INTER GLOBLE AVIATION LTD,DELHI vs. ACIT CIRCLE-10(1) ,, NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’, NEW DELHI BEFORE SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SH. NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER ITA No. 2539/Del/2022 (Assessment Year : 2018-19) Inter Globle Aviation Ltd. Vs. ACIT Upper Ground Floor, Circle – 10(1) Westren Wing, Thapper New Delhi House-124, Janpath, New Delhi-110001 PAN No. AABCI 2726 B (APPELLANT) (RESPONDENT) Assessee by Shri Rohit Jain, Adv. Ms. Soumya Jain, Adv. Revenue by Shri Anuj Garg, Sr. D.R. Date of hearing: 22.02.2023 Date of Pronouncement: 22.03.2023 ORDER PER ANIL CHATURVEDI, AM: This appeal filed by the assessee is directed against the order dated 14.09.2022 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) - Delhi relating to Assessment Year 2018-19.

ITA No.2539/Del/2022 Inter Globle Aviation Ltd vs ACIT 2 3. Assessee is a company stated to be engaged in the business of operation of Airlines under the name and style of Indigo. Assessee electronically filed its return of income for A.Y. 2018-19 on 30.11.2018 declaring total income of Rs.18,26,11,80,910/-. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) r.w.s 144B of the Act vide order dated 19.04.2021 and the total income was determined at Rs.24,31,89,53,536/-.

ITA No.2539/Del/2022 Inter Globle Aviation Ltd vs ACIT 3 1.2 That the CIT(A) erred on facts in not appreciating that the appellant had not opted for settlement of the aforesaid appeal filed against order passed under section 143(3) under the VSV Act [but had opted for settlement of an altogether different appeal filed before the CIT(A) against order passed under section 271DA of the Act for same assessment year] 1.3 That the impugned order passed by the CIT(A) dismissing the appeal, that too, without providing any opportunity of being heard to the appellant, is in gross violation of principles of natural justice and deserves to be set-aside/ reversed. WITHOUT PREJUDICE - ON MERITS Re: Validity of assessment order 2. That on the facts and circumstances of the case and in law, the CIT(A) erred in not appreciating that the assessment order dated 19.04.2021, having been passed by National Faceless Assessment Centre (herein under referred to as 'assessing officer"/"NaFAC) without following the mandatory procedure prescribed under section 144B of the Act was illegal, bad in law and liable to be quashed 2.1 That on the facts and circumstances of the case and in law, the CTT(A) erred in not appreciating that the assessment order was illegal and bad in law since the same was passed without issuing any draft assessment order or show cause notice for the variations proposed to be made to the returned income, which is in gross violation of provisions of Section 144B of the Act. 2.2 That the CIT(A) erred in not appreciating that the assessment proceedings were completed without providing adequate opportunity of being heard to the appellant, including personal/ video hearing, in gross violation of mandatory provisions of section 144B of the Act and also principles of natural justice. 2.3 That the CIT(A) erred in not appreciating that the assessing officer made huge additions/ disallowances without judiciously appreciating/ considering the legal and factual

ITA No.2539/Del/2022 Inter Globle Aviation Ltd vs ACIT 4 contentions of the appellant and therefore, the assessment order is illegal and bad in law. Re: Incentive received in the form of credits erroneously treated as revenue receipt 3. That the CIT(A) erred on facts and in law in not deleting the addition of Rs.575,62,67,767/-, being amount of amortized "supplier credits" received from various suppliers of aircraft parts [mainly from IAE LLC], made by the assessing officer by holding the same to be revenue receipt, instead of capital receipt claimed by the appellant. 3.1 That on the facts and circumstances of the case and in law, "Supplier credits" represents consideration for selection of engine and other aircraft related parts to be fitted in the aircraft, which was a transaction on capital account and hence not liable to tax under the provisions of the Act. 3.2 That the assessing officer erred in not appreciating that that merely because the appellant had taken the aircraft on operating lease would not alter the character of the "Supplier credits" received from being a capital receipt to revenue receipt. 3.3 That the assessing officer erred in not appreciating that merely because the appellant had amortized the credits over the period of lease and netted off the proportionate credits with the amount of lease rental would not alter the character of the "Supplier credits".. 3.4 That the assessing officer erred on facts and in law in alleging that the supplier credits is nothing but commission taxable under the provisions of the Act.

3.5. That the assessing officer erred on facts and in law in not following the decision of the Tribunal in the appellant's own case for earlier assessment year(s) holding "Supplier credits" to be capital receipt, in gross violation of principles of judicial discipline.

ITA No.2539/Del/2022 Inter Globle Aviation Ltd vs ACIT 5 Re: Seat replacement cost treated as capital expenditure 4. That the CIT(A) erred on facts and circumstances of the case and in law in not deleting the disallowance of amounting to Rs.30,15,04,859 made by the assessing officer holding the expenditure on replacement of seats of the aircrafts to be capital expenditure. 4.1 Without prejudice, the assessing officer erred on facts and in law in not allowing depreciation on expenditure of Rs.30,15,04,859, held to be capital expenditure. Re: Others 5. That the CIT(A) erred on facts and in law in not directing the assessing officer to allow credit of TDS of Rs.62,95,03,115 against credit of Rs.63,41,41,846 claimed by the appellant, which were disallowed by the assessing officer without assigning reason therefor. 6. That the CIT(A) erred on facts and in law in not directing the assessing officer to delete interest levied/computed under sections 234B and 234C of the Act. The appellant craves leave to add, alter, amend or vary from the above grounds of appeal before or at the time of hearing.”

ITA No.2539/Del/2022 Inter Globle Aviation Ltd vs ACIT 6 VSV Scheme and Form No.5 has been allotted. He submitted that the aforesaid finding of CIT(A) is factually incorrect. He submitted that assessee had opted for VSV Scheme which was with respect to the appeal for penalty levied u/s 271DA and not with respect to the present appeal. To support his aforesaid contention, he pointed to Form No.1 & 2 filed by assessee for settlement of appeal filed u/s 271DA and the copy of which is placed at page 34 to 44 of the paper book. He thereafter pointed to Form No.3 being the certificate issued by PCIT under Sub Section (1) of Section 5 of Vivad Se Visvas Act, 2020 for the settlement of appeal filed u/s 271DA. He therefore, submitted that since CIT(A) has not decided the appeal on merits and has wrongly dismissed the appeal of the assessee, the matter be remitted to CIT(A) for fresh adjudication.

ITA No.2539/Del/2022 Inter Globle Aviation Ltd vs ACIT 7 further pointed that the appeal that was disposed under VSV Scheme was with respect to appeal against the penalty order passed u/s 271DA and not the appeal against the order passed u/s 143(3) r.w.s 144B of the Act. In such a situation, since CIT(A) has not decided the issue on merits, we are of the view that the issue needs to be re-adjudicated by CIT(A). We accordingly restore the appeal back to the file of CIT(A) and direct him to decide the appeal in accordance with law. Needless to state that CIT(A) shall grant adequate opportunity of hearing to both the parties. Thus the grounds of assessee are allowed for statistical purposes.