DY CIT CENTRAL CIRCLE-4(2),, MUMBAI vs. M/S SHETH CREATORS P. LTD., MUMBAI

PER OM PRAKASH KANT, AM PER OM PRAKASH KANT, AM Out of the above captioned appeals, Out of the above captioned appeals, the first two appeals are the first two appeals are cross-appeals by the assessee and the appeals by the assessee and the Revenue against the order against the order dated 10/09/2020 of the dated 10/09/2020 of the Ld. Commissioner of Income Income-tax (Appeals) -52 Mumbai [in short 52 Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2014 for assessment year 2014-15. The remaining three appeals by the assessee are directed against The remaining three appeals by the assessee are directed against The remaining three appeals by the assessee are directed against three separate orders dated 27/03/2019 eparate orders dated 27/03/2019; 26/04/2019 ; 26/04/2019 and 10/09/2020 passed by the Ld. CIT(A) for assessment year 2015 by the Ld. CIT(A) for assessment year 2015 by the Ld. CIT(A) for assessment year 2015-16; 2016-17 and 2017-18 respectively. As common issue 8 respectively. As common issue-in-dispute are 8 respectively. As common issue involved in these appeals, involved in these appeals, same were heard together and disposed were heard together and disposed off by way of this consolidated order for convenience and avoid way of this consolidated order for convenience and avoid way of this consolidated order for convenience and avoid repetition of facts.

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2.1 The grounds raised by the assessee in assessment year 2015 raised by the assessee in assessment year 2015 raised by the assessee in assessment year 2015-

16 are reproduced as under: 16 are reproduced as under:

“1. Confirming Disallowance of Rs.44,34,562/ 1. Confirming Disallowance of Rs.44,34,562/- on account of on account of 20% Depreciation claimed on Helicopter : 20% Depreciation claimed on Helicopter :

1.1. Commissioner of I.T. (A) erred in confirming disallowance of Rs. 1.1. Commissioner of I.T. (A) erred in confirming disallowance of Rs. 1.1. Commissioner of I.T. (A) erred in confirming disallowance of Rs. 44,34,562/- on account of 20% depreciation claimed on helicopter on account of 20% depreciation claimed on helicopter on account of 20% depreciation claimed on helicopter out of disallowance of 50% Depreciation made by out of disallowance of 50% Depreciation made by A.O. without A.O. without appreciating the fact that the helicopter was not used for personal appreciating the fact that the helicopter was not used for personal appreciating the fact that the helicopter was not used for personal purpose.

1.2. Commissioner of I.T. (A) erred in not appreciating the 1.2. Commissioner of I.T. (A) erred in not appreciating the 1.2. Commissioner of I.T. (A) erred in not appreciating the fact that the helicopter was only and the helicopter was only and exclusively used for the purpose of exclusively used for the purpose of business.

2.1. The Ld. AO erred in making an addition on account of delay in 2.1. The Ld. AO erred in making an addition on account of delay in 2.1. The Ld. AO erred in making an addition on account of delay in payment of PF & ESIC of f PF & ESIC of ₹3,02,607/- without appreciating the fact without appreciating the fact that the appellant has deposited the employees' that the appellant has deposited the employees' contribution to PF contribution to PF & ESIC before filing of income tax return due as per Section 139(1) & ESIC before filing of income tax return due as per Section 139(1) & ESIC before filing of income tax return due as per Section 139(1) of the I.T. Act.

2.2. The Ld. AO erred in not appreciating the 2.2. The Ld. AO erred in not appreciating the fact that the Hon'ble fact that the Hon'ble Supreme Court in case of Alom Extrusion Ltd. 319 ITR 306 has held Supreme Court in case of Alom Extrusion Ltd. 319 ITR 306 has held Supreme Court in case of Alom Extrusion Ltd. 319 ITR 306 has held that if the employees contribution to PF & ESIC is paid before the that if the employees contribution to PF & ESIC is paid before the that if the employees contribution to PF & ESIC is paid before the filing of IT return than there would not be any disallowance under filing of IT return than there would not be any disallowance under filing of IT return than there would not be any disallowance under Section 2(24)(x) Section 2(24)(x) r.w.s. 36(1)(va) of I.T. Act.

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3.1. Commissioner of I.T. (A) erred in law and fact by confirming 3.1. Commissioner of I.T. (A) erred in law and fact by confirming 3.1. Commissioner of I.T. (A) erred in law and fact by confirming additional disallowance u/s. 14A of Rs. 19,52,896/ additional disallowance u/s. 14A of Rs. 19,52,896/- over and above over and above disallowance suo moto offered by the assessee of disallowance suo moto offered by the assessee of ₹21,32 21,32,592/- (equal to dividend income) without appreciating the fact that the (equal to dividend income) without appreciating the fact that the (equal to dividend income) without appreciating the fact that the investment was made in Liquid fund scheme India bulls mutual fund investment was made in Liquid fund scheme India bulls mutual fund investment was made in Liquid fund scheme India bulls mutual fund on short term basis hence section 14A is not applicable and on short term basis hence section 14A is not applicable and on short term basis hence section 14A is not applicable and accordingly no disallowances is to be made u/s 14A of the accordingly no disallowances is to be made u/s 14A of the accordingly no disallowances is to be made u/s 14A of the income tax Act.

3.2. Without prejudice above, even if the disallowances is to be made 3.2. Without prejudice above, even if the disallowances is to be made 3.2. Without prejudice above, even if the disallowances is to be made is to be restricted to the exempt income received which the is to be restricted to the exempt income received which the is to be restricted to the exempt income received which the income. appellant has already disallowed in filed the return of appellant has already disallowed in filed the return of income.

a. Disallowance a. Disallowance of Rs. 44,34,562/- on account of 20% Depreciation on account of 20% Depreciation claimed on Helicopter may be deleted. claimed on Helicopter may be deleted.

b. Addition made u/s.2(24)(x) r.w.s. 36(1)(va) for delay in payment b. Addition made u/s.2(24)(x) r.w.s. 36(1)(va) for delay in payment b. Addition made u/s.2(24)(x) r.w.s. 36(1)(va) for delay in payment of PF & ESIC of Rs.3,02,607/ of PF & ESIC of Rs.3,02,607/- may be deleted.

c. To delete the Additional disallowance of Rs. 19,52 c. To delete the Additional disallowance of Rs. 19,52,896/ ,896/- made u/s. 14A r.w. Rule 8D. d. To allow the claim of the appellant that u/s. 14A r.w. Rule 8D. d. To allow the claim of the appellant that u/s. 14A r.w. Rule 8D. d. To allow the claim of the appellant that disallowance u/s 14A read with rule 8D should disallowance u/s 14A read with rule 8D should be calculated by be calculated by considering all facts stated in grounds of appeal & Rule should not considering all facts stated in grounds of appeal & Rule should not considering all facts stated in grounds of appeal & Rule should not be applied automatically. be applied automatically.

e. The Appellant ple e. The Appellant plead before Honorable ITAT to add, alter or ad before Honorable ITAT to add, alter or amend any or all grounds of appeal before or at the time of amend any or all grounds of appeal before or at the time of amend any or all grounds of appeal before or at the time of hearing.”

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terms mentioned in Memorandum terms mentioned in Memorandum. The assessee failed to produce . The assessee failed to produce logbook maintained in respect of various trips undertaken by the logbook maintained in respect of various trips undertaken by the logbook maintained in respect of various trips undertaken by the helicopter. Thus, the the Assessing Officer concluded that concluded that the assessee could not demonstrate use of the helicopte could not demonstrate use of the helicopter for wholly for wholly and exclusively for the purpose of the business, therefore exclusively for the purpose of the business, therefore exclusively for the purpose of the business, therefore, he disallowed 50% of the depreciation claimed by the assessee 50% of the depreciation claimed by the assessee on helicopter as on helicopter as for personal use of the helicopter personal use of the helicopter, which was worked out to , which was worked out to ₹1,10,86,405/-. The Assessing Officer relied on the decision of the relied on the decision of the Tribunal, Pune Bench in , Pune Bench in the case of Avinash Bhosale (ITA of Avinash Bhosale (ITA No. 1542/PN/08 and Poonawala 1542/PN/08 and Poonawala Finvest & Agro P. . Ltd. (ITA No. 370/PN/2010).

