India Flysafe Aviation Ltd., New Delhi V. DCIT, New Delhi

ITA 969/DEL/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5828 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 20-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SARAS KUMAR
• Assessee Lawyers: SSH SALIL KAPOOR
• Keywords: Depreciation; Revenue expenditure; Capital expenditure; Set aside
• Section: 143(3); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C, NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE, SHRI G.S. PANNU, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.969/DEL/2017 (ASSESSMENT YEAR-2012-13) INDIA FLYSAFE AVIATION LIMITED, 306, 3 RD FLOOR, G+5 BUILDING IGI AIRPORT (DOMESTICS) PALAM, NEW DELHI-110037 PAN:AAHCS 8618Q VS. D Y. CIT, CIRCLE-12(1), NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY S/SH. SALIL KAPOOR & SUMIT LALCHANDANI, ADV. RESPONDENT BY SH. SARAS KUMAR, SR.DR DATE OF HEARING 07.07.2020 DATE OF PRONOUNCEMENT 30.09.2020 ORDER PER SUDHANSHU SRIVASTAVA, JM: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSE E AGAINST ORDER DATED 29.11.2016 PASSED BY THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS)-35, NEW DELHI {CIT (A)} FOR AS SESSMENT YEAR 2012-13. 2 ITA NO.969/DEL/2017 INDIA FLYSAF E AVIATION LTD. VS. DCIT 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS A COMPANY ENGAGED IN THE BUSINESS OF PROVIDING AIRCRA FTS ON CHARTER BASIS TO VVIPS, STATE GOVERNMENTS, CORPORATE HOUSES , TRAVEL AGENTS, TOUR OPERATORS ETC. THE RETURN OF INCOME WA S FILED DECLARING A TOTAL LOSS OF RS.13,84,52,185/-. THE RE TURN WAS SUBSEQUENTLY REVISED DECLARING TOTAL LOSS OF RS.14, 77,18,185/-. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY AND THE AS SESSMENT WAS COMPLETED AT A LOSS OF RS.13,69,68,735/- AFTER MAKI NG THE FOLLOWING DISALLOWANCES: (I) DISALLOWANCE OF DEFERRED REVENUE EXPENDITURE WR ITTEN OFF - RS.92,63,156/-. (II) DISALLOWANCE ON ACCOUNT OF REPAIRS TREATED AS CAPITAL EXPENSES - RS.11,45,026/-. (III) ADDITION ON ACCOUNT OF INTEREST ON INCOME TA X REFUND - RS.3,41,268/-. 2.1 AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. FIRST APPELLATE AUTHORITY. THE LD. CIT (A) UPHELD THE DIS ALLOWANCE ON ACCOUNT OF DEFERRED REVENUE EXPENDITURE. THE LD. CI T (A) ALSO UPHELD THE DISALLOWANCE OF REPAIRS. WITH RESPECT TO INTEREST ON 3 ITA NO.969/DEL/2017 INDIA FLYSAF E AVIATION LTD. VS. DCIT INCOME TAX REFUND, THE ASSESSING OFFICER (AO) WAS D IRECTED TO VERIFY THE CONTENTION OF THE ASSESSEE AND COMPUTE THE CORR ECT INTEREST FOR THE PURPOSES OF TAXATION. 2.2 NOW, THE ASSESSEE IS BEFORE THIS TRIBUNAL AND HAS CHALLENGED THE FINDINGS OF THE LD. CIT (A) BY RAISI NG THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE CIT (A) ERRED ON FACTS AND IN L AW IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN MA KING A DISALLOWANCE OF RS.92,63,156 ON ACCOUNT OF DEDUCTIO N FOR DEFERRED REVENUE EXPENDITURE INCURRED IN RESPECT OF MAINTENANCE AND OVERALL CHECK-UP (IN COMPLIANCE WIT H DGCA GUIDELINES) OF HELICOPTER EC145 TAKEN ON LEASE. 