2014-15. The Ground of are reproduced as under: 1. "Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in directing the AO to restrict the disallowance of Rs 2,10,90,055/-on account of 50% of expenditure claimed on helicopter to 20% of such expenditure for which documentary evidences in the form of log book, user of helicopter has been submitted during the course of assessment proceedings to prove that personal element of expenditure was not involved 2. "Whether, on the fact and circumstances of the case and in law, the Ld. CIT(A), was justified in deleting the entire business promotions expenses of Rs 19,56,530/- even when the assessee could not substantiate such expenses with documentary evidence to demonstrate as to whether these expenditure had been incurred wholly and exclusively for the business purpose.” The ground No. 1 of the appeal of the assessee of the appeal of the Revenue are related to disallowance of depreciation on helicopter. Since this ground is identical to the of the appeal of the assessee for assessment of 2015 Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 34 15. The Ground of 1. "Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in directing the AO to restrict the on account of 50% of expenditure claimed on helicopter to 20% of such expenditure for which no documentary evidences in the form of log book, user of helicopter has been submitted during the course of assessment proceedings to prove that personal element of expenditure was not involved case and in law, the Ld. CIT(A), was justified in deleting the entire business even when the assessee could not substantiate such expenses with documentary evidence to een incurred and ground No. are related to disallowance of depreciation on helicopter. Since this ground is identical to the of the appeal of the assessee for assessment of 2015- 16, which we have already restore to the file of the therefore following the same, both these grounds of the appeal of the assessee and the Revenue 23. The ground No. under consideration is identical to ground No. assessee for assessment year 201 finding in AY 2015-16 allowed. 24. The ground No. respect of ground one and two of the appeal and therefore same is dismissed as infructuous being no separate adjudication required. 25. As regard to ground No. challenging deletion of business promotion expenses both the parties agreed that issue in dispute may be restored back to the file of the Ld. CIT(A). Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. 16, which we have already restore to the file of the Assessing Officer therefore following the same, both these grounds of the appeal of Revenue are allowed for statistical purposes. The ground No. 2 of the appeal of the assessee for the year under consideration is identical to ground No. 2 of the appeal of the assessee for assessment year 2015-16 and therefore following our 16, this ground of the appeal of the assessee is The ground No. 3 of the appeal of the assessee is a prayer in respect of ground one and two of the appeal and therefore same is dismissed as infructuous being no separate adjudication required. As regard to ground No. 2 of the appeal of the challenging deletion of business promotion expenses both the parties agreed that issue in dispute may be restored back to the file of the Ld. CIT(A). Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 35 Assessing Officer, therefore following the same, both these grounds of the appeal of tical purposes. of the appeal of the assessee for the year of the appeal of the 16 and therefore following our e appeal of the assessee is of the appeal of the assessee is a prayer in respect of ground one and two of the appeal and therefore same is dismissed as infructuous being no separate adjudication required. of the appeal of the Revenue challenging deletion of business promotion expenses ₹19,56,530/- both the parties agreed that issue in dispute may be restored back to 26. We find that the Ld. CIT(A) has (supra) and deleted the addition “7.2 The order of the AO and the submission made by the assessee have been examined. It is noted that the AO has concluded that the assessee has failed to submit any agreement compensated in the form of interest for services in the nature of exhibition expense. However, perusal of the P&L account of the assessee shows that the assessee has shown interest income of Rs 90.79 crore and re income of Rs 17.36 crore. The assessee submits that the amount of Rs 19,56,530/ and needs to be allowed. It is noted that this issue was adjudicated by ITAT in ITA No. 5450/M/2016 dated 14.5.2018 for AY 2013 issue observing that: "Having heard both the parties and perusing the relevant material on record and also the impugned order, we find that in this case the Ld:CIT(A) has recorded a finding of fact that assessee has receive to the tune of Rs.2.85 crores by way of reimbursement of administrative expenses incurred on behalf of the group companies by the assessee. The administration expenses included exhibition expenses also. Considering all these facts the Ld.CIT(A) deleted the disallowance of Rs.39,99,977/ Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. We find that the Ld. CIT(A) has followed finding of Tribunal deleted the addition observing as under: 7.2 The order of the AO and the submission made by the assessee have been examined. It is noted that the AO has concluded that the assessee has failed to submit any agreement with sister companies wherein it was to be compensated in the form of interest for services in the nature of exhibition expense. However, perusal of the P&L account of the assessee shows that the assessee has shown interest income of Rs 90.79 crore and reimbursement income of Rs 17.36 crore. The assessee submits that the amount of Rs 19,56,530/- is a part of this reimbursement and needs to be allowed. It is noted that this issue was adjudicated by ITAT in ITA No. 5450/M/2016 dated 14.5.2018 for AY 2013-14 wherein the ITAT has decided the issue observing that: "Having heard both the parties and perusing the relevant material on record and also the impugned order, we find that in this case the Ld:CIT(A) has recorded a finding of fact that assessee has received reimbursement of expenses to the tune of Rs.2.85 crores by way of reimbursement of administrative expenses incurred on behalf of the group companies by the assessee. The administration expenses included exhibition expenses also. Considering all these ts the Ld.CIT(A) deleted the disallowance of Rs.39,99,977/-. In view of these facts, we are of the opinion Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 36 ollowed finding of Tribunal as under: 7.2 The order of the AO and the submission made