(i) the helicopter was purchased for facilitating the trips of the helicopter was purchased for facilitating the trips of the helicopter was purchased for facilitating the trips of the directors/partners of co the directors/partners of co-owners for their their businesses, attend business meetings, conferences etc. The assessee attend business meetings, conferences etc attend business meetings, conferences etc used helicopter for going to Pune, Nasik and Aurangabad used helicopter for going to Pune, Nasik and Aurangabad used helicopter for going to Pune, Nasik and Aurangabad

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etc. for identifying land and also for the business for identifying land and also for the business for identifying land and also for the business meetings. (ii) the co-owners have funded the acquisition of the owners have funded the acquisition of the owners have funded the acquisition of the helicopter on the equal basis and accordingly share of helicopter on the equal basis and accordingly share of helicopter on the equal basis and accordingly share of cost of helicopter of cost of helicopter of ₹11,54,83,388/- was shown under was shown under the fixed assets fixed assets and depreciation has b depreciation has been claimed thereon. No depreciation has been claimed by the AOP on . No depreciation has been claimed by the AOP on . No depreciation has been claimed by the AOP on the helicopter. the helicopter. (iii) The disallowance of depreciation at the rate of 50% by The disallowance of depreciation at the rate of 50% by The disallowance of depreciation at the rate of 50% by the Assessing Officer Assessing Officer on the presumption that same was on the presumption that same was used for personal purpose by the directors was not used for personal purpose by the directors was not used for personal purpose by the directors was not justified as the helicopter was operated from Mumbai s the helicopter was operated from Mumbai s the helicopter was operated from Mumbai- Sangali, Nagpur Sangali, Nagpur-Nanded; Mumbai -Aurangabad etc, which Aurangabad etc, which are not the places are not the places where the person go for personal trip. where the person go for personal trip.

8.1 The assessee filed a copy of the logbook of the helicopter as The assessee filed a copy of the logbook of the helicopter as The assessee filed a copy of the logbook of the helicopter as additional evidence, which was forwa additional evidence, which was forwarded by the Ld. CIT(A) to the rded by the Ld. CIT(A) to the

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Assessing Officer. The . The Assessing Officer in his reman in his remand report pointed out discrepancies pointed out discrepancies in the details of travelling supplied the details of travelling supplied during the assessment proceeding and the logbook provided during the the assessment proceeding and the logbook provided during the the assessment proceeding and the logbook provided during the remand proceeding. Further the remand proceeding. Further the Ld. Assessing Officer Assessing Officer pointed out that name of the persons who travelled in various trips that name of the persons who travelled in various trips that name of the persons who travelled in various trips were not provided in the logbook produced in remand proceeding and provided in the logbook produced in remand proceeding and provided in the logbook produced in remand proceeding and therefore he was unable to ascertain the purpose of the trips and the therefore he was unable to ascertain the purpose of the trips and the therefore he was unable to ascertain the purpose of the trips and the passengers for establishing b passengers for establishing business use of the helicopter. The usiness use of the helicopter. The Ld. Assessing Officer also pointed out that also pointed out that other assessee other assessees engaged in the same business, having almost same volume having almost same volume, were were not incurring any such type of the expens any such type of the expenses. In view of the observations es. In view of the observations, he concluded that the assessee failed to establish the depreciation concluded that the assessee failed to establish the depreciation concluded that the assessee failed to establish the depreciation expenses as incurred wholly and exclusively for the purpose of the incurred wholly and exclusively for the purpose of the incurred wholly and exclusively for the purpose of the business of the assessee. business of the assessee.

8.2 The assessee in the rejoinder submitted that though there was The assessee in the rejoinder submitted that though there was The assessee in the rejoinder submitted that though there was multiple projects in earlier ye multiple projects in earlier years, however in the year under ars, however in the year under

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consideration due to change in regulation for development, partners consideration due to change in regulation for development, partners consideration due to change in regulation for development, partners in joint ventures, unsuccessful closure of land transactions et in joint ventures, unsuccessful closure of land transactions et in joint ventures, unsuccessful closure of land transactions etc. the assessee could not have any project. The assessee mentioned name assessee could not have any project. The assessee mentioned name assessee could not have any project. The assessee mentioned name of the few properties, of the few properties, the transactions in respect of which could not the transactions in respect of which could not be closed. Regarding name of passengers in the logbook, it was be closed. Regarding name of passengers in the logbook, it was be closed. Regarding name of passengers in the logbook, it was submitted that same was maintained by the pilot as per the aviation submitted that same was maintained by the pilot as per the aviation submitted that same was maintained by the pilot as per the aviation norms prescribed by the director general of civil aviation norms prescribed by the director general of civil aviation norms prescribed by the director general of civil aviation, wherein it was not mandatory to mention the name of the passenger in the t mandatory to mention the name of the passenger in the t mandatory to mention the name of the passenger in the logbook, therefore assessee was unable to provide name of the logbook, therefore assessee was unable to provide name of the logbook, therefore assessee was unable to provide name of the passengers who travelled. The assessee also relied on the decision of passengers who travelled. The assessee also relied on the decision of passengers who travelled. The assessee also relied on the decision of the Tribunal in the case of the assessee for assessment year 2013 in the case of the assessee for assessment year 2013 in the case of the assessee for assessment year 2013- 14, wherein the Tribunal Tribunal has upheld the finding of the Ld. CIT(A) upheld the finding of the Ld. CIT(A) that no trips were under undertaken for personal purpose by the assessee. taken for personal purpose by the assessee.

8.3 In background of the above facts, the Ld. CIT(A), restricted the In background of the above facts, the Ld. CIT(A), restricted the In background of the above facts, the Ld. CIT(A), restricted the disallowance of depreciation to 20% of the depreciation disallowance of depreciation to 20% of the depreciation disallowance of depreciation to 20% of the depreciation claimed by the assessee as against 50% depreciation disallowed by the the assessee as against 50% depreciation disallowed by the the assessee as against 50% depreciation disallowed by the

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Assessing Officer. The relevant observation of the Ld. CIT(A) are . The relevant observation of the Ld. CIT(A) are . The relevant observation of the Ld. CIT(A) are

reproduced as under: reproduced as under:

“5.6 The assessment order, remand report as well as the rejoinder to 5.6 The assessment order, remand report as well as the rejoinder to 5.6 The assessment order, remand report as well as the rejoinder to the remand report have been d the remand report have been duly considered. There is some merit uly considered. There is some merit in the claim of the assessee that the element of personal use is not in the claim of the assessee that the element of personal use is not in the claim of the assessee that the element of personal use is not present considering that the helicopter trips undertaken are not to present considering that the helicopter trips undertaken are not to present considering that the helicopter trips undertaken are not to places which are tourist destinations. However, there is also merit in places which are tourist destinations. However, there is also merit in places which are tourist destinations. However, there is also merit in the contention of the AO that in absence of the names of the on of the AO that in absence of the names of the on of the AO that in absence of the names of the passengers, it is not possible to ascertain as to whether the trips passengers, it is not possible to ascertain as to whether the trips passengers, it is not possible to ascertain as to whether the trips have been undertaken solely and exclusively for the purpose of the have been undertaken solely and exclusively for the purpose of the have been undertaken solely and exclusively for the purpose of the business of the assessee. The assessee contends that as per DGCA business of the assessee. The assessee contends that as per DGCA business of the assessee. The assessee contends that as per DGCA guidelines, it is not mandatory to mention the names of the nes, it is not mandatory to mention the names of the nes, it is not mandatory to mention the names of the passengers in the log book which is to be maintained by the pilot. passengers in the log book which is to be maintained by the pilot. passengers in the log book which is to be maintained by the pilot. However, since, the assessee wants to claim depreciation on However, since, the assessee wants to claim depreciation on However, since, the assessee wants to claim depreciation on helicopter on the ground that it was used wholly and exclusively for helicopter on the ground that it was used wholly and exclusively for helicopter on the ground that it was used wholly and exclusively for the purpose of its business, the onus was on the assessee to maintain pose of its business, the onus was on the assessee to maintain pose of its business, the onus was on the assessee to maintain the names of the passengers who had undertaken the various the names of the passengers who had undertaken the various the names of the passengers who had undertaken the various helicopter trips. As regards the reliance of the assessee on the helicopter trips. As regards the reliance of the assessee on the helicopter trips. As regards the reliance of the assessee on the decision of the FAA for A.Y. 2013 decision of the FAA for A.Y. 2013-14 which has been upheld by the 14 which has been upheld by the Hon'ble ITAT deleting the entire disallowance made by the AO out 'ble ITAT deleting the entire disallowance made by the AO out 'ble ITAT deleting the entire disallowance made by the AO out of depreciation on helicopter, it is noted that the FAA, in course of of depreciation on helicopter, it is noted that the FAA, in course of of depreciation on helicopter, it is noted that the FAA, in course of the appellate proceedings, had duly examined the log book of the the appellate proceedings, had duly examined the log book of the the appellate proceedings, had duly examined the log book of the relevant year before concluding that the element of non relevant year before concluding that the element of non relevant year before concluding that the element of non- business/personal use, is not existent. Moreover, the FAA in his iness/personal use, is not existent. Moreover, the FAA in his iness/personal use, is not existent. Moreover, the FAA in his order has specifically noted that the decision for the said year order has specifically noted that the decision for the said year order has specifically noted that the decision for the said year cannot be said to have laid a precedent considering that the same cannot be said to have laid a precedent considering that the same cannot be said to have laid a precedent considering that the same

