JET AIRWAYS (INDIA) LTD,MUMBAI vs. DCIT RG 5(2), MUMBAI

933/M/15(08-09);758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- 3.Next effective Ground (GOA. 2-3)is about disallowance of provision on account of redelivery of aircraft amounting to Rs.6.12 crores both under normal computation and u/s.115JB of the Act.The AO held that the issue to be considered about the dispute in question was as to whether the expenses accrued and claimed on the basis of ascertained liability or worth simple estimation.He further observed that the redelivery of aircraft would take place upon the expiration of the termination of lease period, that such expenses were to be borne by the assessee is provided in the lease agreement, that the assessee had to maintain operational control of the aircraft in accordance with the various rules regulations, that all the cost incurred in the operation of the aircraft during operational period were to be borne by assessee and the same was allowed in actual, that the expenses of repainting and ferrying cost accrued only at the time of redelivery over and above such cost and could be allowed in that particular year,that the provision for redelivery charges on estimation was a liability contingent on the future date of redelivery when such expenses could be allowed in actual as per the provisions of the Act,that if the term of lease was extended or no such specific provisions were provided in the terms of lease agreement then such provisions were not to be allowed,even if conservatively provided through of consistent policy. 3.1.During the appellate proceedings,the FAA following the orders of the tribunal for the assessment years 1997-98 to 2007-08 allowed the appeal of the assessee. 3.2.Before us,the DR argued that each year was different and distinct year as far as assessment was concerned,that principle of res judicata was not applicable to income tax proceedings,that the finding on the facts for one year could change in the subsequent years,that the facts found by the Tribunal were relevant and were to be considered for being identical, that unless the Tribunal came to an independent finding as to the facts of two cases being in pari material order passed by it in one case could not be regarded as covering the other, that cases not examined by the Tribunal on merits could not be treated as precedent in absence of independent finding of fact, that Tribunal had to decide the cases on merits and not on the basis of concessions,that expenses of reconditioning of aircraft for making it in good technical condition with all due and statutory checks were to be allowed in actuals u/s. 31 of the Act, that such provisions irrespective of accrued liability had to be examined u/s. 31 of the Act, that allowability of provisions irrespective of the same being contingent or capital could not be allowed u/s. 37 (1) of the Act, 933/M/15(08-09);758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- that the assessee incurred such expenditure regularly for normal aviation business and claimed the expenditure without bifurcations, that it had not bifurcated the expenses between several business and redelivery purposes, that detail said to be examined about what are specific expenditure so incurred in relation to redelivery of aircrafts, as against the provisions created in earlier years actual expenditures were to be examined,that there were different terms and conditions for lease agreement for each aircraft, that before providing and allowing provisions on uniform rate terms and conditions of particular aircraft had to be taken into consideration,that provision of redelivery was contingent to that extent being not based on proper method of estimation, that at the time of taking the aircraft delivery on lease such expendi -ture on the redelivery were ascertainable, that such expenditure had to be capitalised for each aircraft as cost of asset, that for some of the aircraft the lease agreement provided the ownership to the assessee, that in such cases providing redelivery charges remained contingent upon owner -ship,that the AO had referred to the hire purchase agreement in his order, that such facts were never before the Tribunal in the earlier years when the issue was deliberated upon, is that expenses of C- check,painting were not bifurcated between regular business and for redelivery purposes,that there was no clarity as what would be the treatment of provision in case of no delivery of aircraft would take place,that it was necessary to consider a net impact after reimbursement of expenses by lessor,that the redelivery expenses should be capitalised, that redelivery provisions were claimed for aircraft taken on hire purchase and finance lease. 3.2.1.The AR argued that facts were similar to the previous year, that the AO,in the assessment order (Pg.14,para3.7,Pg.15,para4.3)had accepted that there was no difference in the facts for the year under consideration as well as of the facts for the earlier years,that rule of consistency was to be followed for income tax purposes,that the order of the Tribunal were passed on merits, that in the earlier years the Department admitted that litigation was covered by the orders of the Tribunal,that such a statement made by the then DR could not be considered as granting of concession, that expenses of painting etc. were separately bifurcated, that the assertion made by the DR,in that regard,was factually incorrect,that the AO/FAA had not advanced any argument about painting expenses,that in case there was any extension of lease the assessee would not provide additional provision,that the existing provision were being utilised on the redelivery date, that the issue of treatment of provision in case of redelivery of aircraft was not the case of 933/M/15(08-09);758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- the AO/FAA, that the issue of net impact after reimbursement of expenses by lessor was already considered by the Tribunal while deciding the appeal for the AY 2006-07 (paragraph 6 of page 115-117 of the paper book), that aircraft were taken on operating lease, that the expenditure was not capitalised,that DR was factually incorrect in stating that redelivery provisions were claimed for aircraft taken on hire purchase and finance lease.He relied upon the cases of Aishwaria K. Rai, Mahindra and Mahindra and Anand Y.Chauhan(supra) .

