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TMI Blog2010 (10) TMI 1243X X X X Extracts X X X X X X X X Extracts X X X X ..... On appeal, the ld. CIT(A) while deleting all the impugned disallowances partly allowed the appeal of the assessee. 3. Being aggrieved by the order of the ld. CIT(A) the Revenue is in appeal before us taking following grounds of appeal. 4. Ground No.1. reads as under - 1. On the facts and in the circumstances of the case and as per law, the learned CIT(A) erred in deleting the addition made by Assessing Officer of Rs.18,27,38,472/- on account of provision for obsolescence. 5. The brief facts of the above issue are that on perusal of profit and loss account the Assessing Officer noted that the assessee company has debited a sum of Rs.18,27,38,472/- towards provision for spares obsolescence shown under the schedule of operating expenses. The Assessing Officer after considering the assessee s submission was of the view that the provision for obsolescence is an estimated liability which is contingent in nature. The said claim therefore cannot be allowed since it has not been actually incurred or expended during the year. Accordingly, he disallowed the claim of provision for obsolescence of Rs.18,27,38,472/- and added to the total income of the assessee. On appeal the ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation for the purposes of section 2-5 and 350 of the same Act. In fact, the rate of depreciation prescribed under the Income-Tax Act is @ 40% which is definitely higher than 5.6%. It is the 5.6% of the actual expenditure incurred by the assessee. The stores and spares which go obsolescence due to usage and normal wear and tear have a useful life over the life of the aircraft beyond a year. If such expenses are claimed on actual basis on the purchase of such inventory, assessee s claim will have been much larger and the assessee s claim, in our view, in the light of the table extracted above, is very much reasonable and deserves to be accepted in the light of the method of accounting regularly followed by it. The Assessing Officer may ensure that the assessee does not claim more than the actual cost as deduction in; the form of annual write off to the profit and loss account. In view of the fact that we have accepted the main contention of the assessee, the other alternative prayers are not acceded to. The Tribunal in the recent case after following the above order has rejected the similar ground taken by the revenue vide order dated 4.1.2010, supra. In the absence of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be said that the claims of the assessee are only contingent in nature and are not the accrued liabilities. In fact, in the nature of the assesee s business the assessee has to incur these expenses. The only uncertainty is the actual time of the expenditure. But the expenditure itself has to be incurred because of the flying hours completed. Even the quantum of the expenditure provided for in the accounts are based on the opinion of the technical people. The independence of such authorities is not in serious dispute by the revenue authorities .., has upheld the order of the ld. CIT(A) in deleting the disallowance made by the Assessing Officer . The Tribunal in the recent case also after following the above order of the Tribunal has rejected the similar ground taken by the revenue vide order dated 4.1.2010, supra. In the absence of any distinguishing feature brought on record by the revenue we respectfully, following the order of the Tribunal(supra), and the rule of consistency decline to interfere with the order passed by the ld. CIT(A) on this account and accordingly the grounds taken by the revenue are rejected. 12. Ground No. 4. reads as under :- 4. On the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Corporation Ltd. Vs CIT (239 ITR 142) has held vide para-16 of the order dated 30th May, 2006 as under : ..... we agree with the view of the ld. CIT(A) that the conditions laid down in the said clause 30 are nothing but more than the routine formalities that are to be performed by the hirer. Such terms and conditions are usually part and parcel of every hire purchase agreement. To avoid these controversies the Board has issued circulars from time to time enabling the hirer to claim depreciation on assets acquired under what is known as hire purchase agreements. The Madras High court in the case of Tamil Nadu Dairy Development Corporation Ltd. (supra), has also considered similar agreement and upheld the claim of depreciation on the assets acquired under similar hire purchase agreement. Therefore, the CIT(A) was right in law in directing the allowance of depreciation on the two aircrafts acquired by the assessee and we decline to interfere. The Tribunal in the recent case also after following the above order has rejected the similar ground taken by the revenue vide order dated 4.1.2010, supra. In the absence of any distinguishing feature brought on record by the revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a better working atmosphere to its employees and also to give an aesthetic look to its customers. Therefore, the expenditure in question is purely revenue in nature and is directed to be allowed after withdrawing depreciation allowed by the Assessing Officer. The Tribunal in the recent case also after following the above order has rejected the similar ground taken by the revenue vide order dated 4.1.2010, supra. In the absence of any distinguishing feature brought on record by the revenue we respectfully, following the order of the Tribunal(supra), and the rule of consistency decline to interfere with the order passed by the ld. CIT(A) on this account and accordingly the ground taken by the revenue is rejected. 20. Ground No. 6. reads as under :- 6. On the facts and in the circumstances of the case and as per law, the learned CIT(A) erred in deleting the addition made by Assessing Officer in respect of provisions made for frequent flyer expenses of Rs.6,31,36,406. 