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has been arrived at after factual verification of the log has been arrived at after factual verification of the log has been arrived at after factual verification of the log-book maintained for the relevant year. maintained for the relevant year. 5.7 It is observed that the Hon'ble ITAT, Pune, has dealt with this 5.7 It is observed that the Hon'ble ITAT, Pune, has dealt with this 5.7 It is observed that the Hon'ble ITAT, Pune, has dealt with this issue in the cases of Avinash Bhosale (supra) and Poonawala issue in the cases of Avinash Bhosale (supra) and Poonawala issue in the cases of Avinash Bhosale (supra) and Poonawala Finvest & Agro P.Ltd. (supra) wherein disallowance of 1/7th of the Finvest & Agro P.Ltd. (supra) wherein disallowance of 1/7th of the Finvest & Agro P.Ltd. (supra) wherein disallowance of 1/7th of the aircraft expenses has been aircraft expenses has been upheld. Similarly, in the case of Kirloskar upheld. Similarly, in the case of Kirloskar Oil Engine (supra), the Hon'ble ITAT, Pune has upheld the Oil Engine (supra), the Hon'ble ITAT, Pune has upheld the Oil Engine (supra), the Hon'ble ITAT, Pune has upheld the disallowance of aircraft expenses to the extent of 15%. There is disallowance of aircraft expenses to the extent of 15%. There is disallowance of aircraft expenses to the extent of 15%. There is some merit in the contention of the assessee that there is no element some merit in the contention of the assessee that there is no element some merit in the contention of the assessee that there is no element of personal use sin of personal use since the trips have not been undertaken to tourist ce the trips have not been undertaken to tourist destinations. However in absence of the names of the passengers destinations. However in absence of the names of the passengers destinations. However in absence of the names of the passengers who have undertaken the helicopter trips, it cannot be fully who have undertaken the helicopter trips, it cannot be fully who have undertaken the helicopter trips, it cannot be fully ascertained as to whether the assessee has used the helicopter ascertained as to whether the assessee has used the helicopter ascertained as to whether the assessee has used the helicopter wholly and exclusiv wholly and exclusively for the purpose of its business. Therefore, it ely for the purpose of its business. Therefore, it will meet the ends of justice if 20% of the assessee's claim of will meet the ends of justice if 20% of the assessee's claim of will meet the ends of justice if 20% of the assessee's claim of depreciation on helicopter is disallowed as related to non depreciation on helicopter is disallowed as related to non depreciation on helicopter is disallowed as related to non-business purposes. Accordingly, Ground No. 1 of the appeal is partly allowed. purposes. Accordingly, Ground No. 1 of the appeal is partly allowed. purposes. Accordingly, Ground No. 1 of the appeal is partly allowed.” 9. Before us the Before us the Ld. counsel of the assessee relied on the of the assessee relied on the submissions made before the Ld. CIT(A) including the order of the submissions made before the Ld. CIT(A) including the order of the submissions made before the Ld. CIT(A) including the order of the Tribunal in the case of the assessee for 2013 in the case of the assessee for 2013-14. Whereas the 14. Whereas the Ld. DR submitted that in assessment year 2013 in assessment year 2013-14, the logbook was 14, the logbook was provided and on the basis of which the Ld. CIT(A) concluded that ed and on the basis of which the Ld. CIT(A) concluded that ed and on the basis of which the Ld. CIT(A) concluded that there was no personal trip by the assessee, but in the year under there was no personal trip by the assessee, but in the year under there was no personal trip by the assessee, but in the year under

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consideration details of the passenger travels is not available and consideration details of the passenger travels is not available and consideration details of the passenger travels is not available and therefore lower authorities are justified in sustaining disallo authorities are justified in sustaining disallo authorities are justified in sustaining disallowance of depreciation on helicopter. of depreciation on helicopter.

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“8. We have heard the rival submissions of both the parties and We have heard the rival submissions of both the parties and We have heard the rival submissions of both the parties and perused the material on record. We find that the purchase of perused the material on record. We find that the purchase of perused the material on record. We find that the purchase of helicopter and its use in the helicopter and its use in the business was not disputed by the AO but business was not disputed by the AO but observed that there might be some personal use of helicopter and observed that there might be some personal use of helicopter and observed that there might be some personal use of helicopter and thus making disallowance of 50% of deprecation without any basis thus making disallowance of 50% of deprecation without any basis thus making disallowance of 50% of deprecation without any basis which is nothing but a conclusion drawn on the basis of which is nothing but a conclusion drawn on the basis of which is nothing but a conclusion drawn on the basis of presumption, conjunctures and presumption, conjunctures and surmises. On the other hand, the Ld. surmises. On the other hand, the Ld. CIT(A) has taken a very correct and reasoned view of the matter CIT(A) has taken a very correct and reasoned view of the matter CIT(A) has taken a very correct and reasoned view of the matter after calling for and examining the necessary records primarily the after calling for and examining the necessary records primarily the after calling for and examining the necessary records primarily the helicopter's technical log book recording the finding of facts that no helicopter's technical log book recording the finding of facts that no helicopter's technical log book recording the finding of facts that no trips were taken trips were taken for personal trips by the assessee. Thus there is no for personal trips by the assessee. Thus there is no violation of rule 46A by the Id CIT(A) as he has co extensive powers violation of rule 46A by the Id CIT(A) as he has co extensive powers violation of rule 46A by the Id CIT(A) as he has co extensive powers to call for the records and examine the same in order to decide the to call for the records and examine the same in order to decide the to call for the records and examine the same in order to decide the matter before him. Accordingly, ground No.1 & 2 are dismissed. matter before him. Accordingly, ground No.1 & 2 are dismissed. matter before him. Accordingly, ground No.1 & 2 are dismissed.”

10.1 The assessee has also filed a copy of the order of the Ld. CIT(A) The assessee has also filed a copy of the order of the Ld. CIT(A) The assessee has also filed a copy of the order of the Ld. CIT(A)

for assessment year 2013 for assessment year 2013-14, which is available on page 9 to 18 of n page 9 to 18 of

the paperbook. The relevant finding of the Ld. CIT(A) is reproduced . The relevant finding of the Ld. CIT(A) is reproduced . The relevant finding of the Ld. CIT(A) is reproduced

as under:

“7. I have considered the facts of the ca 7. I have considered the facts of the case, submissions and se, submissions and contentions of the assessee as also the order of the AO. It appears contentions of the assessee as also the order of the AO. It appears contentions of the assessee as also the order of the AO. It appears that the AO has disallowed the claim towards depreciation on the that the AO has disallowed the claim towards depreciation on the that the AO has disallowed the claim towards depreciation on the grounds that the assessee has not been able to prove that asset has grounds that the assessee has not been able to prove that asset has grounds that the assessee has not been able to prove that asset has been used wholly and exclusively fo been used wholly and exclusively for business purposes. The AO in r business purposes. The AO in this regard has also relied upon ITAT Pune judgment in case of this regard has also relied upon ITAT Pune judgment in case of this regard has also relied upon ITAT Pune judgment in case of Avinash Bhosale in ITA no 1524/08. I have considered the entire Avinash Bhosale in ITA no 1524/08. I have considered the entire Avinash Bhosale in ITA no 1524/08. I have considered the entire