3.3.We have heard the rival submissions and perused the material before us. We find that the Tribunal had deliberated upon and decided the issue in favour of the assessee and against the AO in the earlier AY.s. We find that while deciding the appeal for the AY.2006 -07,the Tribunal has held as under(ITA.s3865/4200/7383/7317/7316/7312/6690/6594/M/11 dtd.05/ 04/2013). “5. Now, we will take up the appeal of the department i.e. for the assessment year 2006-07. 5.1 Grounds No.1 & 2 in the appeal of the department relate to addition of Rs.3,03,04,715/- under the normal provision of law and the same amount deleted u/s. 115JB of the Act. 5.2 The AO has discussed this issue at pages 13 to 28 in para 11 whereas in appeal, learned CIT(A) has discussed this issue at pages 1 to 8 of his order. Learned counsel of the assessee has filed a chart mentioning the grounds of appeal raised by the department showing pages of the order of the AO as well as of the CIT(A) and the order of the Tribunal for previous years, where the issue is covered by the order of the Tribunal either in favour of the assessee or in favour of the department. 5.3 On the other hand, learned DR made his submission by which the order of the AO has been supported and has been explained also. Attention of the Bench was also drawn on the order of the AO. Part of the order of the AO was read also. It was submitted that no delivery was given by the assessee in this year. Accounting Standard 29 is very clear. It was also submitted that four aircrafts were due to return but have not returned. The heavy expenses have been made by the assessee. Therefore, the disallowance of provision of redelivery of aircrafts amounting to Rs.3..3 crores or odd under the normal provision of law as well as under the provision of Section 115JB of the Act was correct. Learned CIT(A) was not justified in allowing the issue in favour of the assessee. It was also submitted that there was a report by Special Auditor u/s. 142(A), who has discussed the issue in detail, which has been followed by the AO. Since there was a special audit during the year under consideration, therefore, that should have been considered by the learned CIT(A) while deciding the issue in favor of the assessee. It was also submitted in earlier years when the issue was decided in favour of the assessee, there was no special audit u/s. 142(A) of the Act. 5.4 Per Contra, learned counsel of the assessee stated that the issue is squarely covered by the decision of the Tribunal for assessment year 1997-98 to assessment year 2005-06. This decision has been relied upon by the learned CIT(A), copies of which are placed on the record from pages 5 to 85 of the paper book. Regarding the contention of the learned DR that there was a special audit during the year under consideration, it was also submitted that no doubt there was a special audit during the year under consideration but there is no change in facts. Facts are identical for the year under consideration and in earlier years. Regarding the applicability of provision of Accounting Standard 29 of Institute of Chartered Accountants of India. It was also submitted that Accounting Standard 29 & other provision are not new provisions as they are old provisions. This provision has been considered 8 933/M/15(08-09);758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- in earlier years and the claim of the assessee is in accordance with the provision of Institute as well as provision of the Act. It was also submitted that in view of the consistency, the order of the Tribunal has to be followed, which has been followed by the learned CIT(A). Accordingly, he placed reliance on the order of the learned CIT(A). 5.5 We have heard rival submissions and considered them carefully. After considering the submission and perusing the material on record, we found no infirmity in the finding of the learned CIT(A). We noted that the AO disallowed the claim of the assessee under the normal provision of the Act and under the provision of Section 115JB by observing that the provision made in respect of redelivery expenses has not accrued or expended during the year. The said liability has been reported on the basis of certain estimation. Further the nature of provision was found to be contingent in nature and, therefore, the claim of such provision is disallowed. While holding so, reliance was placed on various case laws, which are reproduced in the order of the learned CIT(A) at page 3. Accordingly, the provision made while computing both the income i.e. under normal provision of law as well as u/s.115JB, were disallowed by the AO and were added to the income computed under the normal provision of law as well as u/s.115JB of the Act. Learned CIT(A) after considering the submissions and perusing the material on record, found that this issue has already been decided by the Tribunal for assessment year 1997-98 to 2005-06 and, therefore, the issue was decided by the learned CIT(A) in favour of the assessee on account of both i.e. in respect of provision made under normal provision of the Act as well as the provision made u/s.115JB of the Act. Both the additions were deleted by the learned CIT(A). 