1.1 THAT THE CIT (A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN MA KING THE AFORESAID DISALLOWANCE WITHOUT APPRECIATING THAT MAINTENANCE AND OVERALL CHECK-UP EXPENSES UNDER CONSIDERATION WERE INCURRED IN A PRECEDING ASSESSME NT YEAR AND SUO MOTU AMORTIZED BY THE APPELLANT OVER THE LE ASE PERIOD OF THE HELICOPTER. 1.2 THAT THE CIT (A) ERRED ON FACTS AND IN LA W IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN MA KING THE AFORESAID DISALLOWANCE ON THE BASIS THAT COPY OF LE ASE AGREEMENT AND INVOICES WERE NOT FURNISHED BY THE AP PELLANT WITHOUT APPRECIATING THAT THE FACT OF TAKING HELICO PTER ON LEASE AND PAYMENT OF LEASE RENTALS BY THE APPELLANT WERE UNDISPUTED AND AGREED FACTS. 4 ITA NO.969/DEL/2017 INDIA FLYSAF E AVIATION LTD. VS. DCIT 1.3 THAT THE CIT (A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN MA KING THE AFORESAID DISALLOWANCE ON THE BASIS THAT COPY OF LE ASE AGREEMENT AND INVOICES WERE NOT FURNISHED BY THE AP PELLANT WITHOUT CONSIDERING THAT THE SAID DOCUMENTS WERE NE VER ASKED FROM THE APPELLANT DURING THE APPELLATE PROCE EDINGS. 1.4 THAT THE CIT (A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN MA KING THE AFORESAID DISALLOWANCE ON THE BASIS THAT APPELLANT TOOK THE HELICOPTER ON LEASE IN A PRECEDING ASSESSMENT YEAR. 1.5 THAT THE CIT (A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN MA KING THE AFORESAID DISALLOWANCE WITHOUT PUTTING ANY COGENT R EASONS ON RECORD IN RESPECT OF THE SAME. 1.6 WITHOUT PREJUDICE, THE CIT (A) ERRED ON FAC TS AND IN LAW IN NOT DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION OF THE AFORESAID EXPENDITURE UNDER CONSIDERATION IN THE YEAR IN WHICH THE SAME WAS INCURRED. 2. THAT THE CIT (A) ERRED ON FACTS AND IN LA W IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN MA KING A DISALLOWANCE OF RS.11,45,026 ON ACCOUNT OF DEDUCTIO N FOR REGULAR REPAIRS AND MAINTENANCE OF AIRCRAFT, AFTER CAPITALIZING THE SAME AND ALLOWING DEPRECIATION THE REON AT APPLICABLE RATES. 2.1 THAT THE CIT (A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN MA KING THE AFORESAID DISALLOWANCE WITHOUT APPRECIATING THAT ON ACCOUNT OF REPAIRS AND MAINTENANCE UNDER CONSIDERAT ION NO NEW ASSET CAME IN EXISTENCE RATHER SOME OLD PARTS ( DUE TO WEAR AND TEAR) OF AIRCRAFT WERE REPLACED. 5 ITA NO.969/DEL/2017 INDIA FLYSAF E AVIATION LTD. VS. DCIT 2.2 THAT THE CIT (A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN MA KING THE AFORESAID DISALLOWANCE WITHOUT PUTTING ANY COGENT R EASONS ON RECORD IN RESPECT OF THE SAME. 2.3 THAT THE CIT (A) ERRED ON FACTS AND IN LA W IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN MA KING THE AFORESAID DISALLOWANCE WITHOUT APPRECIATING THAT TH E ISSUE UNDER CONSIDERATION PERTAINED TO MERE TIMING DIFFER ENCE OF DEDUCTION, WHICH SHOULD NOT BE PRESSED MUCH BY THE DEPARTMENT. 