JET LITE (INDIA) LTD.,NEW DELHI vs. DCIT, NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: “F” NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER & SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No. 1544/Del/2015 Assessment Years: 2007-08 Vs. Deputy M/s Jet Lite (India) Limited Commissioner of Jetair House, 13, Income Tax Community Centre, Yusuf Central Circle-6 Sarai, New Delhi- 49 New Delhi PAN: AADCS4480L (Appellant) (Respondent) Assessee by None Department by Ms. Monika Singh, CIT DR Date of hearing 16.03.2026 Date of pronouncement 03.06.2026 ORDER This assessee’s appeal ITA No. 1544/Del/2015, for assessment years 2007-08, arise against the Commissioner of Income Tax (Appeals)-23 [in short, “CIT(A)”], New Delhi’s orders dated 28.01.2015, passed in Order No. 59/10-11, involving proceedings u/s 143(3) r.w.s. 142(2A) of the Income Tax Act, 1961; hereinafter referred to as ‘the Act’.

Case called twice. None appears at the assessee’s behest. We thus proceed ex-parte on account of its continuous non- appearance before the tribunal.

ITA No. 1544/Del/2015

ITA No. 1544/Del/2015 (Assessee’s appeal); A.Y: 2007- 08 This assessee’s appeal raises the following substantive grounds: “Ground No. 1: The Ld. Commissioner of Income Tax (Appeals) - 23, New Delhi (hereinafter referred to as 'Ld. CIT(A)'), has erred in law and on the facts and in the circumstances of the case in upholding the various additions / disallowances made in the Assessment Oder dated 25.05.2010. Ground No. 2: The Ld. CIT(A) has erred in law and on facts and in the circumstances of the case in confirming the disallowance of provision made for repair of unserviceable spare parts amounting to Rs. 14,97,52,191/-.

Hence, the appellant prays that this disallowance of Rs. 14,97,52,191/- upheld by the Ld. CIT(A) should be deleted. Ground No. 3: The Ld. CIT(A), has erred in law and on facts of the case in confirming the disallowance of provision made for obsolescence of Bid & Win inventory amounting to Rs. 2,36,13,504/- Hence, the appellant prays that this disallowance of Rs. 2,36,13,504/- upheld by the Ld. CIT(A) should be deleted. Ground No. 4: The Ld. CIT(A) erred in law and on facts and in the circumstances of the case in confirming the disallowance of CRS Charges paid to Japan Airlines & Shepherd amounting to Rs. 10,60,245/-

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ITA No. 1544/Del/2015 Hence, the appellant prays that this disallowance of Rs. 10,60,245/- upheld by the Ld. CIT(A) should be deleted.

Ground No. 5: The Ld. CIT(A) erred in law and on facts and in the circumstances of the case in confirming the disallowance of Commission paid to Agent amounting to Rs. 2,89,81,400/-. ”

Hence, the appellant prays that this disallowance of Rs. 2,89,81,400/- upheld by the Ld. CIT(A) should be deleted.

Ground No. 6: The Ld. CIT(A) erred in law and on facts and in the circumstances of the case in confirming the disallowance of Hire Charges of Simulators paid to M/s Jet Airways ed (India) Ltd. amounting to Rs. 21,22,784/-.

Hence, the appellant prays that this disallowance of Rs. 21,22,784/- upheld by the Ld. CIT(A) should be deleted.

Ground No. 7: The Ld. CIT(A) erred in law and on facts and in the circumstances of the case in confirming the disallowance of Rent of Furniture paid to M/s Global Eco Earth amounting to Rs. 9,22,700/.

Hence, the appellant prays that this disallowance of Rs. 9,22,700/- upheld by the Ld. CIT(A) should be deleted.

Ground No. 8: The Ld. CIT(A) erred in law and on facts and in the circumstances of the case in confirming the disallowance of Rent of Air Conditioners amounting to Rs. 7,24,035/-.

Hence, the appellant prays that this disallowance of Rs. 7,24,035/- upheld by the CIT(A) should be deleted.

