The ACIT, Circle 5(1), Indore V. M/s. Yash Air Ltd., Indore

ITA 496/IND/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53940 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 16-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: S S SOLANKI
• Keywords: Revenue expenditure

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 496/IND/2010 A.Y. 2007-08 ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 5(1), INDORE ... APPELLANT VS M/S YASH AIR LIMITED INDORE PAN AAACY 0592Q ... RESPONDENT CO NO. 25/IND/2010 ARISING OUT OF ITA NO. 496/IND/2010 M/S YASH AIR LIMITED INDORE ... OBJECTOR VS ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 5(1), INDORE ... RESPONDENT 2 APPELLANT BY : SHRI S.S. SOLANKI DEPARTMENT BY : SHRI ARUN DEWAN, SR. DR DATE OF HEARING : 14.10.2011 DATE OF PRONOUNCEMENT : 14.10.2011 O R D E R PER JOGINDER SINGH THE REVENUE IS IN APPEAL CHALLENGING THE ORDER OF L EARNED COMMISSIONER OF INCOME TAX (APPEALS) DATED 23 RD MARCH, 2010 AND THE ASSESSEE IS IN CROSS OBJECTION AGAINST THE SAME ORDER. THE GROUND RAISED BY THE REVENUE IS THAT ON THE FAC TS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. FIRST APPELLATE AUTHORITY ERRED IN DELETING THE ADDITION OF RS. 12,68,333/- MADE ON ACCOUNT OF OVERHAULING EXPENSES. 2. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE I S THAT THE ENGINE OVERHAULING EXPENSES CLAIMED BY THE ASS ESSEE ARE OF CAPITAL IN NATURE. THE STAND OF THE ASSESSEE IS THAT THE ASSESSEE COMPANY RUN PILOT TRAINING INSTITUTE AND I S HAVING ITS OWN AIR-CRAFTS. SUCH AIR-CRAFTS REQUIRE REPAIRING A ND MAINTENANCE TO ENSURE AIR WORTHINESS AS PER THE GUI DELINES OF 3 DGCS. THE ENGINE OVERHAULING WAS CLAIMED TO BE PAR T OF REPAIRING AND MAINTENANCE ARE OF REVENUE IN NATURE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON FILE. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE COMPANY RUN PILOT TRAINING INSTITUTE AND I S SUPPOSED TO MAINTAIN ITS AIRCRAFTS TO ENSURE AIR WORTHINESS AS PER THE GUIDELINES OF DGCS. THE ASSESSEE COMPANY IMPORTED O VERHAUL ENGINE KIT FROM AIR-POWER INC USA VIDE BILL NO. 140 67 AND 142068 DATED 10 TH MARCH, 2006. THE PAYMENT WAS MADE IN PRECEDING FINANCIAL YEAR 2005-06 WHEREAS THE KIT WA S RECEIVED DURING THE FINANCIAL YEAR 2006-07 AND WAS FITTED ON THE AIR CRAFT ON 2 ND MARCH, 2007. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE EVIDENCE IN SUPPORT OF THE CLAIM THAT THE EXPENDITURE OF RS. 12,68,322/- MAY BE ALLOWED A S REVENUE EXPENSES. THE ASSESSEE FURNISHED NECESSARY DETAILS AS REQUIRED BY THE ASSESSING OFFICER. ADMITTEDLY, THE AMOUNT WAS PAID FOR REPAIR/OVERHAULING KIT FOR AIRCRAFT ENGINE BY CLAIMING THAT SUCH TYPE OF REPAIRING IS MANDATORY FOR GETTING APP ROVAL FOR AIR WORTHINESS OF THE AIRCRAFT FROM DGCA. ADMITTEDLY, T HE 4 OVERHAULING OF ENGINE IS PART OF REPAIR WHICH IS ES SENTIAL TO MAINTAIN THE AIR WORTHINESS OF THE AIRCRAFT, CONSEQ UENTLY, IN OUR VIEW IT IS OF REVENUE EXPENDITURE. SO FAR AS THE E XPENDITURE WAS SHOWN FOR FINANCIAL YEAR 2005-06 AS THE PAYMENT WAS PAID DURING THAT PERIOD AND THE KIT WAS FITTED DURING FI NANCIAL YEAR 2006-07, CANNOT BE A GROUND FOR DISALLOWANCE. THE IMPUGNED AMOUNT WAS DEBITED TO THE PROVISIONS FOR OVERHAULIN G EXPENSES, CONSEQUENTLY, WE ARE OF THE CONSIDERED OP INION THAT SUCH OVERHAULING EXPENSES ARE PART OF MAINTENANCE, UPKEEPING, THEREFORE, NO NEW ASSET CAME INTO EXISTE NCE ON ACCOUNT OF INCURRING OF SUCH EXPENSES, THEREFORE, W E FIND NO INFIRMITY IN THE STAND OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), CONSEQUENTLY, IT IS AFFIRMED. 4. SO FAR AS THE CROSS OBJECTION OF THE ASSESSEE IS CONCERNED, THE LD. COUNSEL FOR ASSESSEE DID NOT PRE SS THE SAME. THEREFORE, THE SAME IS DISMISSED AS SUCH. FINALLY, THE APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED 5 ORDER PRONOUNCED IN THE OPEN COURT AT THE CONCLUSI ON OF THE HEARING. SD SD (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14.10.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-