Sheth Creators Private Limited Sheth Creator 16 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

gamut of facts. During the year the assessee company made an gamut of facts. During the year the assessee company made an gamut of facts. During the year the assessee company made an Association of Person (AOP) in the na Association of Person (AOP) in the name of M/s. Varva Aviation me of M/s. Varva Aviation along with M/s. Piramal Enterprises Pvt.Ltd., M/s. Real Gold along with M/s. Piramal Enterprises Pvt.Ltd., M/s. Real Gold along with M/s. Piramal Enterprises Pvt.Ltd., M/s. Real Gold Developers Ltd. and M/s. Serum Institute India to purchase a Developers Ltd. and M/s. Serum Institute India to purchase a Developers Ltd. and M/s. Serum Institute India to purchase a helicopter, as the assessee had to frequently travel to Nashik, Pune helicopter, as the assessee had to frequently travel to Nashik, Pune helicopter, as the assessee had to frequently travel to Nashik, Pune and Aurangabad for business purposes. T and Aurangabad for business purposes. The memorandum of he memorandum of understanding for purchasing a helicopter on co understanding for purchasing a helicopter on co-ownership basis ownership basis and for sharing its operation & maintenance cost was entered and for sharing its operation & maintenance cost was entered and for sharing its operation & maintenance cost was entered between the parties on 24th February, 2011 and was amended on between the parties on 24th February, 2011 and was amended on between the parties on 24th February, 2011 and was amended on 23rd October, 2012. The co 23rd October, 2012. The co-owners agreed to fund the acquisition of acquisition of the helicopter on equal basis and also to share the operational the helicopter on equal basis and also to share the operational the helicopter on equal basis and also to share the operational expenses on equal basis. Therefore, the share of assessee in the cost expenses on equal basis. Therefore, the share of assessee in the cost expenses on equal basis. Therefore, the share of assessee in the cost of helicopter is Rs. 11,54,83,388/ of helicopter is Rs. 11,54,83,388/-, which was shown under the head , which was shown under the head Fixed Assets and depreciation was clai Fixed Assets and depreciation was claimed accordingly. It also med accordingly. It also appears that M/s. Varva Aviation had not claimed any depreciation appears that M/s. Varva Aviation had not claimed any depreciation appears that M/s. Varva Aviation had not claimed any depreciation on the helicopter in its books of account and income tax return filed on the helicopter in its books of account and income tax return filed on the helicopter in its books of account and income tax return filed by it. The assessee had submitted before the AO that the helicopter by it. The assessee had submitted before the AO that the helicopter by it. The assessee had submitted before the AO that the helicopter was used only for business was used only for business purposes. More particularly during the purposes. More particularly during the year under consideration the helicopter was operated from Delhi year under consideration the helicopter was operated from Delhi year under consideration the helicopter was operated from Delhi- Jaipur, Jaipur- Indore, Indore-Aurangabad and Baramati which are Aurangabad and Baramati which are not the places where any person would go for personal trip. Apart not the places where any person would go for personal trip. Apart not the places where any person would go for personal trip. Apart from this the helicop from this the helicopter was also used for Pilot training etc. ter was also used for Pilot training etc. Therefore assumption made by the AO that the helicopter was used Therefore assumption made by the AO that the helicopter was used Therefore assumption made by the AO that the helicopter was used for personal purpose appears to be incorrect. The assessee in this for personal purpose appears to be incorrect. The assessee in this for personal purpose appears to be incorrect. The assessee in this regard also produced aircraft technical log book' of helicopter regard also produced aircraft technical log book' of helicopter regard also produced aircraft technical log book' of helicopter containing precise containing precise details of use of helicopter flying time and flying details of use of helicopter flying time and flying hours and destinations etc. This logbook has been duly signed by the hours and destinations etc. This logbook has been duly signed by the hours and destinations etc. This logbook has been duly signed by the pilot flying the helicopter. From the records it appears that the pilot flying the helicopter. From the records it appears that the pilot flying the helicopter. From the records it appears that the helicopter has flown between Pune and Mumbai. These are not the helicopter has flown between Pune and Mumbai. These are not the helicopter has flown between Pune and Mumbai. These are not the

Sheth Creators Private Limited Sheth Creator 17 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

places where the assessee would like to go for personal visits. On es where the assessee would like to go for personal visits. On es where the assessee would like to go for personal visits. On many occasions it has flown for pilot training, maintenance and many occasions it has flown for pilot training, maintenance and many occasions it has flown for pilot training, maintenance and ground etc. A few flights are in nature of ferrying the helicopter ground etc. A few flights are in nature of ferrying the helicopter ground etc. A few flights are in nature of ferrying the helicopter from place of purcghase. None of the flight appears to be of from place of purcghase. None of the flight appears to be of from place of purcghase. None of the flight appears to be of personal nature. Therefore I am not in a position to agree with the ersonal nature. Therefore I am not in a position to agree with the ersonal nature. Therefore I am not in a position to agree with the Ld AO that the asset was not used for business purposes. The AO in Ld AO that the asset was not used for business purposes. The AO in Ld AO that the asset was not used for business purposes. The AO in this regard also relied upon the Hon'ble Pune ITAT judgment in case this regard also relied upon the Hon'ble Pune ITAT judgment in case this regard also relied upon the Hon'ble Pune ITAT judgment in case of Avinash Bhosale wherein disallowance of depreciatio of Avinash Bhosale wherein disallowance of depreciatio of Avinash Bhosale wherein disallowance of depreciation to the extent of 30% was confirmed on account of personal use of chopper extent of 30% was confirmed on account of personal use of chopper extent of 30% was confirmed on account of personal use of chopper etc. However the facts of the present case are slightly different. In etc. However the facts of the present case are slightly different. In etc. However the facts of the present case are slightly different. In the instant case, from perusal of logbook it does not look like that the instant case, from perusal of logbook it does not look like that the instant case, from perusal of logbook it does not look like that the helicopter was used for any non busine the helicopter was used for any non business purposes or personal ss purposes or personal purposes. Therefore I am of the view that no disallowance is called purposes. Therefore I am of the view that no disallowance is called purposes. Therefore I am of the view that no disallowance is called for in respect of depreciation on the facts of the present case. for in respect of depreciation on the facts of the present case. for in respect of depreciation on the facts of the present case. Consequently the ground taken by the assessee is allowed. Consequently the ground taken by the assessee is allowed. Consequently the ground taken by the assessee is allowed.” 10.2 Thus the Tribunal Tribunal in assessment year 2013-14 has decided the 14 has decided the issue on the facts of that particular year that particular year, and held that there was no , and held that there was no personal use of the helicopter personal use of the helicopter. Therefore, in the year under Therefore, in the year under consideration, we have to examine personal use of helicopter. consideration, we have to examine personal use of helicopter. consideration, we have to examine personal use of helicopter.

10.3 The assessee has claimed deprec The assessee has claimed depreciation on helicopter within the iation on helicopter within the provisions of section 32 of the provisions of section 32 of the Act. The section 32 (1) has prescribed . The section 32 (1) has prescribed that in respect of depreciation of building, machinery, plant or that in respect of depreciation of building, machinery, plant or that in respect of depreciation of building, machinery, plant or

Sheth Creators Private Limited Sheth Creator 18 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

furniture, being tangible asset, which are owned, wholly or partly by furniture, being tangible asset, which are owned, wholly or partly by furniture, being tangible asset, which are owned, wholly or partly by the assessee and used for the purpose of the business or profession the assessee and used for the purpose of the business or profession the assessee and used for the purpose of the business or profession deduction shall be allowed percentage on the written down value as deduction shall be allowed percentage on the written down value as deduction shall be allowed percentage on the written down value as prescribed under Rule Rule 5(1) and Appendix-I of Income Income-tax Rules, 1962. Under the rules, the assessee has claimed (1/4 Under the rules, the assessee has claimed (1/4 Under the rules, the assessee has claimed (1/4th) one fourth share of the depreciation on the helicopter. share of the depreciation on the helicopter.

10.4 The section 38(2) of the The section 38(2) of the Act prescribe that where any building that where any building, machinery, plant of furniture is not exclusively used for the machinery, plant of furniture is not exclusively used for the machinery, plant of furniture is not exclusively used for the purpose of the business of profession, then depreciation under section 32 of the business of profession, then depreciation under section 32 of the business of profession, then depreciation under section 32 shall be restricted to shall be restricted to fair proportionate part thereof, which the proportionate part thereof, which the Assessing Officer may determine having regard to the user of such may determine having regard to the user of such may determine having regard to the user of such building machinery plant of furniture for the purp building machinery plant of furniture for the purpose of business or ose of business or profession.

