JET AIRWAYS (INDIA) LTD, MUMBAI V. DCIT RG 5(2), MUMBAI

ITA 933/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9346 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2008-2009
• Appeal Filed On: 10-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK JOHARI; ARJU GORADIADR
• Assessee Lawyers: JEHANGIR D MISTRYAR
• Keywords: Business income; Depreciation; Double taxation relief; Principle of natural justice; Rule of consistency; Earning of tax free income; Question of law; Corroborative evidences; Revenue expenditure; Capital expenditure
• Section: 43B; 14A; 115JB; 37

Judgement Text

, , , , INCOME-TAX APPELLATE TRIBUNAL JBENCH M UMBAI , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & PAWAN SINGH, JUDICIAL MEMBER ./I.T.A./933/MUM/2015 , /ASSESSMENT YEAR: 2008-09 JET AIRWAYS (INDIA) LTD. SIROYA CENTRE, SAHAR AIRPORT ROAD, ANDHERI (E), MUMBAI-400 099. PAN:AAACJ 0920 H VS. DCIT, RANGE-5(2) AAYAKAR BHAVAN MUMBAI-20. ( /APPELLANT ) ( / RESPONDENT ) ./I.T.A./758-760/MUM/2015 , /AY.S 2008-09;2010-11 & 2011-12 DCIT, RANGE-5(2) MUMBAI-20. VS. JET AIRWAYS (INDIA) LTD. MUMBAI-400 099. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI ALOK JOHARI AND MS.ARJU GORADIA-DR ASSESSEE BY: SHRI JEHANGIR D.MISTRY-AR / DATE OF HEARING: 27/07/2017 / DATE OF PRONOUNCEMENT: 27/09/2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) / PER RAJENDRA, AM - CHALLENGING THE ORDERS OF CIT(A)-9, MUMBAI THE ASSE SSEE AND THE ASSESSING OFFICER(AO)HAVE FILED APPEALS TOWARDS THE ABOVE MENTIONED ASSESSMEN T YEARS (AY.S).AS THE ISSUES INVOLVED IN THE APPEALS ARE ALMOST SIMILAR,SO,WE WOULD ADJUDICATE A LL THE APPEALS TOGETHER.THE ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF RUNNING OF AIRCRAFT A S SCHEDULED AIR TAXI OPERATOR.THE DETAILS OF FILING OF RETURNS, RETURNED INCOMES, ASSESSED INCOM ES, ETC.CAN BE SUMMARISED AS UNDER: - AY. ROI FILED ON RETURNED INCOME ASSTT.DATE ASSESSED INCOME CIT(A)ORDER 2008 - 09 29/09/08 RS.5,18,02,87,238/ - 30/12/11 ( - )RS.4,20,62,11,179/ - 13.11.2012 2010 - 11 14/10/10 ( - ) RS.509,30,55,468/ - 06/03/14 ( - )RS.10,09,29,06,621/ - 13/11/2014 2011 - 12 28/09/11 ( - )RS.2,8184,72,223/ - 06/03/14 ( - )RS.2,32,08,08,880/ - 12/11/2014 ITA/758/MUM/2015,AY.2008-09: 2. FIRST GROUND OF APPEAL IS ABOUT DISALLOWANCE OF PRO VISIONS MADE ON ACCOUNT OF OBSOLESCENCE OF RS.27.84 CRORES UNDER NORMAL PROVISIONS OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT THE ASSESSEE HAS CHARGED A SUM OF RS.27. 84 CRORES TOWARDS PROVISION FOR SPACE OF OBSOLESCENCE SHOWN UNDER THE SCHEDULE OF OPERATING EXPENSES.HE DIRECTED THE ASSESSEE TO FURNISH DETAILED EXPLANATION FOR THE SAID PROVISION ALONG W ITH JUSTIFICATION. AFTER CONSIDERING SUBMISSION 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 2 OF THE ASSESSEE,DATED 18.11.2011,THE AO HELD THAT T HE PROVISIONS WERE BASED ON ESTIMATED USEFUL LIFE OF THE AIRCRAFT,THAT IT HAD ONLY MADE PROVISIO NS FOR OBSOLESCENCE OF, THAT IT HAD NOT ACTUALLY WRITTEN OFF OLD AND OBSOLETE SPARES DURING THE YEAR UNDER CONSIDERATION, THAT THE PROVISIONS WERE CONTINGENT IN NATURE.RELYING UPON THE CASES OF SWAN MILLS LTD., MYSORE LAMP WORKS LTD.,HE DISALLOWED THE CLAIM MADE BY THE ASSESSEE.BESIDES, HE ADDED THE AMOUNT IN QUESTION TO THE BOOK PROFIT U/S. 115JB OF THE ACT. 2.1. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).AFTER CONSIDERING THE ORDER OF THE AO AND THE SUBMISSION OF THE ASSESSEE,THE FAA HELD THAT THE ISSUE BEFORE HIM WAS DECIDED BY T HE TRIBUNAL IN THE EARLIER YEAR IN THE APPEALS FILED BEFORE IT, THAT THE ADDITIONS HAVE MADE PERHA PS TO KEEP THE MATTER ALIVE IN THE APPEAL BEFORE THE HIGHER JUDICIAL FORUMS.REFERRING TO THE ORDER O F THE TRIBUNAL FOR THE EARLIER YEARS, I.E. AY.S 1997-98 TO 2007-08,HE ALLOWED THE APPEAL OF THE ASS ESSEE. 2.2. DURING THE COURSE OF HEARING BEFORE US THE DEPARTME NTAL REPRESENTATIVE (DR) ARGUED THAT THE ASSESSEE WAS ACQUIRING AIRCRAFT MAINLY ON HIRE PURC HASE, THAT AT THE TIME OF ACQUISITION, THE COST OF ROTATABLES,GALLIES AND OTHER REUSABLE MACHINERIE S WERE CAPITALISED AS FIXED COSTS, THAT THE ASSESSEE WOULD CLAIM DEPRECIATION ON SUCH FIXED COS TS, THAT THE DEPRECIATION FOR AEROPLANES AND AERO ENGINES WERE PROVIDED FOR 40%, THAT ROTATABLES WERE THOSE COMPONENTS OF AIRCRAFT WHICH NEEDED TO BE ROTATED AT THE FREQUENT INTERVALS LIKE TYRES AND OIL FILTERS, THAT AIRLINES OPERATING COMPANIES WERE EXPECTED TO HAVE STOCK OF SUCH ITEMS IN THEIR OWN STORE, THAT AIRLINES COMPANIES WERE WELL AWARE ABOUT DEMAND OF A NEW ENGINE,THAT T O GET THE EVENTUALITY FOR WHOLE ENGINE ONE HEAD TO MAINTAIN AN INVENTORY,THAT ITEMS LIKE RADIO SETS HAD TO BE CALLED FROM THE SUPPLIER, THAT EXPENDITURE INCURRED ON ACCOUNT OF CURRENT REPAIRS COULD BE ALLOWED, THAT IF ANY OF THE PARK WAS REPLACED AND OLD WAS DISCARDED SUCH EXPENDITURE WOU LD AMOUNT TO A CAPITAL EXPENDITURE, THAT ROTATABLES WERE REQUIRED TO BE MAINTAINED FOR CERTA IN PERIOD,THAT THE QUESTION OF PROVIDING PROVISIONS FOR OBSOLESCENCE WOULD NOT ARISE,THAT SU CH EXPENDITURE HAD TO BE ALLOWED AS REVENUE EXPENDITURE FOR CURRENT REPAIRS OR HAD TO BE CAPITA LISED FOR DEPRECIATION PURPOSES. HE PLACED RELIANCE ON THE CASE OF MOLEX MAFATLAL MICRON LTD. (ITA/1083/AHD/2007), INDIAN MOLASSES CO. P.LTD. (37 ITR 66) SARAVANNA SPINNING MILLS PRIVATE LTD. (293 ITR 201). 2.2.1. THE AUTHORISED REPRESENTATIVE (AR) CONTENDED THAT T HE ISSUES STAND DECIDED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL. HE FURTH ER CONTENDED THAT THE DR HAD MADE 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 3 SUBMISSIONS THAT WERE FACTUALLY INCORRECT OR THEY W ERE NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE,THAT THE DR CAN MAKE ANY ARGUMENT IN SUPPO RT OF THE STAND TAKEN BY THE AO,THAT HE HAD ADVANCED ARGUMENTS WHICH WERE CONTRARY TO THE FINDI NGS OF THE AO, THAT THE AO HAD (PAGE 5 PARA 2.4)HAD MENTIONED THAT THE FACTS WITH REGARD TO THE ISSUE WERE SIMILAR TO THAT OF PREVIOUS YEARS,THAT IT WAS CLAIMED BY THE DR THAT ASSESSEE W OULD REQUIRE AIRCRAFT MAINLY ON HIRE PURCHASE,THAT ASSESSEE HAD ACQUIRED AIRCRAFTS MAINL Y ON LEASE AND THAT CERTAIN THAT FEW AIRCRAFTS WERE ACQUIRED ON OWNERSHIP BASIS, THAT THE DR WAS F ACTUALLY INCORRECT IN STATING THAT ASSESSEE HAD CLAIMED DEPRECATION ON SPARES @40%,THAT IT HAD NOT CLAIMED ANY DEPRECIATION ON SPARES, THAT THE CASES RELIED UPON BY THE DR WERE DISTINGUISHABLE ON FACTS,THAT THE HONBLE BOMBAY HIGH COURT HAD NOT ADMITTED THE ISSUE AS SUBSTANTIAL QUESTION OF LAW IN THE APPEAL FILED BY THE DEPARTMENT. THE AR RELIED UPON THE CASES OF AISHWARIA K. RAI(12 7 ITD 205),MAHINDRA AND MAHINDRA (313 ITR -MUM-TRIB-263) AND ANAND Y.CHAUHAN(126 TTJ 984) . 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT IN THE EARLIER YEARS ORDER THETRIBUNAL HAS (ITA/NO.3865/4 200/7383/7317/7316/7312/6690/ 6594/ M/11DTD.05/04/2013)DELIBERATED UPON THE ISSUE EXTEN SIVELY AND HAD DECIDED IN FAVOUR OF THE ASSESSEE AS UNDER: 8. THE NEXT ISSUE I.E. GROUND NOS.6 & 7 ARE IN REG ARD TO DELETING THE ADDITION ON ACCOUNT OF PROVISION MADE OF OBSOLESCENCE AMOUNTING TO RS.19,4 7,65,816/- UNDER THE NORMAL PROVISION AND THE SAME AMOUNT UNDER THE COMPUTATION OF BOOK PROFI T U/S. 115JB OF THE ACT, RESPECTIVELY. 8.1 BOTH THE ISSUES HAVE BEEN DISCUSSED BY THE AO A T PAGE 38 TO 44 AND BY LEARNED CIT(A) AT PAGES 13 TO 16 IN THEIR RESPECTIVE ORDERS. THE AO W HILE MAKING THE ADDITION STATED ABOVE, HAS OBSERVED THAT THE SAID ITEMS ARE NOT COVERED UNDER SCHEDULE XIV OF THE COMPANIES ACT, 1956. THE AO DISALLOWED THE AMOUNT IN HOLDING THAT THE SA ME WAS A MERE PROVISION WHICH WAS CONTINGENT IN NATURE AND ALSO ON THE GROUND THAT TH E ASSESSEE HAD ONLY MADE PROVISION FOR OBSOLESCENCE AND HAD NOT ACTUALLY WRITTEN OFF OLD A ND OBSOLETE SPARES DURING THE RELEVANT ASSESSMENT YEAR. ACCORDINGLY, THE AO DISALLOWED THE PROVISION MADE UNDER THE NORMAL PROVISION OF INCOME AND U/S. 115JB OF THE ACT, RESP ECTIVELY. DETAILED SUBMISSIONS WERE FILED BEFORE THE CIT(A). IT WAS FURTHER SUBMITTED THAT SI MILAR ADDITIONS WERE MADE FOR 1997-98 TO 2005-06 AND THE TRIBUNAL HAS ALLOWED THIS ISSUE IN FAVOUR OF THE ASSESSEE FOR THESE YEARS. AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIA L ON RECORD, LEARNED CIT(A) FOUND THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE O RDER OF THE TRIBUNAL FOR ASSESSMENT YEAR 1997- 98 TO 2005-06. ACCORDINGLY, HE ALLOWED THE GROUNDS IN FAVOUR OF THE ASSESSEE. 8.2 LEARNED DR PLACED RELIANCE ON THE ORDER OF THE AO. IT WAS FURTHER SUBMITTED THAT THIS ITEM DID NOT FIND MENTION IN THE SCHEDULE OF THE COMPANI ES ACT, 1956. IT WAS ALSO POINTED OUT THAT THE AO IN HIS ASSESSMENT ORDER HAD MENTIONED THAT THE A SSESSEE HAD MISREPRESENTED THE FACTS BEFORE THE ITAT. THEREFORE, THE ORDER OF THE TRIBUNAL SHOU LD NOT BE TAKEN INTO CONSIDERATION IN RESPECT TO THESE DISALLOWANCES. 