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TMI Blog2013 (4) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;ble Jurisdictional High Court in CIT Vs. SRC Aviation Pvt.Ltd. 2012-TIOL-724-HC-DEL-IT. Copies of both these orders are placed before us. The assessee is deriving income from running of the aircrafts. It claimed depreciation at the rate of 40% on such aircrafts. However, the Assessing Officer allowed the depreciation only at the rate of 15% on the ground that the depreciation at the rate of 40% is available only for aeroplanes and not for aircrafts. We find that identical issue is considered by the ITAT Delhi G Bench in the case of SRC Aviation Pvt.Ltd. 2011-TIOL-605-ITAT-DEL, wherein ITAT held as under:- 5. Ld. CIT has invoked his powers u/s 263 in the case of the assessee on the ground that depreciation @ 40% has been claimed by the assessee on the Beechcraft Super King Air B-200C aircraft owned by it and grant of depreciation @ 40% in place of eligible depreciation @ 20% tantamount to an error on the part of the Assessing Officer. The reason given by ld. CIT for holding so is that the Assessing Officer had not investigated this issue and had not made any inquiries in this regard. He also did not ask the assessee to justify its claim regarding depreciation on aircr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eligible for depreciation @ 30%. At the same time, it also provides depreciation for aeroplanesaeroengines under the same block of assets, namely, Plant and machinery and these are eligible for depreciation @ 40%. Taking recourse to such segregation, ld. CIT has observed that the intention of the legislature is to differentiate between aircraft and aeroplane and as old Appendix-I has differentiated between the aeroplaneaeroengines and aeroplane-aircraft and different rates of depreciation have been prescribed, therefore, the contention of the assessee cannot be accepted that the aircraft owned by the assessee is an aeroplane , hence, eligible for higher depreciation. According to ld. CIT, these two terms have different meanings and are eligible for different rates of depreciation. To support this proposition ld. CIT has referred to the decision of Hon ble Bombay High Court in the case of CIT vs. Kirlosker Oil Engines 230 ITR 88 (Bom) and referring to the observations therein ld. CIT has held that the assessee is eligible for depreciation on aircraft @ 25% which is applicable to Machinery and plant and grant of depreciation @ 40% made the order of the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsal Airways Pvt. Ltd. NIL ITO, Ward 18(1), New Delhi. 4. 4th June, 2010 SKB Infractions Pvt. Ltd. NIL ITO, Ward 8(4), New Delhi. 5 5th Feb., 2010 Air India NIL ACIT, Circle 2, Mumbai. 8. To further support the contention that during the course of original assessment proceedings, the Assessing Officer had inquired this point. The assessee had placed on record a copy of letter dated 1st October, 2007 in which the assessee had given the explanation to the Assessing Officer regarding depreciation being eligible @ 40% in place of 25%. When such copy of letter was placed before us, the same was given to the learned DR to take the comments of Assessing Officer as in the assessment order it was not pointed out that whether or not such letter was filed by the assessee. During the course of hearing the learned DR has placed before us copy of correspondence received from the concerned Assessing Officer in which the Assessing Officer though has admitted that such copy is fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t owned by the assessee to show that the aircraft owned by the assessee has fixed wings and it was informed that the aircraft owned by the assessee is a nine-seater. Therefore, it is the case of the learned AR of the assessee otherwise is eligible for depreciation @ 40% and powers u/s 263 have wrongly been exercised by ld. CIT. The order passed by him u/s 263 should be quashed. 10. On the other hand, relying upon the findings recorded by ld. CIT, which have been described in the above part of this order, it is the case of the learned DR that powers u/s 263 have rightly been exercised by ld. CIT and his order should be upheld. 11. We have carefully considered the rival submissions in the light of the material placed before us. Ld. CIT while invoking the power u/s 263 has mainly relied upon the earlier description of depreciation rate which was applicable for assessment years 1984-85 to 1987-88 in which the aeroplane as aircraft and aeroplane as aeroengines were treated differently for the purpose of computing depreciation. From such description of different rates of depreciation, it is the case of ld. CIT that aircraft owned by the assessee cannot be termed to be aeroplane whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c specifications, then, it cannot be said that aeroplane or species thereof will fall under the general head, namely, Machinery and plant which has described the rate of depreciation of 25% for assessment year 2005- 06 and 15% for Assessment Year 2006-07. It may be mentioned here that Item 3 under the head Machinery and Plant of Appendix-I read as under:- Machinery and plant other than those covered by sub-items (ii), (iii) and (viii) below. 15. Therefore, the general rate as described in the relevant Appendix-I create exceptions about the items described under Items (ii), (iii) and (viii). Item (iii) describe aeroplanes-aeroengines . Thus, it will mean that any aeroplanes owned by the assessee will be eligible for depreciation @ 40% as applicable to the relevant assessment years. If the vessel owned by the assessee falls under the broad head aeroplane , then, it will be eligible for depreciation @ 40%. For that purpose, we have to analyse whether the aircraft owned by the assessee falls under the head aeroplane and simply if it falls within the species of aeroplane and it is an aircraft whether it can be considered for depreciation under the head Machinery and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r-thanair or heavier-than-air. Several distinct types are recognized within each group. Each may perform a variety of missions calling for modifications for special usage. Lighter-than-air craft rise and float because they displace a volume of air the weight of which is equal to or greater than the total weight of the aircraft. Such aircraft include balloons and airships. Heavier-than-air craft derive their flight capability (lift) from the dynamic reaction of air flowing around suitably shaped surfaces (wings or airfoils). Such craft include gliders and sailplanes, conventional airplanes, short takeoff and landing (STOL) airplanes, and vertical takeoff and landing (VTOL) aircraft. 16.2. The International Civil Aviation Organisation (ICAO) in its Aviation Glossary Terms Definitions has defined Aircraft and Aeroplane as under:- Aircraft An aircraft is any machine that can derive support in the atmosphere from the reactions of the air other than the reactions of the air against the earth s surface (ICAO Annex.1, Annex 6 Part I). Aeroplane A power driven heavier than air aircraft, deriving its lift in flight chiefly from aerodynamic reactions on surfaces which rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of the above discussion, we are of the opinion that powers u/s 263 have been wrongly exercised by the ld. CIT to hold that the assessee is eligible for depreciation on its aircraft @ 25% in place of 40% claimed by it. Therefore, we set aside the order passed by the ld. CIT for both the years and allow the appeals filed by the assessee. 4. The above order of the ITAT was challenged by the department before the Hon'ble Jurisdictional High Court which upheld the same in ITA No.487 to 490/2012 reported in 2012-TIOL-724-HC-DEL-IT and held as under:- A combined reading of all these definitions will be that aeroplane in comparison to aircraft has a fixed wings and is powered by propellers or jets. Though both the definitions have been given by the CIT in his order, but he has ignored the submission of the assessee that aircraft owned by it has fixed wings and is powered by propellers or jets on the ground that it should be heavier than the aircraft. We find no justification in such observations of CIT that the aircraft of the assessee should not be described as aeroplane simply for the reason that aeroplane is a machine much bigger, heavier and powerful than an ai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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