Ground No. 9; The Ld. CIT(A) erred in law and on facts and in the circumstances of the case in confirming the disallowance of Engine Lease Rent amounting to Rs. 6,11,36,804/-. 3 | P a g e

ITA No. 1544/Del/2015

Hence, the appellant prays that this disallowance of Rs. 6,11,36,804/- upheld by the Lo. CIT(A) should be deleted. Ground No. 10; The appellant craves leave to add, amend, alter or omit any of the above appeal as the circumstances may warrant on or before the date of hearing. Learned CIT(DR) Miss Monika Singh, inter alia 3. submits at the outset that the assessee’s third substantive ground herein regarding the provision made for obsolescence of Bid & Win inventory amounting to Rs. 2,36,13,504/- already stands accepted followed by the learned CIT(A) lower appellate directions that it deserves to be allowed in the succeeding assessment year A.Y. 2008- 09 in para 10.3 at pages 82 to 83 of the impugned order. We thus reject the assessee’s third substantive ground in very terms therefore.

ITA No. 1544/Del/2015 pressed its remaining issues raised in ground no. 4 to 9 regarding disallowance of CRS charges paid to M/s Japan Airlines etc, commission paid to agents, simulator higher charges involving M/s Jet Airways, rent of furniture, rent of Air Conditioners and engine lease rent claims; respectively. We are of the considered view in this factual backdrop that the assessee/appellant could not have to be treated as an aggrieved party on all these issues before the tribunal once it had not pressed for its corresponding substantive grounds in the lower appellate proceedings. Rejected accordingly.

ITA No. 1544/Del/2015 appellant and its vendors was also prepared. Thereafter, a provision was made for repair of unserviceable spares and claimed as expense. The revenue disallowed the claim contending that there was no basis for making such provision, that it was estimated liability and that in any case no expenditure was actually incurred. The appellant contends that the claim of the revenue that there was no basis for estimating the expenditure is incorrect in as much as the estimate was made based on actual inventory of the unserviceable spares lying with the vendors as well as the appellant company.

8.3 I have considered the assessment order and the submissions made. In the airline industry, spares play a key role in maintaining airworthiness of aircraft. There are five classes of spare-parts (i) rotatable, e.g. engine parts; (ii) repairable, e.g. fuel pump; (iii) expendable, e.g. dowel, sleeve, spring, bulb, etc., (iv) consumable, e.g. fabric; and (v) expendable-repairable, e.g. seat-arm. Spares which are unserviceable are to be scrapped and replaced, or repaired for reuse if possible. Replacement or repair of unserviceable spares is an ongoing exercise in the airline industry. Most of the unserviceable spares are scrapped and replaced with new spares. Therefore, the question of making provision for the repair of replaced unserviceable spares does not ordinarily arise. The correct course of action in such circumstances would be to write off the value of unserviceable spares and write back the value realized on the disposal of such spares, if any. In the event that some unserviceable spares are repaired and put back into service, such expenditure can be claimed on actual basis whenever it is incurred. Alternately, the entire unserviceable spares can be claimed as expense when put out of stock by crediting the unserviceable spares / inventory account (if the account head is maintained separately) and debiting the said account whenever any spare is received back repaired. The expenses incurred on repairs can be claimed separately. But at the stage of putting out 6 | P a g e

ITA No. 1544/Del/2015 the unserviceable spares the question of estimating as to how much of it would be received back repaired does not arise. In any view of the matter, it remains an unascertained and contingent liability till the spare is repaired and received for reuse. Thus, making a separate provision for the repair of unserviceable spares is not allowable as it is not an ascertained liability. I hold accordingly. I am also unable to find, in the submissions filed, any amount actually spent or how the account was finally settled. In these circumstances, the disallowance of Rs.14,97,52,191/- made by the revenue is confirmed. This ground of appeal raised by the appellant is dismissed.”

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ITA No. 1544/Del/2015 simply brushed aside for one reason or the other. We quote Bharat Earth Movers v. Commissioner of Income Tax ([2000] 245 ITR 428 (SC) with such a provision on estimation basis could indeed be allowed although the exact liability thereof gets crystalized by way of quantification at a future date. Hon’ble apex court’s yet another landmark judgement in Chainrup Sampatram Vs. CIT (1953) 24 ITR 481 (SC) has further settled the issue long back that such a provision of an anticipated business loss of expenditure could indeed be made at the first sign of reasonable probability as well. We thus accept the assessee’s instant first substantive grievance in very terms. Necessary computation shall follow as per law.

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