8.3 IN REPLY, LEARNED COUNSEL OF THE ASSESSEE HAS S TATED THAT THE ASSESSEE HAS NOT MISREPRESENTED ANY FACTS BEFORE THE TRIBUNAL. THERE ARE NO PRESCRI BED RULES UNDER THE INCOME TAX ACT FOR SUCH 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 4 PARTS OF THE AVIATION INDUSTRY AND, HENCE, THE ASSE SSEE HAD ACCORDINGLY BORROWED/DERIVED THE RATES OF DEPRECIATION FROM THE SCHEDULE OF THE COMP ANIES ACT AND NOT MISREPRESENTED ANY FACTS. IT WAS FURTHER SUBMITTED THAT THIS ISSUE HAS BEEN C OVERED BY THE TRIBUNAL WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE FOR ASSESSMENT YEAR 1997- 98 TO 2005-06. IT WAS ALSO SUBMITTED THAT THE AO HAS ALSO NOT STATED IN HIS ORDER THAT A NY FACT HAS BEEN MISREPRESENTED BY THE ASSESSEE BEFORE THE TRIBUNAL. HE JUST DISALLOWED BY OBSERVING THAT THESE ITEMS ARE NOT COVERED UNDER SCHEDULE XIV OF THE COMPANIES ACT AND THE ASS ESSEE HAS MADE MERE PROVISION WHICH WAS CONTINGENT IN NATURE. ACCORDINGLY, IT WAS SUBMITTED THAT THE ARGUMENTS OF THE LEARNED DR THAT THE ASSESSEE HAS MISREPRESENTED THE FACTS BEFORE TH E TRIBUNAL IS FACTUALLY INCORRECT. FURTHER RELIANCE WAS PLACED ON ORDER OF THE LEARNED CIT(A). 8.4 AFTER CONSIDERING THE ORDER OF THE AO, THE CIT( A) AND THE ARGUMENTS OF BOTH THE PARTIES, WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY THE TRIBUN AL FOR ASSESSMENT YEAR 1997-98 TO 2005-06, COPIES OF WHICH ARE PLACED ON RECORD. LEARNED CIT(A ) HAS FOLLOWED THE ORDER OF THE TRIBUNAL AND HAS ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE . THEREFORE, WE SEE NO REASON TO INTERFERE IN THE FINDING OF THE LEARNED CIT(A), WHICH ARE IN CON SONANCE WITH THE ORDER OF THE TRIBUNAL. MERELY STATING THAT THE ASSESSEE HAS MISREPRESENTED THE FACTS BEFORE THE TRIBUNAL IN EARLIER YEAR, IN OUR OPINION, IS NOT CORRECT BECAUSE SOME MATERIA LS HAS TO BE BROUGHT ON RECORD THAT WHICH FACTS WERE MISREPRESENTED BY THE ASSESSEE BEFORE TH E TRIBUNAL. THE AO HAS ALSO NOT MADE ANY OBSERVATION IN HIS ORDER THAT IN THE EARLIER YEAR T HERE WAS MISREPRESENTATION OF FACTS BEFORE THE TRIBUNAL. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTAN CES OF THE CASE, WE CONFIRM THE ORDER OF THE CIT(A) IN THIS RESPECT. WE ORDER ACCORDINGLY. THE FAA HAS FOLLOWED THE ORDERS OF THE TRIBUNAL.THE REFORE,IN OUR OPINION,NO FAULT CAN BE FOUND WITH HIS APPROACH.HE IS BOUND TO FOLLOW THE ORDERS OF THE JURISDICTIONAL TRIBUNAL AND THAT IS WHAT HE HAS DONE.WE CAN UNDERSTAND THE CONCERN OF THE AO .HE HAS TO KEEP THE ISSUE ALIVE TILL THE FINAL DECISION OF HIGHER JUDICIAL FORUMS IS PRONOUNCED.BU T,TO MAKE IT AN ARGUABLE CASE,THE DEPARTMENT HAS TO BRING ON RECORD SOME DISTINGUISHABLE FACTORS ,AS COMPARED TO THE ORDERS OF THE EARLIER YEAR,TO SHOW THAT SAME CANNOT BE FOLLOWED IN THE SU BSEQUENT YEARS.WE AGREE THAT PRINCIPLES OF RES JUDICATA ARE NOT APPLICABLE TO THE INCOME TAX P ROCEEDINGS.BUT AT THE SAME TIME IT IS ALSO TRUE THAT PRINCIPLE OF CONSISTENCY IS VERY MUCH APPLICAB LE TO INCOME TAX MATTERS. 2.3.1. WE FIND THAT IN THE EARLIER YEARS THE TRIBUNAL HAS DEALT WITH THE ISSUE OF PROVISIONS FOR OBSOLESCENCE EXTENSIVELY.RULE OF CONSISTENCY AND JU DICIAL DISCIPLINE DEMAND THAT ORDERS FOR EARLIER YEARS SHOULD NOT BE DISTURBED UNLESS AND UN TIL NEW FACTS ARE BROUGHT ON RECORD.HERE,WE WOULD LIKE TO REFER TO THE CASE OF GOPAL PUROHIT(33 6ITR287).IN THAT MATTER,ONE OF THE QUESTIONS, RAISED BEFORE THE HONBLE BOMBAY HIGH COURT WAS AS UNDER: (B)WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE INCOME-TAX APPELLATE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT TH E PRINCIPLE OF CONSISTENCY MUST BE APPLIED HERE AS THE AUTHORITIES DID NOT TREAT THE ASSESSEE AS A SHARE TRADER IN THE PRECED ING YEAR, IN SPITE OF EXISTENCE OF SIMILAR TRANSACTION, WHICH CANNOT IN A NY WAY OPERATE AS RES JUDICATA TO PRECLUDE THE AUTHORITIES FROM HOLDING SUCH TRANSACTIONS AS BUSIN ESS ACTIVITIES IN THE CURRENT YEAR ? THE HONBLE COURT DECIDED THE ISSUE AS FOLLOW: 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 5 3. IN SO FAR AS QUESTION (B) IS CONCERNED, THE TRI BUNAL HAS OBSERVED IN PARAGRAPH 8.1 OF ITS JUDGMENT THAT THE ASSESSEE HAS FOLLOWED A CONSISTEN T PRACTICE IN REGARD TO THE NATURE OF THE ACTIVITIES, THE MANNER OF KEEPING RECORDS AND THE P RESENTATION OF SHARES AS INVESTMENT AT THE END OF THE YEAR, IN ALL THE YEARS. THE REVENUE SUBMITTE D THAT A DIFFERENT VIEW SHOULD BE TAKEN FOR THE YEAR UNDER CONSIDERATION, SINCE THE PRINCIPLE OF RE S JUDICATA IS NOT APPLICABLE TO ASSESSMENT PROCEEDINGS. THE TRIBUNAL CORRECTLY ACCEPTED THE PO SITION, THAT THE PRINCIPLE OF RES JUDICATA IS NOT ATTRACTED SINCE EACH ASSESSMENT YEAR IS SEPARATE IN ITSELF. THE TRIBUNAL HELD THAT THERE OUGHT TO BE UNIFORMITY IN TREATMENT AND CONSISTENCY WHEN THE FA CTS AND CIRCUMSTANCES ARE IDENTICAL, PARTICULARLY IN THE CASE OF THE ASSESSEE. THIS APPR OACH OF THE TRIBUNAL CANNOT BE FAULTED. THE REVENUE DID NOT FURNISH ANY JUSTIFICATION FOR ADOPT ING A DIVERGENT APPROACH FOR THE ASSESSMENT YEAR IN QUESTION. QUESTION (B), THEREFORE, DOES NOT ALSO RAISE ANY SUBSTANTIAL QUESTION OF LAW. WE FIND THAT THE AO HAS SPECIFICALLY MENTIONED THAT FACTS FOR THE YEAR UNDER APPEAL,WITH REGARD TO PROVISION FOR OBSOLESCENCE WERE IDENTICAL TO EAR LIER YEARS.IN THESE CIRCUMSTANCES THERE IS NO JUSTIFICATION FOR NOT FOLLOWING THE ORDERS OF THE TRIBUNAL OF THE EARLIER YEARS.WE ALSO FIND THAT AO HAD NOT BROUGHT ON RECORD THE FACTS THAT WOULD M AKE THE ASSESSMENT ORDER DIFFERENT FROM THE EARLIER YEARS.THE DR HAS MADE CERTAIN SUBMISSIONS T HAT,ACCORDING TO US,DO NOT SUPPORT THE CASE OF THE REVENUE.SUBMISSIONS MADE BY HIM HAVE TO BE C ORROBORATED BY SOME EVIDENCES.FOR EXAMPLE IF THE ASSESSEE HAS NOT CLAIMED DEPRECIATIO N AT SPARES @40%,AS SUBMITTED BY THE DR, THEN HE SHOULD NOT HAVE ADVANCED THE ARGUMENT WITHO UT PRODUCING CORROBORATIVE EVIDENCES.WE AGREE THAT THE DRS PERFORM VERY IMPORTANT DUTY AS A N ASSISTANT TO THE BENCH OF THE TRIBUNAL. BEING THE COURT OFFICERS,THEY ARE SUPPOSED TO HELP THE BENCH IN DECIDING THE ISSUE RAISED BY THE AO/ASSESSEE.WE DO NOT WANT TO COMMENT UPON AS TO HO W THE CASES SHOULD BE PRESENTED OR NOT PRESENTED,BUT ASSERTIONS MADE BY THE REPRESENTATIVE S OF EITHER SIDE SHOULD BE BASED ON CERTAIN MATERIAL EVIDENCES.IN OTHER WORDS,FACTS NARRATED BY THE AR/DR SHOULD BE BASED ON SOME EVIDENCES.OTHERWISE AS THE LAST FACT FINDING AUTHOR ITY THE TRIBUNAL WOULD NOT ABLE TO DO JUSTICE.IN THE CASE BEFORE US,THE AR AND DR HAVE MADE WRITTEN SUBMISSIONS AND THE AR HAS ALLEGED THAT SOME OF THE ARGUMENTS ADVANCED BY THE DR WERE NOT F ACTUALLY CORRECT,AS STATED EARLIER.WE WOULD NOT LIKE TO GO INTO THE CONTROVERSY FOR THE SIMPLE REASON THAT ISSUE RAISED BY THE AO HAS BEEN DEALT WITH BY THE TRIBUNAL IN THE EARLIER YEARS.JUD ICIAL DISCIPLINE DEMANDS THAT EARLIER YEARS ORDERS SHOULD BE FOLLOWED,UNLESS AND UNTIL NEW FACT S EMERGE OR LAW CHANGES. WE FIND THAT IN THE CASE UNDER CONSIDERATION BOTH THE CONTINGENCIES ARE NOT EXISTING. SECONDLY, THE HONBLE BOMBAY HIGH COURT HAS NOT ADMITTED A QUESTION OF LAW AGAIN ST THE ORDER ABOUT THE ISSUE.CONSIDERING THE ABOVE AND RESPECTFULLY FOLLOWING ORDERS OF THE TRIB UNAL FOR THE EARLIER YEARS,WE DECIDE THE FIRST GROUND OF APPEAL AGAINST THE AO. 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 6 3. NEXT EFFECTIVE GROUND (GOA. 2-3)IS ABOUT DISALLOWAN CE OF PROVISION ON ACCOUNT OF REDELIVERY OF AIRCRAFT AMOUNTING TO RS.6.12 CRORES BOTH UNDER NORMAL COMPUTATION AND U/S.115JB OF THE ACT.THE AO HELD THAT THE ISSUE TO BE CONSIDERED ABO UT THE DISPUTE IN QUESTION WAS AS TO WHETHER THE EXPENSES ACCRUED AND CLAIMED ON THE BASIS OF AS CERTAINED LIABILITY OR WORTH SIMPLE ESTIMATION.HE FURTHER OBSERVED THAT THE REDELIVERY OF AIRCRAFT WOULD TAKE PLACE UPON THE EXPIRATION OF THE TERMINATION OF LEASE PERIOD, THAT SUCH EXPENSES WERE TO BE BORNE BY THE ASSESSEE IS PROVIDED IN THE LEASE AGREEMENT, THAT THE ASSESS EE HAD TO MAINTAIN OPERATIONAL CONTROL OF THE AIRCRAFT IN ACCORDANCE WITH THE VARIOUS RULES REGUL ATIONS, THAT ALL THE COST INCURRED IN THE OPERATION OF THE AIRCRAFT DURING OPERATIONAL PERIOD WERE TO B E BORNE BY ASSESSEE AND THE SAME WAS ALLOWED IN ACTUAL, THAT THE EXPENSES OF REPAINTING AND FERR YING COST ACCRUED ONLY AT THE TIME OF REDELIVERY OVER AND ABOVE SUCH COST AND COULD BE ALLOWED IN TH AT PARTICULAR YEAR,THAT THE PROVISION FOR REDELIVERY CHARGES ON ESTIMATION WAS A LIABILITY CO NTINGENT ON THE FUTURE DATE OF REDELIVERY WHEN SUCH EXPENSES COULD BE ALLOWED IN ACTUAL AS PER THE PROVISIONS OF THE ACT,THAT IF THE TERM OF LEASE WAS EXTENDED OR NO SUCH SPECIFIC PROVISIONS WERE PR OVIDED IN THE TERMS OF LEASE AGREEMENT THEN SUCH PROVISIONS WERE NOT TO BE ALLOWED,EVEN IF CONS ERVATIVELY PROVIDED THROUGH OF CONSISTENT POLICY. 3.1. DURING THE APPELLATE PROCEEDINGS,THE FAA FOLLOWING THE ORDERS OF THE TRIBUNAL FOR THE ASSESSMENT YEARS 1997-98 TO 2007-08 ALLOWED THE APP EAL OF THE ASSESSEE. 