10.5 The Tribunal in the case of in the case of Avinash Nivrutti Bhosale (supra) Nivrutti Bhosale (supra) also invoking section 38(2) of the also invoking section 38(2) of the Act, held in principle that held in principle that Assessing Officer is is under obligation to determine the under obligation to determine the fair

Sheth Creators Private Limited Sheth Creator 19 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

proportion having regard to the use of such machinery and for that proportion having regard to the use of such machinery and for that proportion having regard to the use of such machinery and for that purpose reliable data has to be supplied either by the assessee or to purpose reliable data has to be supplied either by the assessee or to purpose reliable data has to be supplied either by the assessee or to

be garnered by the be garnered by the Assessing Officer. The relevant finding of the . The relevant finding of the Tribunal is reproduced as under: is reproduced as under:

“10. We have heard t 10. We have heard the parties and perused the orders and the he parties and perused the orders and the paper books made available to us. Undisputed facts are that the paper books made available to us. Undisputed facts are that the paper books made available to us. Undisputed facts are that the assessee used both Bell helicopter as well as the Cessna aircraft for assessee used both Bell helicopter as well as the Cessna aircraft for assessee used both Bell helicopter as well as the Cessna aircraft for the mixed use and therefore, there is no dispute on the invoking of the mixed use and therefore, there is no dispute on the invoking of the mixed use and therefore, there is no dispute on the invoking of the provisions of ns of section 38(2) of the Act. Further, there is no of the Act. Further, there is no dispute that the AO restricted the disallowance art 1/7th of the dispute that the AO restricted the disallowance art 1/7th of the dispute that the AO restricted the disallowance art 1/7th of the claim. The same is evidenced by filing the copies of the assessment claim. The same is evidenced by filing the copies of the assessment claim. The same is evidenced by filing the copies of the assessment orders for the AYs orders for the AYs 2002-03 to AYs 2004-05. They are placed at 05. They are placed at pages 128 to 145 of the paper book. For the instant year, the AO pages 128 to 145 of the paper book. For the instant year, the AO pages 128 to 145 of the paper book. For the instant year, the AO adopted 30% as against 1/7th in the past and therefore the issue adopted 30% as against 1/7th in the past and therefore the issue adopted 30% as against 1/7th in the past and therefore the issue travelled to the Tribunal for the first time for the instant AY. Before, travelled to the Tribunal for the first time for the instant AY. Before, travelled to the Tribunal for the first time for the instant AY. Before, it is adequately made out that the 1/7th is reasonable. Therefore quately made out that the 1/7th is reasonable. Therefore quately made out that the 1/7th is reasonable. Therefore the issue in dispute is whether the disallowance on accounts of the issue in dispute is whether the disallowance on accounts of the issue in dispute is whether the disallowance on accounts of aviation expenses and the depreciation of both Bell Helicoptor and aviation expenses and the depreciation of both Bell Helicoptor and aviation expenses and the depreciation of both Bell Helicoptor and the Cessna Aircraft should be restricted to 1/7th of the claim or no the Cessna Aircraft should be restricted to 1/7th of the claim or no the Cessna Aircraft should be restricted to 1/7th of the claim or not.

Building, etc, partly used for business, etc, or not exclusively so Building, etc, partly used for business, etc, or not exclusively so Building, etc, partly used for business, etc, or not exclusively so used Section 38(1) Section 38(1)....

Sheth Creators Private Limited Sheth Creator 20 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

(2) Where any building, machinery, plant or furniture is not (2) Where any building, machinery, plant or furniture is not (2) Where any building, machinery, plant or furniture is not exclusively used for the purposes of the business or profession, the exclusively used for the purposes of the business or profession, the exclusively used for the purposes of the business or profession, the deductions under sub deductions under sub-clause (ii) of clause (a) and clause (c) clause (ii) of clause (a) and clause (c) of section 30, clauses (i) and (ii) of , clauses (i) and (ii) of section 31 and clause (ii) of sub and clause (ii) of sub- section (1) of section 32 section 32 shall be restricted to a fair proportionate restricted to a fair proportionate part thereof which the Assessing Officer may determine, having part thereof which the Assessing Officer may determine, having part thereof which the Assessing Officer may determine, having regard to the user of such building, machinery , plant or furniture regard to the user of such building, machinery , plant or furniture regard to the user of such building, machinery , plant or furniture for the purposes of the business or profession." for the purposes of the business or profession." From the above, it is evident that the re From the above, it is evident that the restriction should be a 'fair striction should be a 'fair proportionate part thereof which the Assessing Officer may proportionate part thereof which the Assessing Officer may proportionate part thereof which the Assessing Officer may determine, having regard to the user of such ....., machinery , plant determine, having regard to the user of such ....., machinery , plant determine, having regard to the user of such ....., machinery , plant or ..... for the purposes of the business or profession'. If the or ..... for the purposes of the business or profession'. If the or ..... for the purposes of the business or profession'. If the requirement of the law that the A. requirement of the law that the A.O is under obligation to determine O is under obligation to determine having regard to the user of such machinery for determining the having regard to the user of such machinery for determining the having regard to the user of such machinery for determining the same, there is need for reliable data either supplied by the assessee same, there is need for reliable data either supplied by the assessee same, there is need for reliable data either supplied by the assessee or garnered by the A.O. Neither is available in this case. or garnered by the A.O. Neither is available in this case.” 10.6 In the case of Poonawa In the case of Poonawala Finvest & Agro P. Ltd Ltd. (supra) also disallowance for depreciation and other expenses on helicopter disallowance for depreciation and other expenses on helicopter disallowance for depreciation and other expenses on helicopter toward non-business use have been upheld by the business use have been upheld by the business use have been upheld by the Tribunal. Similarly in the case of Similarly in the case of Kirloskar Oil Engine Ltd. Ltd. vide ITA No. 1039 & 1040 for AY 1995 1039 & 1040 for AY 1995-96 & 1996-97, disallowance of a part of , disallowance of a part of the expenses of aircraft for nonbusiness use have been upheld by the expenses of aircraft for nonbusiness use have been upheld by the expenses of aircraft for nonbusiness use have been upheld by the Tribunal, Pune Bench. , Pune Bench.

Sheth Creators Private Limited Sheth Creator 21 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

10.7 In view of above stat In view of above statutory provisions and precedents utory provisions and precedents, it is undisputed that if the helicopter has been used for non undisputed that if the helicopter has been used for non undisputed that if the helicopter has been used for non-business purposes then fair proportionate of depreciation has to be restricted proportionate of depreciation has to be restricted proportionate of depreciation has to be restricted in terms of section 38(2) of the in terms of section 38(2) of the Act. In the instant case before us t In the instant case before us the issue-in-dispute finally precipitate as dispute finally precipitate as to whether whether there was any personal use/non-business use business use of the helicopter or otherwise or otherwise the trips of the helicopter have been carried out for the purpose of the trips of the helicopter have been carried out for the purpose of the trips of the helicopter have been carried out for the purpose of the business of the assessee as well as other three co business of the assessee as well as other three co business of the assessee as well as other three co-owners wholly and exclusively.

10.8 From the orders of the lower authorities and the paperbook From the orders of the lower authorities and the paperbook From the orders of the lower authorities and the paperbook and other documents pr and other documents produced by the assessee before us duced by the assessee before us, we find that in the year under consideration n the year under consideration the assessee has nowhere he assessee has nowhere connected the trips with its offices or business locations connected the trips with its offices or business locations connected the trips with its offices or business locations. In the year under consideration no under consideration no real estate project was carried out by the project was carried out by the assessee. The assessee has not submitted any evidence of ssessee has not submitted any evidence of ssessee has not submitted any evidence of conducting meeting with any customers or for buying land or for conducting meeting with any customers or for buying land or for conducting meeting with any customers or for buying land or for