by the assessee have been examined. It is noted that the AO has concluded that the assessee has failed to submit any with sister companies wherein it was to be compensated in the form of interest for services in the nature of exhibition expense. However, perusal of the P&L account of the assessee shows that the assessee has shown imbursement income of Rs 17.36 crore. The assessee submits that the is a part of this reimbursement and needs to be allowed. It is noted that this issue was adjudicated by ITAT in ITA No. 5450/M/2016 dated wherein the ITAT has decided the "Having heard both the parties and perusing the relevant material on record and also the impugned order, we find that in this case the Ld:CIT(A) has recorded a finding of d reimbursement of expenses to the tune of Rs.2.85 crores by way of reimbursement of administrative expenses incurred on behalf of the group companies by the assessee. The administration expenses included exhibition expenses also. Considering all these ts the Ld.CIT(A) deleted the disallowance of . In view of these facts, we are of the opinion that Ld.CIT(A) has taken a correct view of the matter and as such the order of Ld.CIT(A) does not suffer from any infirmity or illegality and therefo dismissing the ground raised by the assessee. 7.3 The facts remain the same in this year. Respectfully following the decision of ITAT in assessee's own case, the AO is directed to allow the claim. The ground Nos.3 & 6 is decided 27. Since the necessary agreement in respect of reimbursement of exhibition expenses were not made available before the Officer, we feel it appropriate to restore this issue to the file of the Ld. Assessing Officer Tribunal (supra) after verifying the necessary documents in support of the claim of the assessee. The ground Revenue is accordingly allowed for statistical purposes. 28. The sole ground raised in assessment year 2016 assessee is relation to disallowance of depreciation on helicopter. The said issue has already been restored to the file of the Assessing Officer in assessment year 2015 Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. that Ld.CIT(A) has taken a correct view of the matter and as such the order of Ld.CIT(A) does not suffer from any infirmity or illegality and therefore the same is affirmed by dismissing the ground raised by the assessee. 7.3 The facts remain the same in this year. Respectfully following the decision of ITAT in assessee's own case, the AO is directed to allow the claim. The ground Nos.3 & 6 is decided in favour of the assessee and is allowed.” the necessary agreement in respect of reimbursement of exhibition expenses were not made available before the , we feel it appropriate to restore this issue to the file of the for decide in accordance with the finding of the after verifying the necessary documents in support of the claim of the assessee. The ground No. 2 of the appeal of is accordingly allowed for statistical purposes. The sole ground raised in assessment year 2016 assessee is relation to disallowance of depreciation on helicopter. The said issue has already been restored to the file of the in assessment year 2015-16, therefore followi Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 37 that Ld.CIT(A) has taken a correct view of the matter and as such the order of Ld.CIT(A) does not suffer from any re the same is affirmed by 7.3 The facts remain the same in this year. Respectfully following the decision of ITAT in assessee's own case, the AO is directed to allow the claim. The ground Nos.3 & 6 is the necessary agreement in respect of reimbursement of exhibition expenses were not made available before the Assessing , we feel it appropriate to restore this issue to the file of the for decide in accordance with the finding of the after verifying the necessary documents in support of the appeal of is accordingly allowed for statistical purposes. The sole ground raised in assessment year 2016-17 by the assessee is relation to disallowance of depreciation on helicopter. The said issue has already been restored to the file of the Ld. 16, therefore following our finding this issue restored back to the file of the afresh as per directions given in assessment year 2015 ground of the appeal is accordingly allowed for statistica 29. The ground No. year 2017-18 is identical to the ground assessment year 2015 assessment year 2015 for assessment year 17 30. The ground No. 2 assessment year 2017 us in assessment year 2015 ground No. two of the appeal of the year under consideration is also allowed. Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. our finding this issue in the year under consideration is also restored back to the file of the Ld. Assessing Officer afresh as per directions given in assessment year 2015 ground of the appeal is accordingly allowed for statistica The ground No. 1 for the appeal of the assessee for assessment 18 is identical to the ground No. 1 2015-16, therefore following our finding in 2015-16, the ground of the appeal of the for assessment year 17-18 is allowed for statistical purposes. No. 2 of the appeal of the assessee for the assessment year 2017-18 is identical to ground No. 2 us in assessment year 2015-16, therefore following our f ground No. two of the appeal of the year under consideration is also Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 38 in the year under consideration is also Assessing Officer for deciding afresh as per directions given in assessment year 2015-16. This ground of the appeal is accordingly allowed for statistical purposes. for the appeal of the assessee for assessment adjudicated in 16, therefore following our finding in 16, the ground of the appeal of the assessee 18 is allowed for statistical purposes. of the appeal of the assessee for the 2 adjudicated by 16, therefore following our finding, the ground No. two of the appeal of the year under consideration is also 31. In the result, the appeals of the assessee and appeal of the revenue are allowed for statistical purposes. Order pronounced in the Court on Sd/- (SANDEEP SINGH KARHAIL JUDICIAL MEMBER Mumbai; Dated: 12/08/2022 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// Sheth Creator ITA Nos. 2620/M/2019 & Four Ors. In the result, the appeals of the assessee and appeal of the revenue are allowed for statistical purposes. ced in the Court on 12/08/2022. Sd/- SANDEEP SINGH KARHAIL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT Copy of the Order forwarded to : BY ORDER, (Sr. Private Secretary ITAT, Mumbai Sheth Creators Private Limited ITA Nos. 2620/M/2019 & Four Ors. 39 In the result, the appeals of the assessee and appeal of the - OM PRAKASH KANT) MEMBER Sr. Private Secretary) ITAT, Mumbai