3.2. BEFORE US,THE DR ARGUED THAT EACH YEAR WAS DIFFEREN T AND DISTINCT YEAR AS FAR AS ASSESSMENT WAS CONCERNED,THAT PRINCIPLE OF RES JUDICATA WAS NO T APPLICABLE TO INCOME TAX PROCEEDINGS,THAT THE FINDING ON THE FACTS FOR ONE YEAR COULD CHANGE IN THE SUBSEQUENT YEARS,THAT THE FACTS FOUND BY THE TRIBUNAL WERE RELEVANT AND WERE TO BE CONSIDERE D FOR BEING IDENTICAL, THAT UNLESS THE TRIBUNAL CAME TO AN INDEPENDENT FINDING AS TO THE FACTS OF T WO CASES BEING IN PARI MATERIAL ORDER PASSED BY IT IN ONE CASE COULD NOT BE REGARDED AS COVERING TH E OTHER, THAT CASES NOT EXAMINED BY THE TRIBUNAL ON MERITS COULD NOT BE TREATED AS PRECEDEN T IN ABSENCE OF INDEPENDENT FINDING OF FACT, THAT TRIBUNAL HAD TO DECIDE THE CASES ON MERITS AND NOT ON THE BASIS OF CONCESSIONS,THAT EXPENSES OF RECONDITIONING OF AIRCRAFT FOR MAKING IT IN GOOD TECHNICAL CONDITION WITH ALL DUE AND STATUTORY CHECKS WERE TO BE ALLOWED IN ACTUALS U/S. 31 OF THE ACT, THAT SUCH PROVISIONS IRRESPECTIVE OF ACCRUED LIABILITY HAD TO BE EXAMINED U/S. 31 OF THE ACT, THAT ALLOWABILITY OF PROVISIONS IRRESPECTIVE OF THE SAME BEING CONTINGENT OR CAPITA L COULD NOT BE ALLOWED U/S. 37 (1) OF THE ACT, 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 7 THAT THE ASSESSEE INCURRED SUCH EXPENDITURE REGULAR LY FOR NORMAL AVIATION BUSINESS AND CLAIMED THE EXPENDITURE WITHOUT BIFURCATIONS, THAT IT HAD N OT BIFURCATED THE EXPENSES BETWEEN SEVERAL BUSINESS AND REDELIVERY PURPOSES, THAT DETAIL SAID TO BE EXAMINED ABOUT WHAT ARE SPECIFIC EXPENDITURE SO INCURRED IN RELATION TO REDELIVERY O F AIRCRAFTS, AS AGAINST THE PROVISIONS CREATED IN EARLIER YEARS ACTUAL EXPENDITURES WERE TO BE EXAMIN ED,THAT THERE WERE DIFFERENT TERMS AND CONDITIONS FOR LEASE AGREEMENT FOR EACH AIRCRAFT, T HAT BEFORE PROVIDING AND ALLOWING PROVISIONS ON UNIFORM RATE TERMS AND CONDITIONS OF PARTICULAR AIR CRAFT HAD TO BE TAKEN INTO CONSIDERATION,THAT PROVISION OF REDELIVERY WAS CONTINGENT TO THAT EXTE NT BEING NOT BASED ON PROPER METHOD OF ESTIMATION, THAT AT THE TIME OF TAKING THE AIRCRAFT DELIVERY ON LEASE SUCH EXPENDI -TURE ON THE REDELIVERY WERE ASCERTAINABLE, THAT SUCH EXPENDITUR E HAD TO BE CAPITALISED FOR EACH AIRCRAFT AS COST OF ASSET, THAT FOR SOME OF THE AIRCRAFT THE LEASE A GREEMENT PROVIDED THE OWNERSHIP TO THE ASSESSEE, THAT IN SUCH CASES PROVIDING REDELIVERY CHARGES REM AINED CONTINGENT UPON OWNER -SHIP,THAT THE AO HAD REFERRED TO THE HIRE PURCHASE AGREEMENT IN H IS ORDER, THAT SUCH FACTS WERE NEVER BEFORE THE TRIBUNAL IN THE EARLIER YEARS WHEN THE ISSUE WA S DELIBERATED UPON, IS THAT EXPENSES OF C- CHECK,PAINTING WERE NOT BIFURCATED BETWEEN REGULAR BUSINESS AND FOR REDELIVERY PURPOSES,THAT THERE WAS NO CLARITY AS WHAT WOULD BE THE TREATMENT OF PROVISION IN CASE OF NO DELIVERY OF AIRCRAFT WOULD TAKE PLACE,THAT IT WAS NECESSARY TO CONSIDER A NET IMPACT AFTER REIMBURSEMENT OF EXPENSES BY LESSOR,THAT THE REDELIVERY EXPENSES SHOULD BE CA PITALISED, THAT REDELIVERY PROVISIONS WERE CLAIMED FOR AIRCRAFT TAKEN ON HIRE PURCHASE AND FIN ANCE LEASE. 3.2.1 .THE AR ARGUED THAT FACTS WERE SIMILAR TO THE PREVI OUS YEAR, THAT THE AO,IN THE ASSESSMENT ORDER (PG.14,PARA3.7,PG.15,PARA4.3)HAD ACCEPTED THA T THERE WAS NO DIFFERENCE IN THE FACTS FOR THE YEAR UNDER CONSIDERATION AS WELL AS OF THE FACTS FO R THE EARLIER YEARS,THAT RULE OF CONSISTENCY WAS TO BE FOLLOWED FOR INCOME TAX PURPOSES,THAT THE ORD ER OF THE TRIBUNAL WERE PASSED ON MERITS, THAT IN THE EARLIER YEARS THE DEPARTMENT ADMITTED THAT L ITIGATION WAS COVERED BY THE ORDERS OF THE TRIBUNAL,THAT SUCH A STATEMENT MADE BY THE THEN DR COULD NOT BE CONSIDERED AS GRANTING OF CONCESSION, THAT EXPENSES OF PAINTING ETC. WERE SEP ARATELY BIFURCATED, THAT THE ASSERTION MADE BY THE DR,IN THAT REGARD,WAS FACTUALLY INCORRECT,THAT THE AO/FAA HAD NOT ADVANCED ANY ARGUMENT ABOUT PAINTING EXPENSES,THAT IN CASE THERE WAS ANY EXTENSION OF LEASE THE ASSESSEE WOULD NOT PROVIDE ADDITIONAL PROVISION,THAT THE EXISTING PROV ISION WERE BEING UTILISED ON THE REDELIVERY DATE, THAT THE ISSUE OF TREATMENT OF PROVISION IN C ASE OF REDELIVERY OF AIRCRAFT WAS NOT THE CASE OF 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 8 THE AO/FAA, THAT THE ISSUE OF NET IMPACT AFTER REIM BURSEMENT OF EXPENSES BY LESSOR WAS ALREADY CONSIDERED BY THE TRIBUNAL WHILE DECIDING THE APPEA L FOR THE AY 2006-07 (PARAGRAPH 6 OF PAGE 115-117 OF THE PAPER BOOK), THAT AIRCRAFT WERE TAKE N ON OPERATING LEASE, THAT THE EXPENDITURE WAS NOT CAPITALISED,THAT DR WAS FACTUALLY INCORRECT IN STATING THAT REDELIVERY PROVISIONS WERE CLAIMED FOR AIRCRAFT TAKEN ON HIRE PURCHASE AND FINANCE LEA SE.HE RELIED UPON THE CASES OF AISHWARIA K. RAI, MAHINDRA AND MAHINDRA AND ANAND Y.CHAUHAN(SUP RA) . 3.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE TRIBUNAL HAD DELIBERATED UPON AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE AO IN THE EARLIER AY.S. WE FIND THAT WHILE DECIDING TH E APPEAL FOR THE AY.2006 -07,THE TRIBUNAL HAS HELD AS UNDER(ITA.S3865/4200/7383/7317/7316/7312/66 90/6594/M/11 DTD.05/ 04/2013). 5. NOW, WE WILL TAKE UP THE APPEAL OF THE DEPARTME NT I.E. ITA NO.4200/MUM/2011 FOR THE ASSESSMENT YEAR 2006-07. 5.1 GROUNDS NO.1 & 2 IN THE APPEAL OF THE DEPARTMEN T RELATE TO ADDITION OF RS.3,03,04,715/- UNDER THE NORMAL PROVISION OF LAW AND THE SAME AMOU NT DELETED U/S. 115JB OF THE ACT. 5.2 THE AO HAS DISCUSSED THIS ISSUE AT PAGES 13 TO 28 IN PARA 11 WHEREAS IN APPEAL, LEARNED CIT(A) HAS DISCUSSED THIS ISSUE AT PAGES 1 TO 8 OF HIS ORDER. LEARNED COUNSEL OF THE ASSESSEE HAS FILED A CHART MENTIONING THE GROUNDS OF APPEAL RAIS ED BY THE DEPARTMENT SHOWING PAGES OF THE ORDER OF THE AO AS WELL AS OF THE CIT(A) AND THE OR DER OF THE TRIBUNAL FOR PREVIOUS YEARS, WHERE THE ISSUE IS COVERED BY THE ORDER OF THE TRIBUNAL E ITHER IN FAVOUR OF THE ASSESSEE OR IN FAVOUR OF THE DEPARTMENT. 5.3 ON THE OTHER HAND, LEARNED DR MADE HIS SUBMISSI ON BY WHICH THE ORDER OF THE AO HAS BEEN SUPPORTED AND HAS BEEN EXPLAINED ALSO. ATTENTION OF THE BENCH WAS ALSO DRAWN ON THE ORDER OF THE AO. PART OF THE ORDER OF THE AO WAS READ ALSO. IT WAS SUBMITTED THAT NO DELIVERY WAS GIVEN BY THE ASSESSEE IN THIS YEAR. ACCOUNTING STANDARD 2 9 IS VERY CLEAR. IT WAS ALSO SUBMITTED THAT FOUR AIRCRAFTS WERE DUE TO RETURN BUT HAVE NOT RETU RNED. THE HEAVY EXPENSES HAVE BEEN MADE BY THE ASSESSEE. THEREFORE, THE DISALLOWANCE OF PROVIS ION OF REDELIVERY OF AIRCRAFTS AMOUNTING TO RS.3..3 CRORES OR ODD UNDER THE NORMAL PROVISION OF LAW AS WELL AS UNDER THE PROVISION OF SECTION 115JB OF THE ACT WAS CORRECT. LEARNED CIT(A ) WAS NOT JUSTIFIED IN ALLOWING THE ISSUE IN FAVOUR OF THE ASSESSEE. IT WAS ALSO SUBMITTED THAT THERE WAS A REPORT BY SPECIAL AUDITOR U/S. 142(A), WHO HAS DISCUSSED THE ISSUE IN DETAIL, WHIC H HAS BEEN FOLLOWED BY THE AO. SINCE THERE WAS A SPECIAL AUDIT DURING THE YEAR UNDER CONSIDERA TION, THEREFORE, THAT SHOULD HAVE BEEN CONSIDERED BY THE LEARNED CIT(A) WHILE DECIDING THE ISSUE IN FAVOR OF THE ASSESSEE. IT WAS ALSO SUBMITTED IN EARLIER YEARS WHEN THE ISSUE WAS DECID ED IN FAVOUR OF THE ASSESSEE, THERE WAS NO SPECIAL AUDIT U/S. 142(A) OF THE ACT. 5.4 PER CONTR A, LEARNED COUNSEL OF THE ASSESSEE STATED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF TH E TRIBUNAL FOR ASSESSMENT YEAR 1997-98 TO ASSESSMENT YEAR 2005-06. THIS DECISION HAS BEEN REL IED UPON BY THE LEARNED CIT(A), COPIES OF WHICH ARE PLACED ON THE RECORD FROM PAGES 5 TO 85 O F THE PAPER BOOK. REGARDING THE CONTENTION OF THE LEARNED DR THAT THERE WAS A SPECIAL AUDIT DU RING THE YEAR UNDER CONSIDERATION, IT WAS ALSO SUBMITTED THAT NO DOUBT THERE WAS A SPECIAL AU DIT DURING THE YEAR UNDER CONSIDERATION BUT THERE IS NO CHANGE IN FACTS. FACTS ARE IDENTICAL FO R THE YEAR UNDER CONSIDERATION AND IN EARLIER YEARS. REGARDING THE APPLICABILITY OF PROVISION OF ACCOUNTING STANDARD 29 OF INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. IT WAS ALSO SUBMITT ED THAT ACCOUNTING STANDARD 29 & OTHER PROVISION ARE NOT NEW PROVISIONS AS THEY ARE OLD PR OVISIONS. THIS PROVISION HAS BEEN CONSIDERED 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 9 IN EARLIER YEARS AND THE CLAIM OF THE ASSESSEE IS I N ACCORDANCE WITH THE PROVISION OF INSTITUTE AS WELL AS PROVISION OF THE ACT. IT WAS ALSO SUBMITTED THAT IN VIEW OF THE CONSISTENCY, THE ORDER OF THE TRIBUNAL HAS TO BE FOLLOWED, WHICH HAS BEEN FOL LOWED BY THE LEARNED CIT(A). ACCORDINGLY, HE PLACED RELIANCE ON THE ORDER OF THE LEARNED CIT( A). 5.5 WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED THEM CAREFULLY. AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, WE FOUND NO INFIRMITY IN THE FINDING OF THE LEARNED CIT(A). WE NOTED THAT THE AO DISALLOWED THE CLAIM OF THE ASSESSEE UNDER THE NORMAL PROVISION OF THE ACT AND UNDER THE PROVISION OF SEC TION 115JB BY OBSERVING THAT THE PROVISION MADE IN RESPECT OF REDELIVERY EXPENSES HAS NOT ACCR UED OR EXPENDED DURING THE YEAR. THE SAID LIABILITY HAS BEEN REPORTED ON THE BASIS OF CERTAIN ESTIMATION. FURTHER THE NATURE OF PROVISION WAS FOUND TO BE CONTINGENT IN NATURE AND, THEREFORE , THE CLAIM OF SUCH PROVISION IS DISALLOWED. WHILE HOLDING SO, RELIANCE WAS PLACED ON VARIOUS CA SE LAWS, WHICH ARE REPRODUCED IN THE ORDER OF THE LEARNED CIT(A) AT PAGE 3. ACCORDINGLY, THE P ROVISION MADE WHILE COMPUTING BOTH THE INCOME I.E. UNDER NORMAL PROVISION OF LAW AS WELL A S U/S.115JB, WERE DISALLOWED BY THE AO AND WERE ADDED TO THE INCOME COMPUTED UNDER THE NORMAL PROVISION OF LAW AS WELL AS U/S.115JB OF THE ACT. LEARNED CIT(A) AFTER CONSIDERING THE SUBMI SSIONS AND PERUSING THE MATERIAL ON RECORD, FOUND THAT THIS ISSUE HAS ALREADY BEEN DECIDED BY T HE TRIBUNAL FOR ASSESSMENT YEAR 1997-98 TO 2005-06 AND, THEREFORE, THE ISSUE WAS DECIDED BY TH E LEARNED CIT(A) IN FAVOUR OF THE ASSESSEE ON ACCOUNT OF BOTH I.E. IN RESPECT OF PROVISION MAD E UNDER NORMAL PROVISION OF THE ACT AS WELL AS THE PROVISION MADE U/S.115JB OF THE ACT. BOTH THE A DDITIONS WERE DELETED BY THE LEARNED CIT(A). 