Sheth Creators Private Limited Sheth Creator 22 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

attending any conference except making a general statement. attending any conference except making a general statement. attending any conference except making a general statement. The assessee has filed a photo copy of logbook before the Ld. CIT(A) and assessee has filed a photo copy of logbook before the Ld. CIT(A) and assessee has filed a photo copy of logbook before the Ld. CIT(A) and claimed that same was maintained by the pilot of the helicopter as e was maintained by the pilot of the helicopter as e was maintained by the pilot of the helicopter as per the Rules of civil aviation authority. This logbook does not of civil aviation authority. This logbook does not of civil aviation authority. This logbook does not contain name of the persons who travelled and therefore it is not an contain name of the persons who travelled and therefore it is not an contain name of the persons who travelled and therefore it is not an evidence to substantiate whether the evidence to substantiate whether the helicopter was used wholly helicopter was used wholly and exclusively for the purpose of the business of the assessee only. lusively for the purpose of the business of the assessee only. lusively for the purpose of the business of the assessee only. It is to be particularly noted here that co It is to be particularly noted here that co-owners claimed to owners claimed to have shared the funds for purchase of the helicopter as well as for the funds for purchase of the helicopter as well as for the funds for purchase of the helicopter as well as for running and maintenance expenses of the helicopter, but it is running and maintenance expenses of the helicopter, but it is running and maintenance expenses of the helicopter, but it is nowhere clear how the said helicopter has been owhere clear how the said helicopter has been used by the co used by the co- owners in proportion of the expenses shared. Even, it is not clear owners in proportion of the expenses shared. Even, it is not clear owners in proportion of the expenses shared. Even, it is not clear from the logbook presented by the assessee, from the logbook presented by the assessee, as which co which co-owner used the helicopter for which trip. It is the onus of the assessee the helicopter for which trip. It is the onus of the assessee to the helicopter for which trip. It is the onus of the assessee demonstrate with evidences as to out of the tota demonstrate with evidences as to out of the total trips recorded in l trips recorded in the logbook, which particular trip , which particular trips was in relation to his business was in relation to his business

Sheth Creators Private Limited Sheth Creator 23 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

and who travelled in and who travelled in those trips along with the specific purpose of along with the specific purpose of the trip. The assessee has filed a copy of the MO The assessee has filed a copy of the MO The assessee has filed a copy of the MOU entered into among the members of AOP i.e. co among the members of AOP i.e. co-owners of the helicopter owners of the helicopter, which is available on page43 to 52 of the paperbook. The clause 19 of the available on page43 to 52 of the paperbook. The clause 19 of the available on page43 to 52 of the paperbook. The clause 19 of the said MOU reads as under: said MOU reads as under:

“19. The Helicopter shall be Mumbai based, accordingly who so The Helicopter shall be Mumbai based, accordingly who so The Helicopter shall be Mumbai based, accordingly who so ever uses the Craft ever uses the Craft shall be charged for the flight including return to shall be charged for the flight including return to Mumbai (Round trip). Flight schedule shall be calculated to the Co Mumbai (Round trip). Flight schedule shall be calculated to the Co Mumbai (Round trip). Flight schedule shall be calculated to the Co- owners on daily/weekly basis. owners on daily/weekly basis.” 10.9 According to the above clause user of the helicopter has been to the above clause user of the helicopter has been to the above clause user of the helicopter has been charged for the flight including return charged for the flight including return to Mumbai, and therefore all to Mumbai, and therefore all details i.e. which trips have been undertaken by which co which trips have been undertaken by which co which trips have been undertaken by which co-owner, must be available with the AOP. For determination of fair proportion must be available with the AOP. For determination of fair proportion must be available with the AOP. For determination of fair proportion of depreciation in case of depreciation in case, particularly use of the helicopter for non use of the helicopter for non- business purposes, it is business purposes, it is essential either the assessee provide all the essential either the assessee provide all the details of trips carried by the specific business purpose along with carried by the specific business purpose along with carried by the specific business purpose along with the persons and places travelled the persons and places travelled, duly supported with documentary , duly supported with documentary

Sheth Creators Private Limited Sheth Creator 24 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

evidences or the Assessing Officer Assessing Officer has to carry out inquiries from has to carry out inquiries from the office of the concerned civil aviation authority or concerned ice of the concerned civil aviation authority or concerned ice of the concerned civil aviation authority or concerned administrations responsible for maintaining records of helicopter administrations responsible for maintaining records of helicopter administrations responsible for maintaining records of helicopter landing management. management. The Assessing Officer should determine the should determine the proportion of the non proportion of the non-business use by the all four co business use by the all four co-owners, and then restrict the depreciation which could be allowed in te then restrict the depreciation which could be allowed in te then restrict the depreciation which could be allowed in terms of section 38(2) of the Act section 38(2) of the Act. Subsequently, compute the proportion of he proportion of depreciation (i.e. 1/4 i.e. 1/4th amount) which could be allowed to the amount) which could be allowed to the assessee.

10.10 In absence of such evidence In absence of such evidences, we feel it app , we feel it appropriate to restore this issue back to file of the restore this issue back to file of the Assessing Officer Assessing Officer for deciding afresh after examining the documentary evidence either presented fresh after examining the documentary evidence either presented fresh after examining the documentary evidence either presented by the Assessing Officer Assessing Officer or gathered by the Assessing Officer Assessing Officer through inquiries which he deemed fit in the fa through inquiries which he deemed fit in the facts of the case. It is cts of the case. It is needless to mention that adequate opportunity of being heard needless to mention that adequate opportunity of being heard needless to mention that adequate opportunity of being heard shall

Sheth Creators Private Limited Sheth Creator 25 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

be afforded to the assessee be afforded to the assessee. The ground No. 1 of the appeal of the of the appeal of the assessee is accordingly allowed for statistical purposes. assessee is accordingly allowed for statistical purposes. assessee is accordingly allowed for statistical purposes.

Sheth Creators Private Limited Sheth Creator 26 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

under relevant enactment, has been made in ant enactment, has been made ineligible for deduction, eligible for deduction, however said amendment has been held prospective by the however said amendment has been held prospective by the however said amendment has been held prospective by the Tribunal, Mumbai Bench in the case of , Mumbai Bench in the case of DCIT v. Maharashtra DCIT v. Maharashtra Tourism Development Corporation [ITA No. 6426/M/2017] (AY ent Corporation [ITA No. 6426/M/2017] (AY ent Corporation [ITA No. 6426/M/2017] (AY 2012-13), order dated 27.07.2021 13), order dated 27.07.2021.

“16. Before us, the learned CIT DR Ms. Mamta Bansal stated that 16. Before us, the learned CIT DR Ms. Mamta Bansal stated that 16. Before us, the learned CIT DR Ms. Mamta Bansal stated that there is no question of allowance of differential payment of there is no question of allowance of differential payment of there is no question of allowance of differential payment of ₹65,462/- which has never been paid by the assessee and the which has never been paid by the assessee and the which has never been paid by the assessee and the amount which are not paid by the assessee amounting to amount which are not paid by the assessee amounting to amount which are not paid by the assessee amounting to

Sheth Creators Private Limited Sheth Creator 27 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

₹1,28,798/- being claimed on account of employees contribution of being claimed on account of employees contribution of being claimed on account of employees contribution of provident fund. The balance amount of provident fund. The balance amount of ₹9,08,873/- was paid after was paid after the due date as prescribed under the provident fund Act. She stated the due date as prescribed under the provident fund Act. She stated the due date as prescribed under the provident fund Act. She stated that the Assessing Officer clearly brought out the amount that the Assessing Officer clearly brought out the amount that the Assessing Officer clearly brought out the amount due and amount paid. Now, the learned CIT DR further stated that there is amount paid. Now, the learned CIT DR further stated that there is amount paid. Now, the learned CIT DR further stated that there is an amendment in the Provisions of Section 36(va), wherein an amendment in the Provisions of Section 36(va), wherein an amendment in the Provisions of Section 36(va), wherein explanation 2 was added by the Finance Act 2021, with effect from explanation 2 was added by the Finance Act 2021, with effect from explanation 2 was added by the Finance Act 2021, with effect from 01.04.2021 and the relevant explanation read as under: 01.04.2021 and the relevant explanation read as under: -

“[Explanation- -2- For the removal of doubts, it is hereby clarified For the removal of doubts, it is hereby clarified that the provisions of section 43B shall not apply and shall be that the provisions of section 43B shall not apply and shall be that the provisions of section 43B shall not apply and shall be deemed never to have been applied for the purposes of determining deemed never to have been applied for the purposes of determining deemed never to have been applied for the purposes of determining the “due date” under this clause;] the “due date” under this clause;]

Sheth Creators Private Limited Sheth Creator 28 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