3. THAT THE CIT (A) ERRED ON FACTS AND IN LAW IN NOT DIRECTING THE ASSESSING OFFICER TO DELETE THE ADDIT ION OF RS.3,41,268 MADE ON ACCOUNT OF INTEREST ON INCOME T AX REFUND, SINCE, THE SAID INTEREST WAS NEVER RECEIVED BY THE APPELLANT. 3.1 THAT THE CIT (A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE INCOME-TAX DEPARTMENT HAD NOT PROVIDED ANY DETAILS OF TAX REFUND PROVIDED TO THE APPELLANT AND THEREFORE, THE SAME COULD NOT BE BIFURCATED INT O PRINCIPLE AND INTEREST SEPARATELY. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR VARY FROM THE AFORESAID GROUNDS OF APPEAL AT OR BEFORE T HE TIME OF HEARING. 3.0 THE LD. AUTHORIZED REPRESENTATIVE (AR) S UBMITTED THAT GROUND NO.1 CHALLENGES THE DISALLOWANCE OF RS.92,63, 156/- MADE ON ACCOUNT OF DEDUCTION FOR DEFERRED REVENUE EXPEND ITURE IN RESPECT OF MAINTENANCE AND OVERALL CHECK-UP OF HELICOPTER E C145 TAKEN ON LEASE. IT WAS SUBMITTED THAT THIS HELICOPTER HAD BEE N TAKEN ON LEASE 6 ITA NO.969/DEL/2017 INDIA FLYSAF E AVIATION LTD. VS. DCIT AND THE ASSESSEE HAD INCURRED AN AMOUNT OF APPROXIM ATELY 2.6 CRORES ON ACCOUNT OF MAINTENANCE AND REPAIRS CARRIE D OUT IN COMPLIANCE WITH THE DGCA GUIDELINES. IT WAS SUBMITTE D THAT DURING THE ASSESSMENT YEAR 2010-11 BOTH THE ENGINES OF THE HELICOPTER HAD GOT DAMAGED AND, THEREFORE, THE ENGINES WERE RE PAIRED AND A MAJOR CHANGE WAS DONE ON THE RECOMMENDATION OF THE MANUFACTURER OF THE AIRCRAFT. IT WAS SUBMITTED THAT IN VIEW OF THE QUANTUM OF EXPENDITURE, IT WAS FELT NECESSARY TO AMO RTIZE THE EXPENDITURE OVER THE UNEXPLAINED LEASE PERIOD. IT WAS SUBMITTED THAT THE ACCOUNTING TREATMENT ADOPTED FOR BOOKING T HE EXPENDITURE BY SPREADING THE EXPENSES OVER THE REMAINING PERIOD OF LEASE WAS JUSTIFIED NOT ONLY BECAUSE OF THE HUGE AMOUNT INVOL VED, BUT ALSO BECAUSE OF THE BENEFIT ACCRUING FOR THE REMAINING P ERIOD OF LEASE. RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE KOL KATA HIGH COURT IN THE CASE OF HINDUSTAN ALUMINUM CORPORATION LTD. VS. CIT REPORTED IN [1983] 144 ITR 474 (KOL.) AND ALSO ON THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORATION LTD. VS. CIT REPORTED IN [1997] 225 IT R 802 (SC) TO SUPPLEMENT THE ASSESSEES ARGUMENT THAT WHERE THE RE VENUE 7 ITA NO.969/DEL/2017 INDIA FLYSAF E AVIATION LTD. VS. DCIT EXPENDITURE INCURRED IS OF A CONSIDERABLE MAGNITUDE AND ITS BENEFIT CAN BE SPREAD OVER A NUMBER OF YEARS, THE SAME HAS TO BE ALLOWED ON A DEFERRED BASIS OVER THE PERIOD OF BENEFIT THER EOF. IT WAS ALSO BROUGHT TO THE NOTICE OF THE BENCH THAT THE SAID EX PENDITURE WAS INCURRED IN ASSESSMENT YEAR 2010-11 AND THE SAME HA D BEEN ALLOWED AS DEFERRED REVENUE EXPENDITURE IN ASSESSME NT YEARS 2010- 11 AND 2011-12 BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT). THE LD. AUTHORIZED REPRESENTATIVE ALSO SUBMITTED THAT THE LD. CIT (A) HAD ERRED IN CONFIRMING THE DISALLOWANCE BY MAKING THE OBSERVATI ON THAT THE LEASE AGREEMENT AND INVOICES HAD NOT BEEN FURNISHED BY THE ASSESSEE WITHOUT APPRECIATING THAT THE SAID DOCUMENT S HAD NOT BEEN REQUISITIONED BY THE LD. CIT (A) DURING THE CO URSE OF APPELLATE PROCEEDINGS. 