5.6 AFTER CONSIDERING THE SUBMISSION OF THE ASSESS EE AS WELL AS OF THE DEPARTMENT, WE FOUND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A). THE C ONTENTION OF THE LEARNED DR THAT THERE IS NO DELIVERY OF AIRCRAFT DURING THE YEAR AND ALSO AFTER ACCOUNTING STANDARD 29, THE SAME CANNOT BE ALLOWED, WE FOUND THAT EVEN IF THERE IS NO DELIVERY OF AIRCRAFT, IT WILL NOT MAKE A DIFFERENCE. ACCOUNTING STANDARD 29 WAS INTRODUCED W.E.F. 1-4-20 04 AND EVEN AFTER THE INTRODUCTION OF ACCOUNTING STANDARD 29, THE TRIBUNAL HAS ALLOWED TH E SAME IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005-06. EVEN THE LEAVE PERIOD IS E XTENDED, THE LIABILITY WILL CONTINUE TO EXIST. WE ALSO FOUND THAT THE METHOD CANNOT BE CHANGED NOW BECAUSE THE SAME HAS BEEN ALLOWED BY THE TRIBUNAL FOR THE ASSESSMENT YEAR 1997-98 TO 200 5-06. THERE IS NO MATERIAL DIFFERENCE IN THE FACTS OF THE YEAR UNDER CONSIDERATION AS WELL AS FA CTS OF THE EARLIER YEARS. IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE RU LE OF CONSISTENCY, WE HOLD THAT LEARNED CIT(A) WAS JUSTIFIED IN ALLOWING THESE TWO GROUNDS IN FAVOUR OF THE ASSESSEE FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE. AC CORDINGLY, WE CONFIRM THE ORDER OF THE LEARNED CIT(A) ON BOTH THE ISSUES. RESPECTFULLY FOLLOWING THE ABOVE,WE DECIDE BOTH THE GROUNDS AGAINST THE AO. HERE, WE WOULD ALSO LIKE TO DELIBERATE UPON THE ARGUMENTS ADVANCED BY THE DR. WHILE DECIDING THE FIRST GROUND OF APPEAL,WE HAVE ALREADY HELD THAT RULE OF CONSIST ENCY HAS TO BE FOLLOWED IN INCOME TAX PROCEEDINGS,UNLESS NEW FACTS ARE BROUGHT ON RECORD IN THE SUBSEQUENT YEARS. IN THE CASE UNDER CONSIDERATION,THE AO HIMSELF HAD ADMITTED THE FACT THAT THE FACTS FOR THE YEAR UNDER CONSIDERATION WERE SIMILAR TO THE FACTS OF THE EARLIER YEARS.IF I T WAS SO, THE DR SHOULD NOT HAVE GONE BEYOND THE CASE OF THE AO/FAA. IN THAT REGARD WE WOULD LIKE TO REFER TO THE CASE OF MAHINDRA AND MAHINDRA, DELIVERED BY THE SPECIAL BENCH OF THE TRIBUNAL (SUP RA). IN THAT MATTER, THE TRIBUNAL HAS DRAWN THE PROVERBIAL LAKSHMAN REKHA THAT SHOULD NOT BE CROSSED BY THE DR.S.WE WOULD LI KE TO REPRODUCE THE FACTS AND THE OBSERVATION OF THE SPECIAL BENCH OF THE TRIBUNAL AND IT READS AS UNDER: 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 10 79. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PE RUSING THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE ASSESSING OFFICER HAS UNDOUBTEDLY EXAMINED THE PROVISIONS OF THE DTAA BETWEEN INDIA AND THE UK FOR DECIDING THE TAXABILITY OR OTHERWISE OF THE SUMS PAID TO THE NON-RESIDENT. THE ASSESSEE VIDE ITS LETTER DATED FEBRUARY 6, 1999, RE PRODUCED ON PAGE 9 ONWARDS OF THE ASSESSMENT ORDER, CATEGORICALLY STATED IN PARAGRAPH 5.3 THAT T HE DTAA BETWEEN INDIA AND THE UK WAS APPLICABLE. THE ASSESSING OFFICER HAS ALSO NOT DISP UTED THIS FACT. HE HAS REFERRED TO VARIOUS ARTICLES OF THE DTAA BETWEEN INDIA AND THE UK AT SE VERAL PLACES OF HIS ORDER VIZ. PARAGRAPHS 49,50,52,55 ETC. AT NO STAGE HAS IT BEEN DENIED BY THE ASSESSING OFFICER THAT THE DTAA BETWEEN INDIA AND THE UK WAS NOT APPLICABLE. IN SUCH A SITU ATION IT IS IMPERMISSIBLE FOR THE LEARNED DEPARTMENTAL REPRESENTATIVE TO COME OUT WITH A SUBM ISSION CONTRARY TO THE FINDING OF THE ASSESSING OFFICER THAT DTAA WITH THE UK WAS NOT REL EVANT AS BOTH THE LEAD MANAGERS WERE RESIDENTS OF COUNTRIES OTHER THAN THE UK. IN VIEW O F THE ADMISSION OF THE ASSESSING OFFICER AND THE FURTHER ELABORATION OF THE POINT IN THE LIGHT O F THE DTAA BETWEEN INDIA AND THE UK, WE CANNOT PERMIT THE LEARNED DEPARTMENTAL REPRESENTATIVE TO T AKE A CONTRARY STAND FROM THE ONE TAKEN BY THE ASSESSING OFFICER. IN OUR CONSIDERED OPINION TH E LEARNED DEPARTMENTAL REPRESENTATIVE HAS NO JURISDICTION TO GO BEYOND THE ORDER PASSED BY THE A SSESSING OFFICER. HE CANNOT RAISE ANY POINT DIFFERENT FROM THAT CONSIDERED BY THE ASSESSING OFF ICER OR THE COMMISSIONER OF INCOME-TAX (APPEALS). HIS SCOPE OF ARGUMENTS IS CONFINED TO SU PPORTING OR DEFENDING THE IMPUGNED ORDER. HE CANNOT SET UP AN ALTOGETHER DIFFERENT CASE. IF THE LEARNED DEPARTMENTAL REPRESENTATIVE IS ALLOWED TO TAKE UP A NEW CONTENTION DE HORS THE VIEW TAKEN BY THE ASSESSING OFFICER THAT WOULD MEAN THE LEARNED AUTHORISED REPRESENTATIVE STEPPING INTO THE SHOES OF THE COMMISSIONER OF INCOME-TAX EXERCISING JURISDICTION U/S. 263. WE, THEREFORE, DO NOT PERMIT THE LEARNED DEPARTMENTAL REPRESENTATIVE TO TRANSGRESS THE BOUNDRIES OF HIS A RGUMENTS. SIMILAR VIEW HAS BEEN TAKEN BY THE JODHPUR BENCH OF THE TRIBUNAL IN THE CASE OF KWAL P RO EXPORTS V. ASST. CIT [2008] 297 ITR (AT) 49 . THIS CONTENTION IS THEREFORE REPELLED AS DEVOI D OF ANY MERIT. WE DO NOT WANT TO ENTER INTO THE CONTROVERSY OF COR RECTNESS OF THE SUBMISSIONS MADE BY THE DR, IN LIGHT OF THE ASSERTION MADE BY THE AR, WITH REGA RD TO EXPENSES OF C-CHECK AND PAINTING AS WELL AS REDELIVERY PROVISION CLAIM FOR AIRCRAFT TAKEN ON HIRE PURCHASE AND FINANCE LEASE. BUT,WE WOULD LIKE MENTION THAT NO NEW CASE CAN BE MADE ON THE BA SIS OF SAME FACTS-ESPECIALLY WHEN THE AO HIMSELF HAD ADMITTED THAT FACTS OF THE CASE FOR THE YEAR UNDER APPEAL WERE SIMILAR TO THE FACTS OF EARLIER YEARS. THEREFORE, WE DISMISS GROUND NUMBER 2 AND 3,RAISED BY THE AO. 4. DISALLOWANCE OF PROVISION FOR REDELIVERY OF AIRCRAF T AMOUNTING RS. 23.91 LAKHS IN THE INCOME COMPUTED U/S. 115 JB OF THE ACT AND THAT UNDER THE NORMAL PROVISIONS OF THE ACT IN RESPECT OF AIRCRAFTS JWA, JWB, JWC IS THE SUBJECT MATTER OF GR OUND OF APPEAL NUMBER 4 AND 5 RESPECTIVELY. FOLLOWING OUR ORDER FOR THE LAST TWO GROUNDS, WE DE CIDE GROUND NUMBERS 4 AND 5 AGAINST THE AO, AS THE PRINCIPLE INVOLVED IN THESE GROUNDS ARE SAME LIKE THE EARLIER TWO GROUNDS. HERE, WE WOULD LIKE TO MENTION THAT THE AO, IN HIS ORDER, HAD STAT ED THAT FACTS WERE SIMILAR TO THAT OF THE PREVIOUS YEARS. 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 11 5 .NEXT GROUND (GOA-6)DEALS WITH DISALLOWANCE OF THE DEPRECIATION OF RS.175.21 CRORES,UNDER NORMAL PROVISIONS OF THE ACT,ON ACCOUNT OF DEPRECIA TION ON AIRCRAFTS ACQUIRED ON HIRE PURCHASE. DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT THE ASSESSEE HAD ACQUIRED SEVEN(7) AIRCRAFTS ON HIRE PURCHASE BASIS,THAT ALL THE AGREE MENTS WERE ON IDENTICAL LINES, THAT THE ASSESSEE HAD AN OPTION EXERCISABLE BY NOTICE TO THE OWNER ON OR PRIOR TO THE DATE ON WHICH IT COULD REDELIVER THE AIRCRAFT TO THE OWNER AND WOULD MAKE PAYMENT OF THE AMOUNTS SPECIFIED THEREIN TO ACQUIRE THE TITLE TO THE AIRCRAFT BY THE PAYMENT TO THE OWNER, THAT THE ACQUIRING OF OWNERSHIP WAS ON THE BASIS OF AS IS WHERE IS.HE FURTHER OBSERVED THAT THE PURCHASE OPTION WAS NOT ABSOLUTE AND WAS ATTATCHED WITH OTHER CONDITIONS TO BE FULFILLED BY IT, THAT TO EXERCISE THE ABOVE OPTION IT HAD TO COMPLY WITH TERMS SUCH AS PAYMENTS ON TERMINATION D ATE,INTERVENING EVENT AND OWNER TERMINA - TION,THAT THE TERMS OF AGREEMENT OF THE HIRE PURCHA SE DID NOT APPEAR TO BE A SIMPLE HIRE PURCHASE AGREEMENT REGARDED AS SALE,THAT THE OWNER HAD ALL T HE RIGHTS INCLUDING THE RIGHT OF OWNERSHIP OVER THE AIRCRAFT THROUGHOUT THE PERIOD OF HIRE,THAT THE OPTION TO BE EXERCISED BY THE ASSESSEE HAD COMPLEX CONDITIONS BEFORE TRANSFER OF OWNERSHIP, TH AT THERE WAS NO DOCUMENT TO SHOW THAT THE OWNER WOULD ACTUALLY TRANSFER THE RIGHT TITLE AND T HE INTEREST OF THE AIRCRAFT TO THE ASSESSEE, THAT T HE TITLE ON OWNERSHIP OF THE AIRCRAFT CONTINUED TO RES T WITH THE SELLER.FINALLY,HE DISALLOWED THE CLAIM. 5.1. IN THE APPELLATE PROCEEDINGS,THE FAA ALLOWED THE AP PEAL OF THE ASSESSEE, FOLLOWING THE ORDERS OF THE TRIBUNAL FOR THE EARLIER YEARS. 5.2. BEFORE US,THE DR ARGUED THAT THE ORDER OF THE FAA W AS VERY CRYPTIC AND NONSPEAKING PARTICULARLY ON FACTS NARRATED BY THE AO, THAT THE ORDER OF THE AO SHOULD BE UPHELD OR SHOULD BE SENT BACK TO THE FILE OF THE FAA.HE REFERRED TO THE CASE OF PALVAL CO-OPERATIVE SUGAR MILLS (284 ITR 153). HE FURTHER ARGUED THAT OWNERSHIP BEFORE C LAIM OF DEPRECIATION HAD TO BE EXAMINED ON THE FACTS THAT WHETHER THE LEGAL OWNERSHIP THROUGH CONVEYANCE DEED WAS DONE OR NOT, THAT FACTUAL CONTROL WOULD NOT CONFIRM CONSTRUCTIVE OWNERSHIP FO R CLAIM OF DEPRECIATION,THAT STRICT INTEGRATION WAS REQUIRED FOR OWNERSHIP BEFORE GRANT OF DEPRECIA TION,THAT THE ASSESSEE HAD CLAIMED DEPRECIA - TION ON PROVISION MADE FOR OBSOLESCENCE AND WAS CLA IMING DEPRECIATION ON THE SAME, THAT IT WAS MAKING PROVISION FOR REDELIVERY OF AIRCRAFT AND WAS CLAIMING THE SAME AS REVENUE EXPENDITURE, THAT IT WAS CONTRARY TO THE FACT THAT ASSESSEE ITSE LF WAS OWNER AND CLAIMING DEPRECIATION, THAT EITHER OF ONE HAD TO BE ALLOWED.ALTERNATIVELY.IT WA S ARGUED THAT IF DEPRECIATION WAS TO BE ALLOWED THEN IT SHOULD BE DIRECTED TO DISALLOW THE PRINCIPA L AMOUNT OF RS.38.73 CRORES. THE AR CONTENDED 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 12 THAT THE DR HAD WRONGLY STATED THAT PROVISION FOR O BSOLESCENCE WAS ONLY FOR INVENTORY OF ROTATABLES, THAT PROVISION FOR DELIVERY WAS NOT MAD E ON AIRCRAFT TAKEN ON HIRE PURCHASE. 5.3. WE FIND THAT WHILE DECIDING THE ISSUE,THE FAA HAS F OLLOWED THE ORDERS OF THE TRIBUNAL, THAT THE AO AND HIS ORDER (PG. 27,PARA-5.4)HAS STATED TH AT FACTS ABOUT THE DISPUTE UNDER CONSIDERATION WERE SIMILAR TO THE FACTS OF THE EARLIER YEARS. SO, IF THE FAA HAD FOLLOWED THE ORDERS OF THE TRIBUNAL FOR THOSE YEARS,IT HAS TO BE HELD THAT HE HAD MAINTAINED JUDICIAL DISCIPLINE. IN OUR OPINION HIS ORDER DOES NOT SUFFER FROM ANY LEGAL IN FIRMITY. 