36(1)(va) of the Act by inserting explanation 2 as well as 36(1)(va) of the Act by inserting explanation 2 as well as 36(1)(va) of the Act by inserting explanation 2 as well as explanation 5 to section 43B vide Finance Act, 2021 w explanation 5 to section 43B vide Finance Act, 2021 with effect from ith effect from 01.04.2021, wherein it is clarified that the provisions of section shall 01.04.2021, wherein it is clarified that the provisions of section shall 01.04.2021, wherein it is clarified that the provisions of section shall not apply and shall be deemed to have been applied to a sum not apply and shall be deemed to have been applied to a sum not apply and shall be deemed to have been applied to a sum received by assessee from any of his employees covered by section received by assessee from any of his employees covered by section received by assessee from any of his employees covered by section 2(24)(x) of the Act because this explanat 2(24)(x) of the Act because this explanations are prospective and ions are prospective and not retrospective. The relevant Para 2 of the case reads as under: not retrospective. The relevant Para 2 of the case reads as under: not retrospective. The relevant Para 2 of the case reads as under: -

“2. Coming to the sole substantive issue of ESI/PF disallowance of “2. Coming to the sole substantive issue of ESI/PF disallowance of “2. Coming to the sole substantive issue of ESI/PF disallowance of Rs. 1,09,343/- and Rs. 3,52,622/-, the assessee's and revenue's stand , the assessee's and revenue's stand is that the same has bee is that the same has been paid before the due date of filing sec. n paid before the due date of filing sec. 139(1) return and after the due date prescribed in the 139(1) return and after the due date prescribed in the 139(1) return and after the due date prescribed in the corresponding statutes; respectively. I notice in corresponding statutes; respectively. I notice in this factual this factual backdrop that the legislature has not only incorporated necessary backdrop that the legislature has not only incorporated necessary backdrop that the legislature has not only incorporated necessary amendments in Sections 36(va) amendments in Sections 36(va) as well as 43B vide Finance Act, as well as 43B vide Finance Act, 2021 to this effect but also the CBDT has issued Memorandum of 2021 to this effect but also the CBDT has issued Memorandum of 2021 to this effect but also the CBDT has issued Memorandum of Explanation that the same applies w.e.f. 1 Explanation that the same applies w.e.f. 1-4-2021 only. It is further 2021 only. It is further not an issue that the forergoing legislative amendments have not an issue that the forergoing legislative amendments have not an issue that the forergoing legislative amendments have proposed employers contributi proposed employers contributions; disallowances u/s 43B as ons; disallowances u/s 43B as against employee u/s 36 (va) of the Act; respectively. However, against employee u/s 36 (va) of the Act; respectively. However, against employee u/s 36 (va) of the Act; respectively. However, keeping in mind the fact that the same has been clarified to be keeping in mind the fact that the same has been clarified to be keeping in mind the fact that the same has been clarified to be applicable only with prospective effect from 1 applicable only with prospective effect from 1-4-2021, I hold that 2021, I hold that the impugned disallowance is no the impugned disallowance is not sustainable in view of all these t sustainable in view of all these latest developments even if the Revenue's case is supported by the latest developments even if the Revenue's case is supported by the latest developments even if the Revenue's case is supported by the following case law.” following case law.”

Sheth Creators Private Limited Sheth Creator 29 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

application with effect from 01.04.2021. application with effect from 01.04.2021. Hence, we find no Hence, we find no infirmity in the order of Commissioner of Income Tax (Appeals). infirmity in the order of Commissioner of Income Tax (Appeals). infirmity in the order of Commissioner of Income Tax (Appeals). Hence, the appea Hence, the appeal of the Revenue is dismissed.” (emphasized supplied externally) (emphasized supplied externally) 15. Therefore, respectfully following the same, the addition for respectfully following the same, the addition for respectfully following the same, the addition for delayed payment of PF/ESIC amounting to delayed payment of PF/ESIC amounting to ₹3,02,607/ 607/-is directed to be deleted. The ground of the appeal of the assessee is acco be deleted. The ground of the appeal of the assessee is acco be deleted. The ground of the appeal of the assessee is accordingly allowed.

Sheth Creators Private Limited Sheth Creator 30 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

assessee paid interest of assessee paid interest of ₹40,85,488/- in respect of this loan and in respect of this loan and therefore this interest expenditure is directly attributable to the therefore this interest expenditure is directly attributable to the therefore this interest expenditure is directly attributable to the dividend income and therefore he dividend income and therefore he disallowed the said interest sallowed the said interest expenditure and after expenditure and after subtracting the suo moto disallowance by the disallowance by the assessee, made addition for the net amount of assessee, made addition for the net amount of ₹19,52, 19,52,896/-. The Ld. CIT(A) also upheld the disallowance. CIT(A) also upheld the disallowance.

Sheth Creators Private Limited Sheth Creator 31 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

Sheth Creators Private Limited Sheth Creator 32 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

restore this issue of dis restore this issue of disallowance in terms of section 14 allowance in terms of section 14A of the Act to the file of the Ld. Ld. Assessing Officer for deciding deciding in view of our direction above. The ground of the appeal of the assessee is direction above. The ground of the appeal of the assessee is direction above. The ground of the appeal of the assessee is accordingly allowed for statistical purposes. accordingly allowed for statistical purposes.

ITA No. 1858/MUM/2020 ITA No. 1858/MUM/2020 Assessment Year: 2014 2014-15 21. The ground of appeal for AY 2014 The ground of appeal for AY 2014-15 are reproduced as under: 15 are reproduced as under:

Sheth Creators Private Limited Sheth Creator 33 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

1.3. Commissioner of I.T. (A) erred in not appreciating the fact that 1.3. Commissioner of I.T. (A) erred in not appreciating the fact that 1.3. Commissioner of I.T. (A) erred in not appreciating the fact that the helicopter was only and exclusively used for the purpose of he helicopter was only and exclusively used for the purpose of he helicopter was only and exclusively used for the purpose of business.

2.1. The Ld. AO erred in making an addition on account of delay in 2.1. The Ld. AO erred in making an addition on account of delay in 2.1. The Ld. AO erred in making an addition on account of delay in payment of PF & ESIC payment of PF & ESIC of Rs. 3,91,257/- without appreciating the without appreciating the fact that the appellant has deposited the employees' fact that the appellant has deposited the employees' contribution to contribution to PF & ESIC before filing of income tax return due as per Section PF & ESIC before filing of income tax return due as per Section PF & ESIC before filing of income tax return due as per Section 139(1) of the I.T. Act. 139(1) of the I.T. Act.

2.2. The Ld. AO erred in not appreciating the fact that 2.2. The Ld. AO erred in not appreciating the fact that the Hon'ble the Hon'ble Supreme Court in case of Alom Extrusion Ltd. 319 ITR 306 has held Supreme Court in case of Alom Extrusion Ltd. 319 ITR 306 has held Supreme Court in case of Alom Extrusion Ltd. 319 ITR 306 has held that if the employees contribution to PF & ESIC is paid before the that if the employees contribution to PF & ESIC is paid before the that if the employees contribution to PF & ESIC is paid before the filing of IT return than there would not be any disallowance under filing of IT return than there would not be any disallowance under filing of IT return than there would not be any disallowance under Section 2(24)(x) r.w.s. 36(1)(va) of I.T. Ac Section 2(24)(x) r.w.s. 36(1)(va) of I.T. Act.

a. Disallowance of Rs. 84,36,022/ Disallowance of Rs. 84,36,022/- on account of 20% Depreciation on account of 20% Depreciation claimed on Helicopter may be deleted. claimed on Helicopter may be deleted.

b. Addition made u/s.2(24)(x) r.w.s. 36(1)(va) for delay in payment b. Addition made u/s.2(24)(x) r.w.s. 36(1)(va) for delay in payment b. Addition made u/s.2(24)(x) r.w.s. 36(1)(va) for delay in payment of PF & ESIC of Rs.3,91,257/ of PF & ESIC of Rs.3,91,257/- may be deleted.

c. The Appellant plead before Honorable ITAT to add, alter or Appellant plead before Honorable ITAT to add, alter or Appellant plead before Honorable ITAT to add, alter or amend any or all grounds of appeal before or at the time of hearing. amend any or all grounds of appeal before or at the time of hearing. amend any or all grounds of appeal before or at the time of hearing.