3.1 WITH RESPECT TO GROUND NO.2, IT WAS SUB MITTED BY THE LD. AUTHORIZED REPRESENTATIVE THAT THIS GROUND CHALLENG ES THE ACTION OF THE LD. CIT (A) IN UPHOLDING DISALLOWANCE OF RS.11,4 5,026/- MADE ON ACCOUNT OF REGULAR REPAIRS AND MAINTENANCE OF AI RCRAFT AFTER CAPITALIZING THE SAME AND ALLOWING DEPRECIATING THE REON. THE LD. 8 ITA NO.969/DEL/2017 INDIA FLYSAF E AVIATION LTD. VS. DCIT AUTHORIZED REPRESENTATIVE SUBMITTED THAT AN AMOUNT OF RS.19,08,376/- HAD BEEN INCURRED ON REPAIRS AND MAI NTENANCE OF AIRCRAFTS WHICH HAD BEEN DISALLOWED BY THE ASSESSIN G OFFICERING BY TREATING THE SAME AS BEING CAPITAL IN NATURE AND CA PITALIZING THE SAME UNDER THE HEAD ON AIRCRAFTS AND, THEREAFTER, ALLOWING DEPRECIATION @ 40% THEREON. THE LD. AUTHORIZED REP RESENTATIVE SUBMITTED THAT THE REPAIRS HAD BEEN IN THE NATURE O F REPAIRING THE PRIMARY ADAPTIVE DISPLAY, AND TAIL ROTOR BLADE A SSEMBLY. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE REPAIR S OF THESE TWO COMPONENTS PARTS DO NOT INCREASE THE USEFUL LIFE OF THE AIRCRAFT AND THAT THEIR REPLACEMENT IS IN THE NATURE OF REVENUE EXPENDITURE. IT WAS SUBMITTED THAT BOTH THESE UNITS WERE FOUND FAULTY AND WERE NOT REQUIRED TO BE REPLACED AS PER THE DCGA GUIDELINES AND THEREFORE THE SAME WAS NOT A CAPITAL EXPENDITURE. RELIANCE WAS PLACED ON THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF NEW SHORROCK SPINNING AND MANUFACTURING CO. LTD. VS. CIT [ 1956 ] 30 ITR 338 (SC) AND ALSO IN THE CASE OF MR. BALLIMAL NAVAL KISHORE VS. CIT REPORTED IN [1997] 224 ITR 414 (SC). RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JAGATJIT 9 ITA NO.969/DEL/2017 INDIA FLYSAF E AVIATION LTD. VS. DCIT INDUSTRIES LTD. REPORTED IN [2000] 241 ITR 566 FOR THE PROPOSITION THAT THE REPLACEMENT OF PARTS OF EXISTING MACHINER Y WILL BE REVENUE EXPENDITURE. 3.2 WITH RESPECT TO GROUND NO.3 CHALLENGING TH E ADDITION OF RS.3,41,268/- MADE ON ACCOUNT OF INTEREST ON INCOME TAX REFUND, THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT TH E ASSESSEE HAD NEVER RECEIVED THE SAID INTEREST. THE LD. AUTHORIZE D REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER MAY BE DIRECTE D TO VERIFY THE FACT AND ALLOW RELIEF TO THE ASSESSEE AFTER SUCH VER IFICATION. 4.0 IN RESPONSE, THE LD. SR. DEPARTMENTAL REP RESENTATIVE (DR) SUBMITTED THAT THE DOCUMENTS AND VOUCHERS RELEVANT TO THE LEASE AGREEMENT AND THE VOUCHERS FOR THE REPAIRS CLAIMED TO HAVE BEEN DEFERRED REVENUE EXPENDITURE WERE NOT FURNISHED BEF ORE THE LD. CIT(A) AND THEREFORE, HE WAS NOT IN A POSSESSION TO GIVEN RELIEF TO THE ASSESSEE. 