5.3.1. WE WOULD LIKE TO REPRODUCE THE PORTION OF THE ORDER OF THE TRIBUNAL DEALING WITH THE GROUND RAISED BY THE ASSESSEE,AND IT READS AS UNDER: 9. THE NEXT ISSUE I.E. GROUND NO.8 IS AGAINST DELE TING THE ADDITION OF RS.98,42,67,988/-ON ACCOUNT OF DEPRECIATION ON AIRCRAFT ACQUIRED ON HIR E PURCHASE BASIS. 9.1 THIS ISSUE HAS BEEN DISCUSSED BY THE AO AT PAGE S 44 TO 59 AND BY CIT(A) AT PAGES 16 TO 17 IN THEIR RESPECTIVE ORDER. 9.2 WHILE DISALLOWING THE C LAIM OF THE ASSESSEE, THE AO OBSERVED THAT THE CLAIM OF DEPRECIATION OF RS.98,42,67,988/- CANNOT B E ALLOWED ON THE GROUND THAT THE ASSESSEE CANNOT BE TREATED AS A OWNER OF THESE AIRCRAFTS AND ENGINES FOR THE PURPOSES OF CLAIMING DEPRECIATION ALLOWANCE. THE AO ALSO OBSERVED THAT T HE TITLE AND OWNERSHIP OF THE AIRCRAFT CONTINUED TO VEST WITH SELLER AT ALL TIMES. 9.3 BEFORE THE CIT(A) IT WAS SUBMITTED THAT SIMILAR CLAIM WAS DISALLOWED FOR ASSESSMENT YEAR 1997-98 TO 2005-06 AND THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. IT WAS ALSO SUBMITTED THAT DURING THE YEAR THE ASSESSEE HAS CLA IMED DEPRECIATION IN RESPECT OF AIRCRAFTS AND ENGINES ACQUIRED UNDER HIRE PURCHASE IN EARLIER ASS ESSMENT YEARS. THE ASSESSEE HAD ENTERED INTO HIRE PURCHASE AGREEMENT IN EARLIER YEARS. IT WAS FU RTHER STATED THAT DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE HAS NOT ACQUIRED ANY NEW AIRCRAFT ON HIRE PURCHASE BASIS AND ALL ITS HIRE PURCHASE AGREEMENTS WERE ON IDENTICAL LINES. A FTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, LEARNED CIT(A) FOUND THAT T HIS ISSUE IS COVERED BY THE ORDER OF THE TRIBUNAL FOR THE EARLIER ASSESSMENT YEARS I.E. 1997 -98 TO 2005-06. ACCORDINGLY, HE ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE. 9.4 AFTER CONSIDERING THE ORDER OF THE AO, THE CIT( A) ON WHICH RELIANCE HAS BEEN PLACED BY THE RESPECTIVE PARTIES, WE FOUND NO INFIRMITY IN THE FI NDING OF THE LEARNED CIT(A) AS LEARNED CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE FOLLOWING THE ORDERS OF THE TRIBUNAL FOR EARLIER YEARS, WHERE SIMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE . ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT(A) ON THIS ISSUE ALSO. 5.3.2. WE WOULD ALSO LIKE TO REFER TO THE CASE OF PALVAL CO-OPERATIVE SUGAR MILLS(SUPRA), RELIED UPON BY THE DRP. IN THAT MATTER THE SUBSTANTIAL QUE STION OF LAW BEFORE THE HONBLE HIGH COURT WAS AS UNDER: WHETHER THE ORDERS PASSED BY THE COMMISSIONER OF I NCOME-TAX (APPEALS) AND THE TRIBUNAL FULFIL THE REQUIREMENT OF A SPEAKING ORDER? DECIDING THE ISSUE, THE HONBLE COURT TOOK NOTICE O F THE FACTS OF THE CASE AND HELD AS FOLLOW: 4. A PERUSAL OF THE ORDER DATED JULY 29, 1994, SHOW S THAT AFTER MAKING A CURSORY REFERENCE TO THE ORDER PASSED BY THE ASSESSING OFFI CER ON THE ISSUE OF THE APPELLANTS CLAIM FOR DEDUCTION U/S. 43B AND NOTICING THE SUBMI SSION MADE IN THE APPEAL, THE COMMISSIONER OF INCOME-TAX (APPEALS), WITHOUT ASSIG NING ANY REASON WHATSOEVER, 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 13 GRANTED RELIEF TO THE ASSESSEE TO THE EXTENT OF RS. 5,69,322 BY RECORDING A ONE LINE OBSERVATION IN THE FOLLOWING WORDS : IN VIEW OF THE EXPLANATION OF THE ASSESSEE, THE PR ODUCTION INCENTIVE IS ALLOWABLE IN THE PRESENT ASSESSMENT YEAR. THEREFORE, THE ASSESSEE GETS RELIE F OF RS. 5,69,322. 5.THE TRIBUNAL DISMISSED THE APPEAL FILED BY THE AP PELLANT BY MAKING THE FOLLOWING OBSERVATIONS : UNDISPUTEDLY THE AMOUNT WAS DUE TO WORKERS FOR THE ASSESSMENT YEAR 1989-90 BUT PAID IN THE YEAR UNDER CONSIDERATION AND AS PER THE PROV ISIONS OF SECTION 43B OF THE ACT THE AMOUNT COULD BE CLAIMED IN THE YEAR WHEN PAYMENT IS ACTUALLY MADE. ALL FACTUAL POSITION MAKES THE ORDER OF THE COMMISSIONER OF INCOME-TAX ( APPEALS) AS JUSTIFIED IN WHICH NO INTERFERENCE IS CALLED FOR. GROUND FAILS. 6. IN OUR OPINION, THE ORDERS PASSED BY THE COMMISS IONER OF INCOME-TAX (APPEALS) AND THE TRIBUNAL ARE CRYPTIC TO THE CORE AND ARE GROSSLY VI OLATIVE OF ONE OF THE FACETS OF THE RULES OF NATURAL JUSTICE, NAMELY, THAT EVERY JUDICIAL/QUASI- JUDICIAL BODY/AUTHORITY MUST PASS A REASONED ORDER WHICH SHOULD REFLECT THE APPLICATION OF MIND BY THE CONCERNED AUTHORITY TO THE ISSUES/ POINTS RAISED BEFORE IT AND, THEREFORE, THE SAME ARE LIABL E TO BE SET ASIDE. PERUSAL OF THE ABOVE JUDGMENT CLEARLY SHOWS THAT FA CTS OF THAT CASE WERE TOTALLY DIFFERENT FROM THE FACTS OF THE CASE UNDER CONSIDERATION.IN THE PRESEN T CASE,IN THE EARLIER YEARS,THE TRIBUNAL HAD PASSED A REASONED AND SPEAKING ORDER AND THE FAA HA S FOLLOWED THE ORDER OF THE TRIBUNAL. WE HAVE ALREADY REPRODUCED THE ORDER OF THE TRIBUNAL A ND IN OUR OPINION IT IS NOT A CRYPTIC OR NON - SPEAKING ORDER. WE AGREE THAT THE APPELLATE AUTHORITIES SHOULD PASS REASONED AND SPEAKING ORDER. BUT,IN THE CASE BEFORE US,IT IS CLEAR THAT IN THE EARLIER YEARS,ALL THE ARGUMENTS RAISED BY THE DEPARTMENT,HAVE BEEN DEALT WITH.NO USEFUL PURPOSE IS SERVED IN WRITING A LL THE FACTS AND DECISIONS OF THE EARLIER YEARS WHILE PASSING THE ORDERS FOR THE LATER YEARS,IF THE FACTS AND CIRCUMSTANCES ARE SAME. IT IS A WASTAGE OF TIME AND MONEY TO REPEAT THE THINGS AND MAKE OR DELETE AN ADDITION.IN THE CASE BEFORE US,WE FIND THAT ISSUE HAS BEEN DEALT CONCLUSIVELY B Y THE TRIBUNAL IN EARLIER YEARS.THEREFORE, FOLLOWING THE ORDERS OF THE TRIBUNAL FOR THOSE YEAR S,WE HOLD THAT ORDER OF THE FAA IS NOT SUFFERING FROM ANY FACTUAL OR LEGAL INFIRMITY.CONFI RMING THE SAME, WE DECIDE GROUND NUMBER 6 AGAINST THE AO. 6. NEXT TWO GROUNDS(GOA 7&8)ARE ABOUT DISALLOWANCE OF RS.18.02 CRORES ON ACCOUNT OF FREQUENT FLYER EXPENSES BOTH UNDER THE NORMAL PROVISIONS AND THE MAT PROVISIONS.DURING THE ASSESSMENT PROCEEDINGS,THE AO DIRECTED THE ASSESSEE TO FILE DE TAILS OF FREQUENT FLYER PROGRAM (FFP). THE ASSESSEE SUBMITTED THAT FOR ASCERTAINED LIABILITY A S PER VARIOUS CASE LAWS THE ESTIMATED VALUE OF FFP HAD BEEN ALLOWED. HOWEVER, THE AO HELD THAT THE DECISION OF THE TRIBUNAL, ADJUDICATING THE ISSUE IN FAVOUR OF THE ASSESSEE, HAD BEEN CHALLENGE D BEFORE THE HONORABLE BOMBAY HIGH COURT, THAT THE PROVISIONS WERE MADE FOR CONTINGENT LABILI TY, THAT FFP WAS A BENEVOLENT SCHEME, THAT THE 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 14 LIABILITY IN THAT REGARD WAS NOT ON ACCOUNT OF A CO NTRACTUAL LIABILITY ON THE PART OF THE ASSESSEE TO INCUR SUCH EXPENDITURE, THAT THE EXPENSES WERE CONT INGENT UPON THE UTILISATION OF FACILITIES UNDER FFP BY THE PASSENGER, THAT IT WAS TO BE ALLOWED IN ACTUAL AND NOT THE PROVISIONS FOR UNUTILISED FACILITIES WHICH WERE BASED ON ESTIMATION.FINALLY,H E MADE A DISALLOWANCE OF RS.18.02 CRORES UNDER THE NORMAL COMPETITION OF INCOME AS WELL AS U NDER THE MAT PROVISIONS. 6.1. THE FAA, FOLLOWING THE ORDERS OF THE TRIBUNAL, ALLO WED THE APPEAL OF THE ASSESSEE UNDER NORMAL PROVISIONS OF THE ACT, AS WELL AS UNDER THE PROVISIONS OF SECTION 115JB. 6.2. DURING THE COURSE OF HEARING BEFORE US, THE DR ARGU ED THAT EXPENSE THAT HAD TO BE ALLOWED ON ACTUAL IN THE YEAR OF ITS REDEMPTION RATHER THAN PR OVIDING IT ON ESTIMATED BASIS, THAT THE REAL QUESTION WAS ABOUT THE EFFECT OF UNUTILISED MILES O R EXPIRED MILES,THAT THE PROVISIONS WERE CONTINGENT IN NATURE AND WERE NOT ALLOWABLE, THAT T HE TRIBUNAL IN ITS ORDER DATED 30/05/2006 FOR THE ASSESSMENT YEAR 1997-98 HAD DISCUSSED THE ISSUE OF IMPLEMENTATION OF FFP, THAT IN THE SUBSEQUENT ORDER THE TRIBUNAL HAD NOT EXAMINED THE FACTS AND HAD ALLOWED THE APPEAL OF THE ASSESSEE ON THE BASIS OF RECORDING OF THE FACT THAT BOTH PARTIES AGREED THAT ISSUE WAS COVERED BY EARLIER YEARS ORDER. WITH REGARD TO DISALLOWANCE U/S. 115 JB, HE CONTEND ED THAT THE ORDERS OF THE TRIBUNAL FOR THE EARLIER YEARS DID NOT DEAL WITH DISALLOWANCES TO MA DE U/S. 115 JB, THAT UNASCERTAINED LIABILITIES AND PROVISIONS MADE FOR THE LIABILITIES WERE REQUIR ED TO BE ADDED UNDER CLAUSE C OF EXPLANATION 1,THAT IT HAD TO BE ASCERTAINED WHETHER THE CERTIFI CATE IN FORM 29B FOR COMPUTATION OF SECTION 115 JB ADJUSTED SUCH PROVISIONS SO AS TO ARRIVE AT BOOK PROFIT IN COMPLIANCE OF THE PROVISIONS OF THE COMPANY ACT. THE AR ARGUED THAT ASCERTAINING OF THE LIABILITY UN DER FFP SCHEME WAS DONE ON A SCIENTIFIC BASIS, THAT ON THE BASIS OF PAST YEARS EXPERIENCE THE ASS ESSEE WOULD ESTIMATE THE EXPENSES OF FREE TICKETS AND WOULD MAKE A DEBIT IN THE ACCOUNTS IN T HE SAME YEAR IN WHICH THE LIABILITY WOULD ARISE, THAT THERE REMAINED NEGLIGIBLE POSSIBILITY O F ANY FFP MILES REMAINING UNUTILISED AFTER THE TERM WOULD EXPIRE, THAT IF THEY REMAINED ANY UNUTIL ISED MILES THE PROVISION WOULD BEING NET OF TO THE EFFECT, THAT AT THE END OF EACH YEAR THE PROVIS ION WOULD BE REVERSED IF THERE REMAINED ANY UNUTILISED MILES, THAT THE TOTAL PROVISION AT THE E ND OF THE YEAR WOULD ACCOMMODATE ONLY THOSE EXPENSES WHICH WOULD PERTAINED TO TOTAL PENDING NON -EXPIRED MILES, THAT THE PROVISION EARLIER CREATED FOR FFP MILES,WHICH WERE NEVER REDEEMED,WER E AUTOMATICALLY NETTED OFF THROUGH P&L 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 15 ACCOUNT, THAT IF THE FFP MILES WERE REDEEMED THROUG H OTHER AGENCIES THE ASSESSEE WOULD BE MAKING NECESSARY ENTRIES IN ITS BOOKS OF ACCOUNTS A S PER THE INVOICES RECEIVED BY IT FROM THE OTHER AGENCIES, THAT THE CONTENTION OF THE DRP THAT PROVISIONS WERE CONTINGENT WAS NOT BASED ON FACTS.WITH REGARD TO DISALLOWANCE MADE U/S. 115 JB OF THE ACT, HE ARGUED THAT ONLY THOSE PROVISIONS WERE TO BE ADDED BACK TO THE PROFIT AND LOSS ACCOUNT WHICH WERE NOT ASCERTAINED, THAT ASCERTAINED ITEMS WERE NOT TO BE CONSIDERED FOR MAT PROVISIONS, THAT IN THE EARLIER YEARS,THE TRIBUNAL HAD HELD THAT PROVISIONS CREATED FOR FFP U NDER NORMAL PROVISIONS WERE NOT CONTINGENT, THAT THE TRIBUNAL HAD GIVEN A FINDING THAT THE EXPE NSES IN DISPUTE WERE ASCERTAINED LIABILITIES, THAT WHILE DECIDING THE APPEAL FOR THE AY.2006-07 THE TR IBUNAL HAD HELD THAT EXPENDITURE WAS ASCERTAINED AND WAS NOT TO BE CONSIDERED FOR ANY AD JUSTMENT UNDER THE MAT PROVISIONS. 