21. The brief facts of the above issue are that it was observed by the Assessing Officer that as per company s accounting policy as mentioned in schedule S, of the assessee company accounts for frequent flyer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the provision made by the assessee is in respect of a contingent liability. The principle laid down by the Hon ble Supreme Court supra, equally applies to the scheme in question and the claim of the assessee has been properly appreciated by the ld. CIT(A) and his order is confirmed. The Tribunal in the recent case also after following the above order has rejected the similar ground taken by the revenue vide order dated 4.1.2010, supra. In the absence of any distinguishing feature brought on record by the revenue we respectfully, following the order of the Tribunal(supra), and the rule of consistency decline to interfere with the order passed by the ld. CIT(A) on this account and accordingly the ground taken by the revenue is rejected. 24. Ground No.7. reads as under :- 7. On the facts and in the circumstances of the case and as per law, the ld. CIT(A) erred in directing the Assessing Officer to treat interest income on fixed deposits of Rs. 30,63,78,087/- as profit from business and profession rather than as income from other sources as held by Assessing Officer. 25. The brief facts of the above issue are that on perusal of the P L Account it was observed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly the ground taken by the revenue is rejected. 28. Ground No. 8 reads as under :- 8. On the facts and in the circumstances of the case and as per law, the learned CIT(A) erred in allowing the additional claim of Rs.2,80,49,904/- for proportionate initial rent paid and other expenses incurred on aircraft acquired on finance lease although the assessee company failed to make the said claim through a revised return as provide in the Act. 29. The brief facts of the above issue are that it was observed by the Assessing Officer that the assessee during the course of hearing filed an additional claim for proportionate initial rent paid and other expenses incurred on aircraft acquired on finance lease amounting to Rs.2,80,49,904/-. The Assessing Officer after considering the assessees explanation that the additional claim is allowable u/s.37 of the Act was of the view that since the assessee has made claim by way of separate letter and no revised return was filed making such additional claim, therefore, following the judgment of Hon ble Supreme Court in Goetze (India) Ltd. vs. CIT reported in 284 ITR 323(SC), there is no need to examine the issue on merits and accordingly he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the ld. DR supports the order of the Assessing Officer. 31. On the other hand the ld. Counsel for the assessee while relying on the order of the ld. CIT(A) also relied on the decision of the Tribunal in Emerson Network Power India (P) Ltd. vs. ACIT (2009) 122 TTJ (Mum.) 67 wherein the Tribunal following the decision in Chicago Pneumatic India Ltd. vs. DCIT (2007) 15 SOT 252 (Mum.) has held that the Assessing Officer was obliged to give due relief to the assessee or entertain its claims if admissible as per law even though the assessee had not filed the revised return. He therefore, submits that the order passed by the ld. CIT(A) be upheld. 32. We have carefully considered the submissions of the rival parties and perused the material available on record. We find that the facts are not in dispute inasmuch as it is also not in dispute that the impugned claim has been allowed in past. It was disallowed on the ground that the assessee has made the claim through its letter without filing any revised return as held by the Hon ble Supreme Court in Goetze (India) Ltd. vs. CIT (2006) 284 ITR 323 (SC). In the absence of any other material placed on record by the ld. DR to show that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee in its accounts based on International Accounting Standard should be treated as provision and liabilities incurred in the course of the business and the same is in the nature of ascertained liabilities and proper debit to the profit and loss account, the contentions of the revenue have no force. Apart from the above and in the light of the principle laid down by the supreme Court in the case of Apollo Tyres (supra), the AO is not permitted to make adjustment while determining the book profit for the purpose of section 115 JB of the Act. Accordingly, we allow this ground of the assessee. The Tribunal in the recent case also after following the above order of the Tribunal has rejected the similar ground taken by the revenue vide order dated 4.1.2010, supra. In the absence of any distinguishing feature brought on record by the revenue we respectfully, following the order of the Tribunal(supra), and the rule of consistency decline to interfere with the order passed by the ld. CIT(A) on this account and accordingly the ground taken by the revenue is rejected. 37. Ground No.10. and 11 read as under :- 10. On the facts and in the circumstances of the case and as per law, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the second proviso to sec.115JB(2) of the Act the issue with regard to the provisions for doubtful debt to book profit is decided against the assessee and in favour of the revenue. The ground No.10 taken by the revenue is, therefore, allowed. 42. However, with regard to the provision for gratuity to book profit we find merit that the issue is squarely covered against the revenue and in favour of assessee by the order of the Tribunal supra wherein the Tribunal vide para-7 of its order dated 27.11.2007 while observing that the issue is covered by the judgment of Jurisdictional High Court in CIT vs. Echjay Forgings Pvt. Ltd. 251 ITR 15 (Bom.) in which it has been held that the provisions for gratuity has been made on the basis of actual calculations such it was an ascertained liability and the said amount cannot be added to the net profit, deleted the addition made by the Assessing Officer and sustained by the ld. CIT(A). The Tribunal in the recent case also after following the above order of the Tribunal has rejected the similar ground taken by the revenue vide order dated 4.1.2010, supra. In the absence of any distinguishing feature brought on record by the revenue we respec ..... 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