4.1 WITH RESPECT TO THE DISALLOWANCE OF REPAIR S AND MAINTENANCE OF AIRCRAFTS, THE LD. SR. DR PLACED RELIANCE ON THE CONCURRENT FINDING OF BOTH THE LOWER AUTHORITIES AND ARGUED TH AT THE DISALLOWANCE HAD BEEN RIGHTLY MADE. 10 ITA NO.969/DEL/2017 INDIA FLYSAF E AVIATION LTD. VS. DCIT 4.2 WITH RESPECT TO THE ISSUE OF INTEREST OF INCOME TAX REFUND, THE LD. SR. DR AGREED TO THE PRAYER OF THE LD. AUTH ORIZED REPRESENTATIVE THAT THE ISSUE TO BE VERIFIED BY THE ASSESSING OFFICER. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND H AVE ALSO PERUSED THE MATERIAL ON RECORD. AS FAR AS GROUND NO.1, THE ASSESSEES APPEAL IS CONCERNED, IT IS SEEN THAT THE ASSESSING OFFICER HAS MADE A DISALLOWANCE OF RS.92,63,156/- ON THE PREMISE THAT THESE EXPENSES WERE PRIOR PERIOD EXPENSES NOT RELATING TO THE YEAR UNDER CONSIDERATION I.E., ASSESSMENT YEAR 2012-13. THE LD . CIT (A), WHILE UPHOLDING THE DISALLOWANCE, HAS NOTED THAT THE ASSE SSEE HAS NOT FURNISHED COPY OF THE LEASE AGREEMENT AND, THEREFOR E, THE EXACT PERIOD OF LEASE COULD NOT BE VERIFIED. IT HAS ALSO BEEN NOTED BY THE LD. CIT (A) THAT THE ASSESSEE HAS NOT FURNISHED ANY BILLS OR VOUCHERS FOR REPAIRS OF THE HELICOPTER AND THAT IT COULD NOT BE ASCERTAINED THAT THE REPAIRS WERE THE RESPONSIBILITY OF THE ASSESSEE. IT IS SUBMISSION OF THE ASSESSEE THAT THESE DOCUMEN TS WERE NOT DIRECTED TO BE FILED BY THE LD. CIT (A) AT THE TIME OF FIRST APPELLATE PROCEEDINGS. THE LD. AUTHORIZED REPRESENTATIVE HAS PLACED A COPY 11 ITA NO.969/DEL/2017 INDIA FLYSAF E AVIATION LTD. VS. DCIT OF THE LEASE AGREEMENT AS WELL AS THE RELEVANT BILL S AND VOUCHERS IN THE PAPER BOOK FILED BEFORE US. IT HAS ALSO BEEN SU BMITTED BY THE LD. AUTHORIZED REPRESENTATIVE THAT THE IMPUGNED EXP ENDITURE HAD BEEN ALLOWED BY THE ASSESSING OFFICER IN THE EARLIE R TWO ASSESSMENT YEARS I.E., 2010-11 AND 2011-12 IN 143(3) PROCEEDIN GS. HOWEVER, THE COPY OF THOSE TWO ASSESSMENT ORDERS HAVE NOT BEE N FILED BEFORE US SO AS TO ENABLE US TO ASCERTAIN AS TO WHETHER THE SAME WAS EXAMINED B THE ASSESSING OFFICER IN THOSE TWO ASSESS MENT YEARS. IN THE YEAR UNDER CONSIDERATION, THE ISSUE DOES NOT SE EM TO HAVE BEEN EXAMINED BY THE ASSESSING OFFICER IN THE PROPER PER SPECTIVE I.E. WITH REFERENCE TO THE LEASE AGREEMENT. WE ALSO NOTE THAT EVEN THE LD. CIT (A) DID NOT EXAMINE THE RELEVANT DOCUMENTS. THEREFO RE, IT IS OUR CONSIDERED OPINION THAT THE ISSUE BE RESTORED TO TH E FILE OF THE ASSESSING OFFICER FOR DULY CONSIDERING THE CLAIM OF THE ASSESSEE AFTER GOING THROUGH CONTENTS OF THE LEASE DEED AS WELL AS THE RELEVANT BILLS AND VOUCHERS. IT IS SO DIRECTED ACCORDINGLY. WHILE THE ASSESSING OFFICER IS RE-EXAMINING THE ISSUE, HE SHOULD ALSO C ONSIDER THE FACTUM OF SIMILAR EXPENDITURE HAVING BEEN ALLOWED I N 143(3) PROCEEDINGS IN ASSESSMENT YEARS 2010-11 AND 2011-12 . THE 12 ITA NO.969/DEL/2017 INDIA FLYSAF E AVIATION LTD. VS. DCIT ASSESSING