Sheth Creators Private Limited Sheth Creator 34 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

ITA No. 2012/MUM/2020 ITA No. 2012/MUM/2020 Assessment Year: 2014 2014-15 21.1 Now, we take the cross Now, we take the cross-appeal for AY 2014-15. The Ground of 15. The Ground of appeal of Revenue are reproduced as under: are reproduced as under:

“1. "Whether, on the facts and circumstances of the case and in law, 1. "Whether, on the facts and circumstances of the case and in law, 1. "Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in directing the AO to restrict the the Ld. CIT(A) was justified in directing the AO to restrict the the Ld. CIT(A) was justified in directing the AO to restrict the disallowance of Rs 2,10,90,055/ disallowance of Rs 2,10,90,055/-on account of 50% of expenditure on account of 50% of expenditure claimed on helicopter to 20% of such expenditure for which claimed on helicopter to 20% of such expenditure for which claimed on helicopter to 20% of such expenditure for which no documentary evidences in the form of log book, user of helicopter documentary evidences in the form of log book, user of helicopter documentary evidences in the form of log book, user of helicopter has been submitted during the course of assessment proceedings to has been submitted during the course of assessment proceedings to has been submitted during the course of assessment proceedings to prove that personal element of expenditure was not involved prove that personal element of expenditure was not involved prove that personal element of expenditure was not involved therein." 2. "Whether, on the fact and circumstances of the 2. "Whether, on the fact and circumstances of the case and in law, case and in law, the Ld. CIT(A), was justified in deleting the entire business the Ld. CIT(A), was justified in deleting the entire business the Ld. CIT(A), was justified in deleting the entire business promotions expenses of Rs 19,56,530/ promotions expenses of Rs 19,56,530/- even when the assessee could even when the assessee could not substantiate such expenses with documentary evidence to not substantiate such expenses with documentary evidence to not substantiate such expenses with documentary evidence to demonstrate as to whether these expenditure had b demonstrate as to whether these expenditure had been incurred een incurred wholly and exclus wholly and exclusively for the business purpose.” 22. The ground No. The ground No. 1 of the appeal of the assessee and ground No. 1 of the appeal of the of the appeal of the Revenue are related to disallowance of are related to disallowance of depreciation on helicopter. Since this ground is identical to the depreciation on helicopter. Since this ground is identical to the depreciation on helicopter. Since this ground is identical to the ground No. 1 of the appeal of the assessee for assessment of 2015 of the appeal of the assessee for assessment of 2015 of the appeal of the assessee for assessment of 2015-

Sheth Creators Private Limited Sheth Creator 35 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

16, which we have already restore to the file of the 16, which we have already restore to the file of the Assessing Officer Assessing Officer, therefore following the same, both these grounds of the appeal of therefore following the same, both these grounds of the appeal of therefore following the same, both these grounds of the appeal of the assessee and the Revenue Revenue are allowed for statistical purposes. tical purposes.

Sheth Creators Private Limited Sheth Creator 36 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

(supra) and deleted the addition deleted the addition observing as under: as under:

“7.2 The order of the AO and the submission made by the 7.2 The order of the AO and the submission made by the 7.2 The order of the AO and the submission made by the assessee have been examined. It is noted that the AO has assessee have been examined. It is noted that the AO has assessee have been examined. It is noted that the AO has concluded that the assessee has failed to submit any concluded that the assessee has failed to submit any concluded that the assessee has failed to submit any agreement agreement with sister companies wherein it was to be with sister companies wherein it was to be compensated in the form of interest for services in the compensated in the form of interest for services in the compensated in the form of interest for services in the nature of exhibition expense. However, perusal of the P&L nature of exhibition expense. However, perusal of the P&L nature of exhibition expense. However, perusal of the P&L account of the assessee shows that the assessee has shown account of the assessee shows that the assessee has shown account of the assessee shows that the assessee has shown interest income of Rs 90.79 crore and re interest income of Rs 90.79 crore and reimbursement imbursement income of Rs 17.36 crore. The assessee submits that the income of Rs 17.36 crore. The assessee submits that the income of Rs 17.36 crore. The assessee submits that the amount of Rs 19,56,530/ amount of Rs 19,56,530/- is a part of this reimbursement is a part of this reimbursement and needs to be allowed. It is noted that this issue was and needs to be allowed. It is noted that this issue was and needs to be allowed. It is noted that this issue was adjudicated by ITAT in ITA No. 5450/M/2016 dated adjudicated by ITAT in ITA No. 5450/M/2016 dated adjudicated by ITAT in ITA No. 5450/M/2016 dated 14.5.2018 for AY 2013 14.5.2018 for AY 2013-14 wherein the ITAT has decided the wherein the ITAT has decided the issue observing that: issue observing that:

"Having heard both the parties and perusing the relevant "Having heard both the parties and perusing the relevant "Having heard both the parties and perusing the relevant material on record and also the impugned order, we find material on record and also the impugned order, we find material on record and also the impugned order, we find that in this case the Ld:CIT(A) has recorded a finding of that in this case the Ld:CIT(A) has recorded a finding of that in this case the Ld:CIT(A) has recorded a finding of fact that assessee has receive fact that assessee has received reimbursement of expenses d reimbursement of expenses to the tune of Rs.2.85 crores by way of reimbursement of to the tune of Rs.2.85 crores by way of reimbursement of to the tune of Rs.2.85 crores by way of reimbursement of administrative expenses incurred on behalf of the group administrative expenses incurred on behalf of the group administrative expenses incurred on behalf of the group companies by the assessee. The administration expenses companies by the assessee. The administration expenses companies by the assessee. The administration expenses included exhibition expenses also. Considering all these included exhibition expenses also. Considering all these included exhibition expenses also. Considering all these facts ts ts the the the Ld.CIT(A) Ld.CIT(A) Ld.CIT(A) deleted deleted deleted the the the disallowance disallowance disallowance of of of Rs.39,99,977/ Rs.39,99,977/-. In view of these facts, we are of the opinion . In view of these facts, we are of the opinion

Sheth Creators Private Limited Sheth Creator 37 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

that Ld.CIT(A) has taken a correct view of the matter and that Ld.CIT(A) has taken a correct view of the matter and that Ld.CIT(A) has taken a correct view of the matter and as such the order of Ld.CIT(A) does not suffer from any as such the order of Ld.CIT(A) does not suffer from any as such the order of Ld.CIT(A) does not suffer from any infirmity or illegality and therefo infirmity or illegality and therefore the same is affirmed by re the same is affirmed by dismissing the ground raised by the assessee. dismissing the ground raised by the assessee. 7.3 The facts remain the same in this year. Respectfully 7.3 The facts remain the same in this year. Respectfully 7.3 The facts remain the same in this year. Respectfully following the decision of ITAT in assessee's own case, the following the decision of ITAT in assessee's own case, the following the decision of ITAT in assessee's own case, the AO is directed to allow the claim. The ground Nos.3 & 6 is AO is directed to allow the claim. The ground Nos.3 & 6 is AO is directed to allow the claim. The ground Nos.3 & 6 is decided decided in favour of the assessee and is allowed.” 27. Since the necessary agreement in respect of reimbursement of the necessary agreement in respect of reimbursement of the necessary agreement in respect of reimbursement of exhibition expenses were not made available before the exhibition expenses were not made available before the exhibition expenses were not made available before the Assessing Officer, we feel it appropriate to restore this issue to the file of the , we feel it appropriate to restore this issue to the file of the , we feel it appropriate to restore this issue to the file of the Ld. Assessing Officer for decide in accordance with the finding of the for decide in accordance with the finding of the Tribunal (supra) after verifying the necessary documents in support after verifying the necessary documents in support after verifying the necessary documents in support of the claim of the assessee. The ground of the claim of the assessee. The ground No. 2 of the appeal of of the appeal of Revenue is accordingly allowed for statistical purposes. is accordingly allowed for statistical purposes. is accordingly allowed for statistical purposes.

Sheth Creators Private Limited Sheth Creator 38 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

our finding this issue our finding this issue in the year under consideration is also in the year under consideration is also restored back to the file of the restored back to the file of the Ld. Assessing Officer Assessing Officer for deciding afresh as per directions given in assessment year 2015 afresh as per directions given in assessment year 2015 afresh as per directions given in assessment year 2015-16. This ground of the appeal is accordingly allowed for statistica ground of the appeal is accordingly allowed for statistica ground of the appeal is accordingly allowed for statistical purposes.

Sheth Creators Private Limited Sheth Creator 39 ITA Nos. 2620/M/2019 & Four Ors. ITA Nos. 2620/M/2019 & Four Ors.

Order pronounced in the Court on ced in the Court on 12/08/2022. Sd/- Sd/- - (SANDEEP SINGH KARHAIL SANDEEP SINGH KARHAIL) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 12/08/2022 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Sr. Private Secretary Sr. Private Secretary) ITAT, Mumbai ITAT, Mumbai