6.3. WE HAVE HEARD THE RIVAL SUBMISSIONS.WE FIND THAT IN THE EARLIER YEARS, INCLUDING THE AY. 2006-07, THE TRIBUNAL HAD HELD THAT EXPENDITURE TOW ARDS FFP EXPENSES WERE PART OF ASCERTAINED LIABILITIES,THAT THE TRIBUNAL HAD HELD THAT ASSESSE E WAS FOLLOWING A SCIENTIFIC METHOD TO DETERMINING ITS LIABILITY AND THAT SAME WAS NOT CON TINGENT.WE FIND THAT THE ASSESSEE HAD EXPLAINED THAT IN THE BOOKS OF ACCOUNTS ONLY NETTED OFF LIABILITY WOULD APPEAR. NOTHING HAS BEEN BROUGHT ON RECORD TO PROVE THAT FINDING OF FACT GIV EN BY THE TRIBUNAL,IN THE EARLIER YEARS ABOUT ASCERTAINED FFP LIABILITY,WAS INCORRECT.THEREFORE, RESPECTFULLY FOLLOWING THE ORDERS OF THE TRIBUNAL FOR THE EARLIER YEARS WE HOLD THAT FAA WAS JUSTIFIED IN HOLDING THAT DISALLOWANCE MADE BY THE AO WAS NOT AS PER THE PROVISIONS OF SECTION 115JB OF THE ACT.AS FAR AS COMPUTATION UNDER NORMAL PROVISIONS IS CONCERNED,WE FIND THAT IN THE EARLIER YEAR THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE AO.SO,FOL LOWING THE SAME WE HOLD THAT FFP LIABILITY WAS ASCERTAINED LIABILITY. GROUND NO. 7 &8 STAND DI SMISSED. 7. GROUND NO.9 DEALS WITH INTEREST INCOME OF RS.27.62 CRORES THAT WAS ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES AS AGAINST BUSINESS INCOM E.DURING THE ASSESSMENT PROCEEDINGS, THE AO HELD THAT AS PER THE PROVISIONS OF SECTION 14 OF THE ACT VARIOUS HEADS WERE PROVIDED FOR COMPUTATION OF TOTAL INCOME, THAT COMPUTATION OF IN COME UNDER EACH HAD WOULD HAVE TO BE MADE INDEPENDENTLY AND SEPARATELY, THAT THE INTEREST INC OME ON INVESTMENT OF SURPLUS FUNDS WAS ASSESS -ABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. HE RELIED UPON THE CASE OF MURLI INVESTMENT COMPANY LTD. (167 ITR 368) AND GODAVARI SUGAR MILLS LTD. (191 ITR 359). CULLING OUT VARIOUS TESTS FROM LEGAL PREPOSITION FOR TREATING INTEREST INCOME OUT OF THE DEPOSITS FROM SURPLUS FUNDS 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 16 AND OTHERWISE HE HELD THAT INTEREST INCOME EARNED B Y THE ASSESSEE HAD TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES. 7.1. IN THE APPELLATE PROCEEDINGS,THE FAA,FOLLOWING THE ORDER OF THE TRIBUNAL FOR THE EARLIER YEARS, HELD THAT DUE TO THE INTERLACING OF BUSINESS FUNDS AND EARNING OF INTEREST INCOME ON SHORT-TERM DEPOSITS INTEREST INCOME WAS TAXABLE AS BUSINESS IN COME. 7.2. BEFORE US,THE DR ARGUED THAT THERE WAS SOME TYPOGRA PHICAL MISTAKE IN THE QUANTUM OF AMOUNT, THAT INTEREST EARNED ON TEMPORARY PARKING O F SURPLUS FUND OR UNUTILISED MONEY WAS TO BE TREATED AS RECEIPT UNDER INCOME FROM OTHER SOURCES, THAT THE TRIBUNAL HAD IN THE EARLIER YEARS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, THAT P RINCIPLE OF RES JUDICATA WERE NOT APPLICABLE IN THE INCOME TAX PROCEEDINGS, THAT THE ISSUE WAS HELD TO BE COVERED IN FAVOUR OF THE ASSESSEE ON THE BASIS OF CONCESSION BY THE DR AND NOT BY VERIFICATI ON/ANALYSING THE FACTS OF THAT PARTICULAR YEAR, THAT THE ORDER OF THE FAA WAS NONSPEAKING AND CRYPT IC, THAT THE PHYSICAL BUSINESS CARRIED ON BY THE ASSESSEE HAD TO BE CONSIDERED FOR DECIDING VARI OUS RECEIPTS. HE FURTHER STATED THAT WHILE DECIDING THE APPEALS FOR THE A.Y. 1997 TO 2002 THE TRIBUNAL HAD NOT CONSIDERED THE JUDGMENTS OF PANDIAN CHEMICALS LTD.(262 ITR 278)AND LIBERTY INDI A (317 ITR 218) THAT THE PRINCIPAL BUSINESS CARRIED OUT BY THE ASSESSEE AND THE COMPANIES ACT A ND THE ACT SHOULD DECIDE THE RECEIPT UNDER VARIOUS HEADS. 7.2.1. THE AR CONTENDED THAT THE TYPOGRAPHICAL MISTAKE ABO UT THE QUANTUM OF INTEREST COULD NOT AFFECT THE ISSUE, THAT THE DISPUTE BEFORE THE TRIBU NAL WAS TO DECIDE THE HEAD UNDER WHICH INTEREST INCOME WAS TO BE ASSESSED, THAT IN THE EARLIER YEAR S THE TRIBUNAL HAD ALREADY AGITATED THE ISSUE AGAINST THE AO, THAT THE APPEAL FILED BY THE DEPART MENT IN THAT REGARD BEFORE THE HONBLE BOMBAY HIGH COURT HAD BEEN REJECTED, THAT IN THE CA SES OF PANDIAN CHEMICALS LTD. AND LIBERTY INDIA (SUPRA),THE ISSUE INVOLVED WAS ALLOWANCE OF I NTEREST AND DUTY DRAWBACK U/S. 80 HH AND 80 IB OF THE ACT, THAT IN BOTH THE SECTIONS WORDS USED WERE DERIVED FROM INDUSTRIAL UNDERTAKING , THAT THE ASSESSEE HAD OFFERED THE INTEREST INCOME F ROM DEPOSITS AND MARGIN MONEY UNDER THE HEAD BUSINESS INCOME AS PER THE PROVISIONS OF SECTION 28 OF THE ACT,THAT IN SECTION 28 THE WORDS USED WERE ARISING OUT OF OR IN CONNECTION WITH .. THE BUSINESS AND PROFESSION, THAT THERE WAS N O CHANGE IN THE FACTS OF THE CURRENT AY.AS COMPARED T O EARLIER YEARS, THAT THE INTEREST FROM MARGIN MONEY DEPOSIT AND OTHER DEPOSITS FOR THE A.Y.S 1997 -98 TO 2001-02 WERE IN NATURE AND CHARACTER SAME AS THE INTEREST INCOME RECEIVED FOR THE YEAR U NDER APPEAL, THAT EXCEPT FOR THE QUANTUM THE SUBSTANCE WAS THE SAME, THAT THE TREATMENT TO BE GI VEN FOR VARIOUS RECEIPTS AS PER COMPANIES ACT 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 17 WAS IRRELEVANT SINCE THE ISSUE WAS PERTAINING TO TA XING OF RECEIPT UNDER APPROPRI-ATE HAD AND NOT ACCOUNTING OF RECEIPTS UNDER SPECIFIC SCHEDULE. 7.3. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT W HILE DECIDING THE APPEALS FOR THE EARLIER AYS THE TRIBUNAL HAD DECIDED THE ISSUE AGAINST THE AO, THAT THE HONBLE DIVISIONAL HIGH COURT HAS NOT ADMITTED THE SUBSTANTIAL QUESTION OF LAW AG AINST THE ORDER OF THE TRIBUNAL IN THAT REGARD, THAT THE ISSUE HAS THUS ATTAINED FINALITY, THAT THE RE WAS NO DIFFERENCE IN FACTS AND CIRCUMSTANCES OF THE CASE FOR THE YEAR UNDER CONSIDERATION AND THE F ACTS OF THE EARLIER A.Y.S.WE HAVE ALREADY HELD IN THE EARLIER PART OF OUR ORDER THAT PRINCIPLES OF CONSISTENCY HAVE TO BE FOLLOWED IN THE SUBSEQUENT AY.S IF THERE WAS NO DIFFERENCE IN THE F ACTS AND CIRCUMSTANCES.NOTHING WAS BROUGHT TO OUR NOTICE THAT COULD DISTINGUISH THE FACTS OF T HE YEAR UNDER APPEAL AND THE FACTS OF THE EARLIER YEARS GIVING THE JUSTIFICATION FOR NOT ASSESSING TH E INTEREST INCOME UNDER THE HEAD BUSINESS INCOME. IN OUR OPINION, CASES RELIED UPON BY THE DR ARE NOT HELPFUL TO THE DECIDE THE ISSUE BEFORE US.THE MANDATE OF THOSE CASES IS VERY LIMITED,AS CO MPARED TO THE PROVISIONS SECTION 28 OF THE ACT.RESPECTFULLY,FOLLOWING THE ORDERS OF THE TRIBUN AL FOR THE EARLIER YEARS(AY.S 1997 TO 2002), WE DISMISS GROUND NUMBER 9, RAISED BY THE AO. 8. ADDITION OF RS.223.37 CRORES U/S.41(1)OF THE ACT,ON ACCOUNT OF SALE AND LEASE BACK OF FOUR AIRCRAFTS UNDER THE NORMAL PROVISIONS OF THE ACT,IS THE SUBJECT MATTER OF GROUND NO.10. REFERRING TO THE ORDERS FOR THE EARLIER YEARS, THE AO (PG. 41 , PARA 9.1 AND PG. 45, PARA 9.8) OBSERVED THAT THE FACTS FOR THE YEAR UNDER CONSIDERATION WERE SIMILAR TO THE FACTS OF PREVIOUS YEARS. FOLLOWING ORDERS OF HIS PREDECESSORS HE MADE AN ADDITION OF R S.2, 23, 37, 21, 091/- TO THE TOTAL INCOME OF THE ASSESSEE, INVOKING THE PROVISIONS OF SECTION 41 (1) OF THE ACT. HE OBSERVED THAT DEPRECIATION ON AIRCRAFT ACQUIRED BY THE ASSESSEE WERE DISALLOWE D IN ALL THE EARLIER YEARS, THAT THE PAYMENT OF INSTALMENT INCLUDING PRINCIPAL AND INTEREST WERE AL LOWED, THAT WHEN THE ASSESSEE RECEIVED SALE CONSIDERATION ON SUCH AIRCRAFTS THEN TO THE EXTENT INSTALMENT DUE AS ON THE DATE OF RECEIPT OF CONSIDERATION WAS TO BE TREATED AS CESSATION OF LIA BILITY U/S.41(1) OF THE ACT. 8.1. THE FAA,IN THE APPELLATE PROCEEDINGS,ALLOWED THE AP PEAL OF THE ASSESSEE,FOLLOWING THE ORDERS OF THE HIS PREDECESSOR AND OF THE TRIBUNAL,FOR EARL IER YEARS. 8.2. THE DR ARGUED THAT THERE WERE CHANGE OF FACTS ON AC COUNT OF SALE OF AN AIRCRAFT AND TAKING BACK THE SAME AIRCRAFT ON LEASE ON FOUR COUNTS. HE ARGUED THAT THE AO HAD HELD THAT DOMINION 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 18 CONTROL OVER THE AIRCRAFTS WAS WITH THE ASSESSEE, T HAT IT WAS ALLOWED DEPRECIATION, THAT ABSOLUTE OWNERSHIP WAS NOT WITH THE ASSESSEE, THAT ASSESSEE COULD NOT SELL THESE AIRCRAFTS, THAT IT WAS NOT KNOWN AS TO HOW THE SALE CONSIDERATION WAS RECEIVED BY THE ASSESSEE, THAT IT WAS ALSO NOT KNOWN AS TO HOW THE MONEY WOULD COME TO THE ASSESSEE I.E. FROM THE ORIGINAL OWNER OR FROM THE NEW OWNER, THAT IN THE EARLIER YEARS DEPRECIATION WAS A LLOWED ON THE BASIS OF REGISTRATION WITH DCGA, THAT MONEY TRAIL WAS REQUIRED TO BE EXAMINED FOR CO NSIDERATION, THAT DEFECTS OF THE TRANSACTION ON THE OTHER CLAIMS OF THE ASSESSEE RELATING TO PROVIS IONS FOR OBSOLESCENCE AND REDELIVERY OF AIRCRAFT HAD TO BE EXAMINED, THAT THE ASSESSEE HAD RECEIVED SALE CONSIDERATION IN CASH IN RESPECT OF LOSS AND EXPENDITURE, THAT THE PROVISIONS OF SECTION 41 (1) HAD TO BE CONSIDERED CUMULATIVELY, THAT THE ASSESSEE HAD TO PAY BACK BALANCE INVOLVEMENTS OUT O F THE HIRE PURCHASE AGREEMENTS, THAT THE AO HAD RIGHTLY INVOKED THE PROVISIONS OF SECTION 41. 