OFFICER IS ALSO DIRECTED TO GIVE PROPER O PPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE BEFORE PASSING THE ORD ER IN ACCORDANCE WITH LAW. 5.1 SO FAR AS THE GROUND NO.2 OF THE ASSESSEES APPEAL IS CONCERNED, IT IS SEEN THAT THE ASSESSEE HAD DEBITED AN AMOUNT OF RS.5,34,10,000/- ON ACCOUNT OF REPAIRS AND MAINTENA NCE AND OUT OF THIS EXPENDITURE, REPLACEMENT OF PRIMARY ADAPTIVE D ISPLAY AMOUNTING TO RS.9,51,000/- AND REPLACEMENT OF TAIL ROTOR BLADE ASSEMBLY AMOUNTING TO RS.9,57,376/- WAS DISALLOWED O N THE GROUND THAT THE SAME WAS CAPITAL IN NATURE. AS PER THE ASSESSING OFFICER, THIS REPLACEMENT WAS IN THE NATURE OF MAJO R REPAIRS WHICH ADDED TO THE LIFE OF THE ASSET. THE LD. CIT (A), WHI LE DISMISSING THE ASSESSEES APPEAL, ALSO HELD THAT THESE WERE REPAIR S OF A NATURE WHICH ENHANCED THE EFFICIENCY OF THE AIRCRAFT AND WER E NOT PART OF THE REGULAR MAINTENANCE EXPENSES. IT IS THE ASSESSE ES CONTENTION, ON THE OTHER HAND, THAT THESE REPLACEMENTS WERE NEC ESSARILY IN THE NATURE OF CURRENT REPAIRS WHICH WERE REQUIRED TO MAI NTAIN/PRESERVE AN ALREADY EXISTING ASSET. WE AGREE WITH THE CONTENT ION OF THE LD. AUTHORIZED REPRESENTATIVE THAT THE QUANTUM OF EXPEN DITURE CANNOT 13 ITA NO.969/DEL/2017 INDIA FLYSAF E AVIATION LTD. VS. DCIT DETERMINE WHETHER A PARTICULAR EXPENDITURE IS CAPITA L OR REVENUE IN NATURE. IN OUR OPINION, REPLACEMENT OF PRIMARY ADAP TIVE DISPLAY AND TAIL ROTOR BLADE ARE ESSENTIAL TO KEEP THE AIRC RAFT IN A RUNNING USABLE CONDITION AND THE REPLACEMENTS DO NOT ENHANC E THE USEFUL LIFE OF THE AIRCRAFT. THUS, THE IMPUGNED REPAIRS WO ULD FALL UNDER CURRENT REPAIRS WHICH WERE ESSENTIAL TO KEEP THE A IRCRAFT IN A RUNNING CONDITION. THEREFORE, WE SET ASIDE THE ORDE R OF THE LD. CIT (A) ON THE ISSUE AND DIRECT THE ASSESSING OFFICER T O DELETE THE DISALLOWANCE. 5.2 IN GROUND NO.3 CHALLENGING THE ADDITIO N ON ACCOUNT OF INTEREST OF INCOME TAX REFUND, IT IS THE ASSESSEES CONTENTION THAT THE ASSESSEE HAS NOT RECEIVED ANY SUCH INTEREST. TH E LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT THE ISSUE MAY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR PASSING APPROPRIA TE ORDER AFTER DUE VERIFICATION IN THIS REGARD AND THE LD. SR. DR ALSO DOES NOT HAVE ANY OBJECTION TO THE SAME. THEREFORE, IN VIEW OF THE AGREEMENT OF BOTH THE PARTIES, THIS ISSUE IS ALSO RESTORED TO TH E FILE OF THE ASSESSING OFFICER FOR THE PURPOSE OF BEING ADJUDICA TED AFRESH AFTER 14 ITA NO.969/DEL/2017 INDIA FLYSAF E AVIATION LTD. VS. DCIT DUE VERIFICATION OF THE ASSESSEES CLAIM AND AFTER GIVING A PROPER OPPORTUNITY TO THE ASSESSEE IN THIS REGARD 6.0 IN THE FINAL RESULT, THE APPEAL OF THE ASS ESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 30/09/2020. SD/- SD/- (G.S.PANNU) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDICIAL MEM BER DATED: 30/09/2020 PK/PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI