HIMALAYAPUTRA AVIATION LTD,NEW DELHI vs. ACIT CIRCLE-11(2), NEW DELHI

The assessee has raised following grounds of appeal:-

Brief facts of the case are that the assessee company was incorporated on 23.07.2011 with the main object of Civil Aviation. In the course of business, the assessee entered into an agreement with USA Company on 26.03.2012 for the purchase of Aircraft. The Aircrafts were supplied in the FY 2012-13 and the assessee company took possession of the same on 15.07.2012 on the payment of custom duty. Later on, after completion of all formalities and approvals, the assessee applied for issue of non-schedule Air transport services permit on 24.09.2012 which was received on 10.10.2012. In the books, depreciation was provided from 15.07.2012. The assessee claimed 40% depreciation as per the Act. In the assessment order passed u/s 143(3), the assessee return was accepted including the said claim of deprecation. Thereafter, the Assessing Officer issued in order u/s 154 of the Act on 21.02.2018, wherein, he corrected the mentioning of assessee’s income as Nil. Thereafter, in another order u/s 154, dated 21.01.2019, the Assessing Officer noted that during the course of audit, the audit party has found discrepancies and pointed out that Aircraft was put to use on 17.10.2012 for less than 180 days.

Upon assessee’s appeal, the Ld. CIT(A) noted the assessee’s submission that the aircraft was ready to use earlier and hence the claim of depreciation whether 40% or 20% is a debatable issue. The Ld. CIT(A) was not satisfied, he found there is no debate in this as sections provided for deprecation from date of put to use and not from the date when aircraft is ready to use, hence, he held there is no debate on this and it is clear mistake. Hence, he upheld the order of the Assessing Officer.

Against this order, the assessee is in appeal before us.

We have heard both the parties and perused the records. The Ld. Counsel for the assessee submitted that after having passed the assessment order u/s 143(3) only at the behest to audit party, the Assessing Officer had passed second order u/s 154 of the Act. He submitted that issue of ready to use or put to use have been duly considered in several case laws. He submitted that ready for put to use by transport operator has been held to sufficient in allowing depreciation by the Hon’ble Delhi High Court in the case of Capital Bus Service Ltd. vs CIT 4 taxman 309 (Del). He further referred to the decision of Hon’ble Bombay High Court in the case of CIT vs Visvanath Bhaskar Sathe 5 ITR 621 (Bom.). He submitted that in this case, it was held that with reference to aircraft use for the purpose of business should be interpreted to mean that such plant or machinery must be open to use for the business and the proof of actual uses is not necessary. Referring to these case laws, the ld. counsel for the assessee submitted that the issue in this case is certainly debatable and cannot be rectified in order u/s 154 of the Act.

Per Contra, the Ld. DR relied upon the orders of the authorities below.

Upon careful consideration, on the facts and circumstances of the case narrated above, we are of the considered opinion that the issue is certainly debatable and cannot be rectified u/s 154 of the Act. The Hon’ble Apex Court in the case of T.S. Balaram, ITO vs Vokar Bros 82 ITR 50(SC) has held that a mistake apparent from record is the one which is apparent and there is no debate or reasoning is required. In the present case as referred by the ld. counsel for the assessee, there are Hon’ble High Courts decisions, where ready to use have been found to be sufficient for allowing depreciation instead of put to use. In this view of the matter, and in our considered opinion, the matter could not have been rectified u/s 154 of the Act after the assessment order has been framed u/s 143(3) of the Act. Hence, we set-aside the orders of the authorities below and decide the issue in favour of the assessee.

In the result, the assessee’s appeal stands allowed.