8.2.1. THE AR ARGUED THAT SUBMISSIONS OF THE DR ARE FACTUA LLY INCORRECT, THAT NO PROVISION FOR OBSOLESCENCE OR REDELIVERY WAS MADE ON AIRCRAFTS AC QUIRED ON HIRE PURCHASE BASIS, THAT BEFORE SELLING THE AIRCRAFTS ALL REMAINING INSTALMENTS WER E PAID, THAT INTEREST WAS ALSO PAID TILL THE DATE O F E-PAYMENT, THAT DEPRECIATION WAS NOT CLAIMED @ 60% AS ALLEGED BY THE DR, THAT IT WAS NOT THE CASE OF AO/FAA. HE REFERRED TO THE ORDERS OF THE TR IBUNAL FOR THE AY.S 2006-07 AND 2007-08. 8.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE AO, IN HIS ORDER HAS STATED(PG-41,PARA 9.1,PG.-45,P ARA-9.8)THAT THE FACTS FOR THE YEAR UNDER CONSIDERATION WERE SIMILAR TO FACTS OF PREVIOUS YEA RS.THEREFORE, WE DO NOT AGREE WITH THE DR WHO HAS STATED THAT THERE WAS CHANGE IN THE FACTS. FOLLOWING THE RULE OF CONSISTENCY WE WOULD LIKE TO RELY UPON THE ORDERS OF THE TRIBUNAL IN EAR LIER YEARS. WE ARE REPRODUCING THE RELEVANT PORTION OF THE ORDER DEALING WITH IDENTICAL ISSUE, OF THE TRIBUNAL FOR THE AY.2006-07 (PARA-10 PB-125-129) AND IT READS AS UNDER: 10. GROUND NO.9 RELATES TO DELETING THE ADDITION O F RS.100,52,85,728/- U/S. 41(1) OF THE ACT ON ACCOUNT OF SALE AND LEASE BACK OF FIVE AIRCRAFTS. 10.1 THIS ISSUE HAS BEEN DISCUSSED BY THE AO AT PAG ES 59 TO 64 AND BY LEARNED CIT(A) AT PAGES 17 TO 23 IN THEIR RESPECTIVE ORDERS. THE AO OBSERVE D THAT THE ASSESSEE WAS NOT THE OWNER OF THESE AIRCRAFTS AS HELD BY THE TRIBUNAL IN EARLIER ASSESS MENT YEARS. IT WAS FURTHER OBSERVED BY THE AO THAT THE ASSESSEE WAS ELIGIBLE TO CLAIM DEDUCTION I N RESPECT OF PRINCIPAL PAYMENT OF INSTALLMENTS OF THESE AIRCRAFTS AS PER THE STAND TAKEN BY THE DE PARTMENT IN THE EARLIER ASSESSMENT YEARS. THE AO ALSO OBSERVED THAT THE AMOUNT RECEIVED ON SALE O F THE SAID AIRCRAFTS IN EXCESS OF THE INSTALLMENT PAYABLE NEEDS TO BE ASSESSED AS INCOME U/S. 41(1) OF THE ACT. ACCORDINGLY, THE AO MADE AN ADDITION OF RS.100,52,85,727/- (RS.462,24,9 7,188/- BEING SALE CONSIDERATION OF FIVE AIRCRAFTS RS.361,72,11,460/- INSTALLMENTS PAYABLE ) U/S. 41(1) OF THE ACT BEING THE DIFFERENCE 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 19 BETWEEN THE SALE CONSIDERATION OF RS.462,24,97,188/ - AND INSTALLMENT PAYABLE RS.361,72,11,460/- ON THE GROUND THAT IT HAS RESULTED IN A BENEFIT TO THE ASSESSEE ON ACCOUNT OF CESSATION OF TRADING LIABILITY. IT WAS EXPLAINED BEFORE THE CIT(A) THAT IT IS PERTINENT TO NOTE THAT SECTION 41(1) OF THE ACT PROVIDES FOR CHARGING OF CERTAIN BENEFITS, WHIC H ARE OBTAINED BY THE ASSESSEE AS DEEMED PROFITS. IT WAS ALSO EXPLAINED THAT THE ASSESSEE HA D SOLD FIVE BOEING 737 AIRCRAFTS BEARING TAIL NOS. JAS, JAT, JAR, JNC AND JND TO INJET 400 AIRCRA FTS LEASING CO. LTD., GRAND CAYMAN, CAYMAN ISLANDS FOR A SUM OF RS.462,24,97,188/-. THE SAID AIRCRAFTS WERE ACQUIRED ON HIRE PURCHASE FROM WASINGTON AIRCRAFT HIRE CO. LTD. IN E ARLIER YEARS FOR A SUM OF RS.671,95,92,523/-. PURSUANT TO THE SALE, THE SAID AIRCRAFTS WERE TAKEN ON OPERATING LEASE BY THE ASSESSEE FROM INJET 400 AIRCRAFT LEASING CO. LTD.. IN THE BOOKS OF ACCO UNTS, THE ASSESSEE REDUCED THE SALE CONSIDERATION OF RS.462,24,97,188/- FROM THE BLOCK OF ASSETS. FURTHER DEPRECIATION FOR THE YEAR WAS CLAIMED ONLY ON THE REDUCED BLOCK OF ASSETS. AC CORDINGLY, IT WAS SUBMITTED THAT THIS IS NOT A CASE OF CESSATION OF LIABILITY AND THE AO WAS TOTAL LY MISGUIDED HIMSELF IN UNDERSTANDING THE FACTS OF THE CASE. RELIANCE WAS PLACED ON VARIOUS CASE LA WS. IT WAS ALSO SUBMITTED THAT IN ORDER TO INVOKE THE PROVISION OF SECTION 41(1) OF THE ACT, T HE ASSESSEE SHOULD HAVE CLAIMED DEDUCTION IN RESPECT OF EXPENDITURE IN EARLIER YEARS AND SUBSEQU ENTLY THERE HAS BEEN REMISSION/CESSATION OF LIABILITY AS A RESULT OF WHICH SOME BENEFIT ACCRUES TO THE ASSESSEE. IN THE INSTANT CASE, THE ASSESSEE HAD CAPITALIZED THE COST OF THE SAID AIRCRAFTS ACQU IRED ON HIRE PURCHASE AND CLAIMED DEPRECIATION THEREON. FURTHER THE SALE OF AIRCRAFTS IN ANY WAY D OES NOT RESULT IN REMISSION OR CESSATION OF LIABILITY OF THE ASSESSEE TO PAY THE BALANCE AMOUNT TO THE ENTITY FROM WHOM THE AIRCRAFTS WERE PURCHASED ON HIRE-PURCHASE BASIS. THUS, THE CONDITI ONS FOR INVOKING THE PROVISIONS OF SECTION 41(1) OF THE ACT ARE NOT PRESENT IN CASE IN HAND. IN RESPECT TO CONTENTION OF THE AO THAT THE ASSESSE E HAS NOT CONSIDERED THE VIEW TAKEN BY THE DEPARTMENT IN EARLIER YEARS REGARDING THE LIABILITY OF THE DEPRECIATION AND LEASE RENT, IS ERRONEOUS. IT WAS SUBMITTED THAT IN PRECEDING ASSES SMENT YEAR, THE ISSUE HAS BEEN DECIDED FOR ASSESSMENT YEAR 1997-98 TO 2005-06 IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE ASSESSEE WAS AN OWNER OF THE AIRCRAFT ACQUIRED UNDER HIRE PURCHASE BASIS AND ALLOWED THE DEPRECIATION ON THE AIRCRAFTS AND ENGINES ACQUIRED UNDER THE HIRE PURCH ASE BASIS. ACCORDINGLY, IT WAS POINTED OUT THAT QUESTION OF OWNERSHIP OF THESE AIRCRAFTS HAS B EEN SETTLED INASMUCH AS THE ASSESSEE IS THE OWNER OF THESE AIRCRAFTS AND THE CLAIM OF DEPRECIAT ION HAS ALSO BEEN UPHELD BY THE CIT(A) AS WELL AS BY THE TRIBUNAL. AFTER CONSIDERING THE SUBMISSIO N AND PERUSING THE MATERIAL ON RECORD, LEARNED CIT(A) FOUND THAT THE AO WAS NOT CORRECT IN MAKING ANY ADDITION U/S. 41(1) OF THE ACT. IT WAS SEEN THAT THE ASSESSEE HAS BEEN DECLARED AS OWN ER OF THESE AIRCRAFTS. THE ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE I N EARLIER YEARS AND DEPRECIATION HAS BEEN ALLOWED. IT IS SEEN THAT ON SALE OF THESE AIRCRAFTS , THE ASSESSEE HAS REDUCED THE BLOCK OF ASSETS BY SALE CONSIDERATION AND ACCORDINGLY CLAIMED LESSER D EPRECIATION. THIS FACT WAS IN CONFORMITY WITH THE FINDING OF THE TRIBUNAL IN EARLIER YEAR. ACCORD INGLY, THE ADDITION MADE U/S. 41(1) WAS DELETED BY THE LEARNED CIT(A). 10.2 LEARNED PLACED RELIANCE ON THE ORDER OF AO. ON THE OTHER HAND, LEARNED COUNSEL OF THE ASSESSEE PLACED RELIANCE ON THE ORDER OF CIT(A). 10.3 AFTER CONSIDERING THE ORDER OF AO AND CIT(A), WE FOUND NO INFIRMITY IN THE FINDING OF THE LEARNED CIT(A). LEARNED CIT(A) HAS NOTED THAT IN EA RLIER YEAR, THE ISSUE IN RESPECT OF OWNERSHIP OF THESE AIRCRAFTS HAVE BEEN SETTLED BY THE TRIBUNA L BY DECLARING THAT THE ASSESSEE IS THE OWNER OF THESE AIRCRAFTS. ACCORDINGLY, DEPRECIATION DISALLOW ED BY THE AO WAS ALLOWED BY THE CIT(A) AND THE ORDER OF CIT(A) HAS BEEN AFFIRMED BY THE TRIBUN AL UPTO THE ASSESSMENT YEAR 2005-06. IT WAS FURTHER NOTICED BY THE LEARNED CIT(A) THAT THE COST OF THESE AIRCRAFTS HAVE BEEN SHOWN IN THE BLOCK OF ASSETS AND SALE CONSIDERATION RECEIVED BY THE AS SESSEE HAS BEEN REDUCED FROM THE BLOCK OF ASSETS AND ON REDUCED VALUE, THE ASSESSEE HAS CLAIM ED LESSER DEPRECIATION. THEREFORE, THIS IS NOT A CASE OF CESSATION OF LIABILITY AND ACCORDINGLY, PRO VISIONS OF SECTION 41(1) ARE NOT APPLICABLE ON THE FACTS OF THIS ISSUE. FINDING OF THE CIT(A) REMA INED UNCONTROVERTED AS LEARNED DR HAS PLACED 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 20 HEAVY RELIANCE ON THE ORDER OF AO ONLY. THEREFORE, WE CONFIRM THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE ALSO. RESPECTFULLY FOLLOWING THE ABOVE,WE DISMISS GROUND NO.10. 9. NEXT GROUND PERTAINS TO ADDITION OF RS.1.17 CRORES OUT OF REPAIR OF PREMISES,FURNITURE AND FIXTURE.DURING THE ASSESSMENT PROCEEDINGS,THE AO FO UND THAT THE ASSESSEE HAD CLAIMED AN EXPEN -DITURE OF RS.1.91 CRORES UNDER THE HEAD REPAIR AND MAINTENANCE OF FURNITURE AND FIXTURE. AS THE OWNERSHIP OF THOSE ASSETS DID NOT BELONG TO THE ASS ESSEE , HE DIRECTED IT TO FILE EXPLANATION IN THAT REGARD.AFTER CONSIDERING THE SAME,HE HELD THAT THE EXPENDITURE WAS NOT IN THE NATURE OF CURRENT REPAIR, THAT IT RESULTED IN ENDURING BENEFITS TO TH E ASSESSEE .HE HELD THAT EXPENDITURE TO THE TUNE OF RS.1.17 CRORES HAS TO BE TREATED AS CAPITAL EXPENDI TURE. 9.1. DURING THE APPELLATE PROCEEDINGS THE FAA,FOLLOWING THE RATIO OF EARLIER YEARS ALLOWED THE CLAIM OF THE ASSESSEE . 9.2. THE DR ARGUED THAT, THE ASSESSEE ITSELF HAD ADMITTE D THAT IT HAD ALTERED THE FURNITURE EXISTING IN THE LEASED OFFICE PREMISES AND AIRPORT,, THAT IT HAD TO SUBSTANTIATE ITS CLAIM, THAT IT WAS NOT CLE AR AS TO WHETHER THE PREMISES WERE FURNISHED/UNFURNISH ED, THAT ONUS WAS ON THE ASSESSEE TO PROVE THAT EXPENDITURE WAS OF REVENUE NATURE,THAT APART F ROM THE FRONT OFFICE AT AIRPORTS, SECURITY CHECK, LOUNGES AND OTHER INTERNAL SPACE/BUILDINGS WERE COM MON FOR OTHER AIRLINES, THAT SAME DID NOT REQUIRE SPECIFIC LOOK, THAT EVEN THE FRONT OFFICE W AS HAVING SPECIFIED DESIGNATED DESIGN AS FAR AS LOOK WAS CONCERNED. 9.2.1. THE AR RELIED UPON THE ORDER OF THE TRIBUNAL FOR TH E AY.S 1997-98 TO 2001-02 AND SUBSEQUENT AY.S. .HE FURTHER STATED THAT THE APPEAL FILED BY THE DEPARTMENT IN THAT REGARD HAS NOT BEEN ADMITTED BY THE HON'BLE HIGH COURT IN THE EARL IER AY.S.WE FIND THAT WHILE DECIDING THE IDENTICAL ISSUE TRIBUNAL HAS DISMISSED THE APPEAL FILED BY AO IN EARLIER YEA RS. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL FROM 1997-98 TO 2007-08 & (ITA.S.3865/4200/7383/7317/ 7316/7312/6690/6594/M/11DTD.05/04/2013),WE DECIDE G ROUND OF APPEAL -11 AGAINST THE AO. 10. GROUND NO.12 DEALS WITH DISALLOWANCE OF RS.15.63 CR ORES MADE BY THE AO,U/S. 40(A)(IA)OF THE ACT.DURING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE HAD PAID TAX DEDUCTED AT SOURCE ,AMOUNTING TO RS.15.63 CRORES AFTER THE DUE DATE . HE HELD THAT TAX WAS DEPOSITED AFTER LAPSE OF RELEVANT FY.,THAT THERE WAS DELAY IN PAYM ENT OF TAX .INVOKING THE PROVISIONS OF SECTION 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 21 40(A) (IA) OF THE ACT. HE MADE A DISALLOWANCE OF RS .15,63,04,882/-. THE FAA ALLOWED THE APPEAL FILED BY THE ASSESSEE. 10.1. BEFORE US, THE DR STATED THAT MATTER COULD BE DECID ED ON MERITS.THE AR STATED THAT PAYMENT WAS MADE BEFORE DUE DATE OF FILING OF RETURN . 10.2. IN OUR OPINION THERE IS NO FACTUAL OR LEGAL INFIRMI TY IN THE ORDER OF FAA,AS HE HAD DELETED THE DELETION AFTER CONSIDERING THE FACT THAT TAX DEDUCT ED AT SOURCE WAS PAID BEFORE DUE DATE OF FILING OF RETURN.CONFIRMING HIS ORDER,WE DECIDE 12 TH GROUND AGAINST THE AO. 11. IN GROUND NO.13 THE AO HAS AGITATED THE DELETION OF DISALLOWANCE MADE DURING ASSESSMENT PROCEEDINGS,U/S.14A OF THE ACT,AMOUNTING TO RS.3.66 LAKHS.DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAD MADE INVESTMENT IN SHARES OF SUBSIDIARY COMPANIES. REFERRING TO THE PROVISIONS OF SECTION 14A OF THE A CT,HE MADE DISALLOWANCE OF RS.3,66,25,000/-. IN THE APPELLATE PROCEEDINGS,THE ASSESSEE STATED TH AT IT HAD ACQUIRED EQUITY SHARES AND NON CUMULATIVE CONVERTIBLE PREFERENCE SHARES OF ITS SU BSIDIARY COMPANY FOR STRATEGICAL PURPOSES, THAT INVESTMENT WAS NOT MADE TO EARN ANY EXEMPT INC OME FROM THE INVESTMENT. IN THE APPELLATE PROCEEDINGS, THE ASSESSEE MADE ELABORATE SUBMISSION S .RELYING UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF GARWARE ROPES INDIA LTD. (ITA/5408/M UM/2012),HE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE IN RESPECT OF OLD INVESTMENT IN ITS SU BSIDIARY ENTITY.HOWEVER,HE UPHELD PART DISALLOWANCE HOLDING THAT NOTIONAL EXPENDITURE WAS INCURRED TO EARN EXEMPT INCOME. 11.1. THE DR LEFT THE ISSUE TO THE DISCRETION OF THE BENC H.THE AR STATED THAT THE ENTIRE INVESTMENT WAS MADE IN ITS SUBSIDIARY COMPANY, SAME SHOULD NOT BE CONSIDERED FOR DISALLOWANCE U/S. 14A OF THE ACT, THAT THE PURPOSE OF THE INVESTMENT WAS TO GAIN CONTROL IN STAKE. HE RELIED UPON THE CASES OF CHEM INVEST LTD. (378ITR33); HOLCIM INDIA (P) LT D.(272CTR282); SHIVA MOTORS P. LTD. , THAT THE ASSESSEE HAD NOT EARNED ANY EXEMPT INCOME DURING THE YEAR, THAT THE AO HAD NOT RECORDED ANY SATISFACTION BEFORE INVOKING THE PROVI SIONS OF SECTION 14A OF THE ACT. 11.2. AFTER HEARING THE RIVAL SUBMISSIONS, WE ARE OF THE OPINION THAT FOR MAKING ANY DISALLOWANCE U/S.14A THE AO HAS TO PROVE THAT THE ASSESSEE HAD INCURRED EXPENSES FOR EARNING EXEMPT INCOME. IF EXEMPT INCOME IS NOT THERE OR NO EXPENDITURE IS CLAIMED BY THE ASSESSEE TOWARDS EARNING EXEMPT INCOME,THEN THERE IS NO JUSTIFICATION FOR MA KING ANY DISALLOWANCE.IN THE CASE UNDER CONSIDERATION, THE ASSESSEE HAD NOT EARNED ANY EXE MPT INCOME DURING THE YEAR,THEREFORE, WE HOLD THAT EVEN PARTIAL DISALLOWANCE WAS NOT JUSTIFI ABLE.GROUND NO.13 IS DECIDED AGAINST AO. 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 22 11.3. SOLITARY GROUND,RAISED BY THE ASSESSEE ,IN ITA 933/MUM/2015 IS ALLOWED, 12. LAST TWO GROUNDS(GOA-14 &15)OF APPEAL ARE ABOUT DEL ETION OF THE ADDITIONS MADE BY THE AO ON ACCOUNT OF PROVISION FOR LEAVE ENCASHMENT(RS. 21.43 CRORES)AND PROVISION FOR GRATUITY (RS. 13.14 CRORES).WHILE COMPUTING THE INCOME OF THE ASS ESSEE AS PER PROVISIONS OF SECTION 115JB OF THE ACT.THE AO DISALLOWED ABOVE MENTIONED SUMS UNDE R THE HEAD PROVISION FOR LEAVE ENCASHMENT AND PROVISIONS FOR GRATUITY RESPECTIVELY .THE FAA FOLLOWING THE EARLIER YEARS ORDER ALLOWED THE APPEAL OF THE ASSESSEE. 12.1 WE FIND THAT WHILE DECIDING THE APPEAL FOR AY .2005 -06 THE TRIBUNAL HAD DEALT WITH THE ISSUE FOR PROVISION FOR LEAVE ENCASHMENT WHILE COMPUTING INCOME AS PER SECTION 115JB OF THE ACT AS UNDER : 19. NOW, WE WILL TAKE THE APPEAL OF THE ASSESSEE FILED FOR THE ASSESSMENT YEAR 2005-06, WHICH HAS BEEN LISTED UNDER ITA NO.7383/MUM/2011. 19.1 IN THE APPEAL OF THE ASSESSEE ONLY ISSUE IS AG AINST CONFIRMING THE ADDITION OF RS.3,49,38,827/-, BEING PROVISION FOR LEAVE ENCASHM ENT IN COMPUTING THE BOOK PROFIT U/S. 115JB OF THE ACT. 19.2 THIS ISSUE WAS INVOLVED IN APPEAL OF THE ASSES SEE FOR ASSESSMENT YEAR 2006-07, LISTED UNDER ITA NO.3865/MUM/2011, WHICH WE HAVE ALREADY DISPOSE D OF AND WE HAVE ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE. FOR THE SAME REASONING, THI S GROUND OF THE ASSESSEE IS ALLOWED. SIMILARLY,WHILE DECIDING THE APPEAL FOR AY.2006-07, THE TRIBUNAL HAS DEALT WITH THE ISSUE OF PROVISION OF GRATUITY (PARA-16, PG-135 TO 137-PB). 16. GROUND NO.15 RELATES TO DELETING ADDITION OF RS .1,04,41,07,743/- MADE U/S. 115JB OF THE ACT. 16.1 THE AO MADE DISALLOWANCE UNDER THE PROVISION F OR GRATUITY IN COMPUTING THE BOOK PROFIT U/S. 115JB OF THE ACT. IT WAS SUBMITTED THAT PROVISION F OR GRATUITY IS AN ASCERTAINED LIABILITY AND AS SUCH IT CANNOT BE ADDED BACK AS A MERE PROVISION IN COMPUTING BOOK PROFIT U/S. 115JB OF THE ACT. PROVISION OF SECTION 115JB WAS EXPLAINED BEFORE THE LEARNED CIT(A). IT WAS SUBMITTED THAT GRATUITY IS A FORM OF RETIREMENT BENEFIT TO THE EMP LOYEES. THE COST OF RETIREMENT BENEFITS TO AN EMPLOYER RESULTS FROM RECEIVING SERVICES FROM THE E MPLOYEES, WHO ARE ENTITLED TO RECEIVE SUCH BENEFITS. CONSEQUENTLY, THE COST OF RETIREMENT BENE FITS IS ACCOUNTED FOR IN THE PERIOD DURING WHICH THESE SERVICES ARE RENDERED. THE LIABILITY TOWARDS LEAVE ENCASHMENT ACCRUES FROM YEAR TO YEAR, ONLY THE PAYMENT IS MADE ON CESSATION OF EMPLOYMENT . THE LIABILITY, THEREFORE, IS IN PRESENT THOUGH IT WILL BE DISCHARGED AT A FUTURE DATE. IT D OES NOT MAKE ANY DIFFERENCE IF THE FUTURE DATE ON WHICH THE LIABILITY SHALL HAVE TO BE DISCHARGED IS NOT CERTAIN. THE LIABILITY CAN BE ESTIMATED WITH REASONABLE CERTAINTY ALTHOUGH IT CANNOT BE QUANTIFI ED WITH PRECISION. IT WAS ALSO SUBMITTED THAT THE COMPANY HAS MADE PROVISION FOR LEAVE ENCASHMENT ON THE BASIS OF ACTUARIAL VALUATION, WHICH IS AS PER ACCOUNTING STANDARD 15 ISSUED BY THE INST ITUTE OF CHARTERED ACCOUNTANTS OF INDIA. THE RELEVANT EXTRACTS FROM THE ACCOUNTING STANDARD 15 W AS ALSO SUPPLIED TO THE LEARNED CIT(A). RELIANCE WAS PLACED ON VARIOUS CASE LAWS INCLUDING DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ECHJAY FORGINGS (P) LTD., RE PORTED IN 251 ITR 15 AND ALSO ON THE DECISION OF THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF I.E. FROM ASSESSMENT YEAR 1998-99 TO 2005-06. AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIA L ON RECORD, LEARNED CIT(A) FOUND THAT THE 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 23 ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF. ACCORDINGLY, ADDITION MADE UNDER THE PROVISION OF SECTION 115JB WAS DELETED BY THE LEARNED CIT(A). 16.2 AFTER CONSIDERING THE ORDER OF THE AO AND LEAR NED CIT(A), WE FOUND THAT LEARNED CIT(A) HAS ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE FOLLOWI NG THE DECISION OF THE TRIBUNAL IN CASE OF ASSESSEE ITSELF AND THE DECISION OF THE HONBLE BOM BAY HIGH COURT N THE CASE OF ECHJAY FORGINGS (P) LTD (SUPRA).ACCORDINGLY, WE CONFIRM THE ORDER O F CIT(A) ON THIS ISSUE ALSO. CONSIDERING THE ABOVE,BOTH THE GROUNDS ARE DECIDED AGAINST THE AO. ITA/933/MUM/15,AY.2008-09: AS STATED EARLIER,THE ONLY ISSUE FILED BY ASSESSEE IS ABOUT DISALLOWANCE MADE U/S. 14A OF THE ACT WHILE CALCULATING INCOME UNDER THE NORMAL PROVISION S AND MAT PROVISIONS. WHILE DECIDING THE APPEAL OF THE AO AT PARA NO.S 11 -11.3,WE HAVE MENTIONED THE FACTS ABOUT THE CASE AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSE E. ITA.S/759-760/MUM/2015-AY.S2010-11 & 2011-12 WE ARE TABULATING THE ISSUES,RAISED BY THE AO,AS PE R THE GROUNDS OF APPEAL,IN A TABULAR FORM FOR SAKE OF CONVENIENCE,FOR THE ABOVE MENTIONED TWO AY. S. ISSUE AY. GOA NO 2010-11 11-12 DISALLOWANCE OF PROVISIONS MADE ON ACCOUNT OF OBSOL ESCENCE CRORES UNDER NORMAL PROVISIONS OF THE ACT 1 1 DISALLOWANCE OF THE DEPRECIATION ON AIRCRAFT ON HIR E PURCHASE 2 4 DISALLOWANCE ON ACCOUNT OF FREQUENT FLYER EXPENSES BOTH UNDER THE NORMAL PROVISIONS AND THE MAT PROVISIONS 3-4 5-6 TREATING INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AS AGAINST BUSINESS INCOME 5 7 EXPENDITURE INCURRED ON REPAIRS OF PREMISES FURNITU RE AND FIXTURE 6 8 DISALLOWANCE U/S.14A OF THE ACT 7 9 PROVISION FOR GRATUITY FOR COMPUTING INCOME U/S.11 5JB OF THE ACT 8 11-12 DISALLOWANCE U/S.40(A)(IA)OF THE ACT 9 10 DISALLOWANCE UNDER NORMAL AND MAT PROVISIONS ON ACC OUNT OF REDELIVERY OF AIRCRAFT. --- 2-3 FOLLOWING OUR ORDERS FOR THE AY.2008-09,WE DISMISS ALL THE GROUNDS RAISED BY THE AO,FOR BOTH THE AY.S. AS A RESULT,ALL THE APPEALS FILED BY THE AO STAND D ISMISSED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH SEPTEMBER, 2017. 933/M/15(08-09) ; 758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- JET AIRWAYS(INDIA) LTD. 24 27 ,2017 SD/- SD/- /PAWAN SINGH) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 27.09.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR J BENCH, ITAT, MUMBAI / , , . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.