5.6 After considering the submission of the assessee as well as of the department, we found no infirmity in the order of the learned CIT(A). The contention of the learned DR that there is no delivery of aircraft during the year and also after Accounting Standard 29, the same cannot be allowed, we found that even if there is no delivery of aircraft, it will not make a difference. Accounting Standard 29 was introduced w.e.f. 1-4-2004 and even after the introduction of Accounting Standard 29, the Tribunal has allowed the same in assessee’s own case for assessment year 2005-06. Even the leave period is extended, the liability will continue to exist. We also found that the method cannot be changed now because the same has been allowed by the Tribunal for the assessment year 1997-98 to 2005-06. There is no material difference in the facts of the year under consideration as well as facts of the earlier years. In view of these facts and circumstances of the case and in view of the rule of consistency, we hold that learned CIT(A) was justified in allowing these two grounds in favour of the assessee following the decision of the Tribunal in assessee’s own case. Accordingly, we confirm the order of the learned CIT(A) on both the issues.” Respectfully following the above,we decide both the grounds against the AO. Here, we would also like to deliberate upon the arguments advanced by the DR. While deciding the first Ground of appeal,we have already held that Rule of consistency has to be followed in income tax proceedings,unless new facts are brought on record in the subsequent years. In the case under consideration,the AO himself had admitted the fact that the facts for the year under consideration were similar to the facts of the earlier years.If it was so, the DR should not have gone beyond the case of the AO/FAA. In that regard we would like to refer to the case of Mahindra and Mahindra, delivered by the Special Bench of the Tribunal (supra). In that matter, the Tribunal has drawn the proverbial ‘Lakshman Rekha’ that should not be crossed by the DR.s.We would like to reproduce the facts and the observation of the Special Bench of the Tribunal and it reads as under:

933/M/15(08-09);758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- “79. After considering the rival submissions and perusing the relevant material on record we find that the Assessing Officer has undoubtedly examined the provisions of the DTAA between India and the UK for deciding the taxability or otherwise of the sums paid to the non-resident. The assessee vide its letter dated February 6, 1999, reproduced on page 9 onwards of the assessment order, categorically stated in paragraph 5.3 that the DTAA between India and the UK was applicable. The Assessing Officer has also not disputed this fact. He has referred to various articles of the DTAA between India and the UK at several places of his order viz. paragraphs 49,50,52,55 etc. At no stage has it been denied by the Assessing Officer that the DTAA between India and the UK was not applicable. In such a situation it is impermissible for the learned Departmental representative to come out with a submission contrary to the finding of the Assessing Officer that DTAA with the UK was not relevant as both the lead managers were residents of countries other than the UK. In view of the admission of the Assessing Officer and the further elaboration of the point in the light of the DTAA between India and the UK, we cannot permit the learned Departmental representative to take a contrary stand from the one taken by the Assessing Officer. In our considered opinion the learned Departmental Representative has no jurisdiction to go beyond the order passed by the Assessing Officer. He cannot raise any point different from that considered by the Assessing Officer or the Commissioner of Income-tax (Appeals). His scope of arguments is confined to supporting or defending the impugned order. He cannot set up an altogether different case. If the learned Departmental representative is allowed to take up a new contention de hors the view taken by the Assessing Officer that would mean the learned authorised representative stepping into the shoes of the Commissioner of Income-tax exercising jurisdiction u/s.

4.Disallowance of provision for redelivery of aircraft amounting Rs. 23.91 lakhs in the income computed u/s. 115 JB of the Act and that under the normal provisions of the Act in respect of aircrafts JWA, JWB, JWC is the subject matter of ground of appeal number 4 and 5 respectively. Following our order for the last two grounds, we decide ground numbers 4 and 5 against the AO, as the principle involved in these grounds are same like the earlier two grounds. Here, we would like to mention that the AO, in his order, had stated that facts were similar to that of the previous years.

933/M/15(08-09);758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- 5.Next ground (GOA-6)deals with disallowance of the depreciation of Rs.175.21 crores,under normal provisions of the Act,on account of depreciation on aircrafts acquired on hire purchase. During the assessment proceedings,the AO found that the assessee had acquired seven(7) aircrafts on hire purchase basis,that all the agreements were on identical lines, that the assessee had an option exercisable by notice to the owner on or prior to the date on which it could redeliver the aircraft to the owner and would make payment of the amounts specified therein to acquire the title to the aircraft by the payment to the owner, that the acquiring of ownership was on the basis of as is where is.He further observed that the purchase option was not absolute and was attatched with other conditions to be fulfilled by it, that to exercise the above option it had to comply with terms such as payments on termination date,intervening event and owner termina - tion,that the terms of agreement of the hire purchase did not appear to be a simple hire purchase agreement regarded as sale,that the owner had all the rights including the right of ownership over the aircraft throughout the period of hire,that the option to be exercised by the assessee had complex conditions before transfer of ownership, that there was no document to show that the owner would actually transfer the right title and the interest of the aircraft to the assessee, that the title on ownership of the aircraft continued to rest with the seller.Finally,he disallowed the claim. 5.1.In the appellate proceedings,the FAA allowed the appeal of the assessee, following the orders of the Tribunal for the earlier years. 5.2.Before us,the DR argued that the order of the FAA was very cryptic and nonspeaking particularly on facts narrated by the AO, that the order of the AO should be upheld or should be sent back to the file of the FAA.He referred to the case of Palval Co-Operative Sugar Mills (284 ITR 153). He further argued that ownership before claim of depreciation had to be examined on the facts that whether the legal ownership through conveyance deed was done or not, that factual control would not confirm constructive ownership for claim of depreciation,that strict integration was required for ownership before grant of depreciation,that the assessee had claimed deprecia - tion on provision made for obsolescence and was claiming depreciation on the same, that it was making provision for redelivery of aircraft and was claiming the same as revenue expenditure, that it was contrary to the fact that assessee itself was owner and claiming depreciation, that either of one had to be allowed.Alternatively.it was argued that if depreciation was to be allowed then it should be directed to disallow the principal amount of Rs.38.73 crores. The AR contended 933/M/15(08-09);758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- that the DR had wrongly stated that provision for obsolescence was only for inventory of rotatables, that provision for delivery was not made on aircraft taken on hire purchase. 5.3.We find that while deciding the issue,the FAA has followed the orders of the Tribunal, that the AO and his order (Pg. 27,Para-5.4)has stated that facts about the dispute under consideration were similar to the facts of the earlier years. So,if the FAA had followed the orders of the Tribunal for those years,it has to be held that he had maintained judicial discipline. In our opinion his order does not suffer from any legal infirmity. 5.3.1.We would like to reproduce the portion of the order of the Tribunal dealing with the ground raised by the assessee,and it reads as under: “9. The next issue i.e. ground No.8 is against deleting the addition of Rs.98,42,67,988/-on account of depreciation on aircraft acquired on hire purchase basis. 9.1 This issue has been discussed by the AO at pages 44 to 59 and by CIT(A) at pages 16 to 17 in their respective order. 9.2 While disallowing the claim of the assessee, the AO observed that the claim of depreciation of Rs.98,42,67,988/- cannot be allowed on the ground that the assessee cannot be treated as a owner of these aircrafts and engines for the purposes of claiming depreciation allowance. The AO also observed that the title and ownership of the aircraft continued to vest with seller at all times. 9.3 Before the CIT(A) it was submitted that similar claim was disallowed for assessment year 1997-98 to 2005-06 and the Tribunal has decided the issue in favour of the assessee. It was also submitted that during the year the assessee has claimed depreciation in respect of aircrafts and engines acquired under hire purchase in earlier assessment years. The assessee had entered into hire purchase agreement in earlier years. It was further stated that during the relevant assessment year, the assessee has not acquired any new aircraft on hire purchase basis and all its hire purchase agreements were on identical lines. After considering the submission and perusing the material on record, learned CIT(A) found that this issue is covered by the order of the Tribunal for the earlier assessment years i.e. 1997-98 to 2005-06. Accordingly, he allowed the issue in favour of the assessee. 9.4 After considering the order of the AO, the CIT(A) on which reliance has been placed by the respective parties, we found no infirmity in the finding of the learned CIT(A) as learned CIT(A) has allowed the claim of the assessee following the orders of the Tribunal for earlier years, where similar issue was decided in favour of the assessee. Accordingly, we confirm the order of the CIT(A) on this issue also.” 5.3.2.We would also like to refer to the case of Palval Co-Operative Sugar Mills(supra), relied upon by the DRP. In that matter the substantial question of law before the Hon’ble High Court was as under: “Whether the orders passed by the Commissioner of Income-tax (Appeals) and the Tribunal fulfil the requirement of a speaking order? Deciding the issue, the Hon’ble Court took notice of the facts of the case and held as follow:

4. A perusal of the order dated July 29, 1994, shows that after making a cursory reference to the order passed by the Assessing Officer on the issue of the appellant’s claim for deduction u/s. 43B and noticing the submission made in the appeal, the Commissioner of Income-tax (Appeals), without assigning any reason whatsoever, 12 933/M/15(08-09);758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- granted relief to the assessee to the extent of Rs. 5,69,322 by recording a one line observation in the following words : “In view of the explanation of the assessee, the production incentive is allowable in the present assessment year. Therefore, the assessee gets relief of Rs. 5,69,322.” 5.The Tribunal dismissed the appeal filed by the appellant by making the following observations : “Undisputedly the amount was due to workers for the assessment year 1989-90 but paid in the year under consideration and as per the provisions of section 43B of the Act the amount could be claimed in the year when payment is actually made. All factual position makes the order of the Commissioner of Income-tax (Appeals) as justified in which no interference is called for. Ground fails.”

6.Next two grounds(GOA 7&8)are about disallowance of Rs.18.02 crores on account of frequent flyer expenses both under the normal provisions and the MAT provisions.During the assessment proceedings,the AO directed the assessee to file details of Frequent Flyer Program (FFP). The assessee submitted that for ascertained liability as per various case laws the estimated value of FFP had been allowed. However, the AO held that the decision of the Tribunal, adjudicating the issue in favour of the assessee, had been challenged before the honorable Bombay High Court, that the provisions were made for contingent lability, that FFP was a benevolent scheme, that the 13 933/M/15(08-09);758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- liability in that regard was not on account of a contractual liability on the part of the assessee to incur such expenditure, that the expenses were contingent upon the utilisation of facilities under FFP by the passenger, that it was to be allowed in actual and not the provisions for unutilised facilities which were based on estimation.Finally,he made a disallowance of Rs.18.02 crores under the normal competition of income as well as under the MAT provisions. 6.1.The FAA, following the orders of the Tribunal, allowed the appeal of the assessee under normal provisions of the Act, as well as under the provisions of section 115JB. 6.2.During the course of hearing before us, the DR argued that expense that had to be allowed on actual in the year of its redemption rather than providing it on estimated basis, that the real question was about the effect of unutilised miles or expired miles,that the provisions were contingent in nature and were not allowable, that the Tribunal in its order dated 30/05/2006 for the assessment year 1997-98 had discussed the issue of implementation of FFP, that in the subsequent order the Tribunal had not examined the facts and had allowed the appeal of the assessee on the basis of recording of the fact that both parties agreed that issue was covered by earlier years order. With regard to disallowance u/s. 115 JB, he contended that the orders of the Tribunal for the earlier years did not deal with disallowances to made u/s. 115 JB, that unascertained liabilities and provisions made for the liabilities were required to be added under clause C of explanation 1,that it had to be ascertained whether the certificate in form 29B for computation of section 115 JB adjusted such provisions so as to arrive at book profit in compliance of the provisions of the Company Act. The AR argued that ascertaining of the liability under FFP scheme was done on a scientific basis, that on the basis of past years’ experience the assessee would estimate the expenses of free tickets and would make a debit in the accounts in the same year in which the liability would arise, that there remained negligible possibility of any FFP miles remaining unutilised after the term would expire, that if they remained any unutilised miles the provision would being net of to the effect, that at the end of each year the provision would be reversed if there remained any unutilised miles, that the total provision at the end of the year would accommodate only those expenses which would pertained to total pending non-expired miles, that the provision earlier created for FFP miles,which were never redeemed,were automatically netted off through P&L 933/M/15(08-09);758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- account, that if the FFP miles were redeemed through other agencies the assessee would be making necessary entries in its books of accounts as per the invoices received by it from the other agencies, that the contention of the DRP that provisions were contingent was not based on facts.With regard to disallowance made u/s. 115 JB of the Act, he argued that only those provisions were to be added back to the profit and loss account which were not ascertained, that ascertained items were not to be considered for MAT provisions, that in the earlier years,the Tribunal had held that provisions created for FFP under normal provisions were not contingent, that the Tribunal had given a finding that the expenses in dispute were ascertained liabilities, that while deciding the appeal for the AY.2006-07 the Tribunal had held that expenditure was ascertained and was not to be considered for any adjustment under the MAT provisions. 6.3.We have heard the rival submissions.We find that in the earlier years, including the AY. 2006-07, the Tribunal had held that expenditure towards FFP expenses were part of ascertained liabilities,that the Tribunal had held that assessee was following a scientific method to determining its liability and that same was not contingent.We find that the assessee had explained that in the books of accounts only netted off liability would appear. Nothing has been brought on record to prove that finding of fact given by the Tribunal,in the earlier years about ascertained FFP liability,was incorrect.Therefore, respectfully following the orders of the Tribunal for the earlier years we hold that FAA was justified in holding that disallowance made by the AO was not as per the provisions of section 115JB of the Act.As far as computation under normal provisions is concerned,we find that in the earlier year the Tribunal has decided the issue in favour of the assessee and against the AO.So,following the same we hold that FFP liability was ascertained liability. Ground no. 7 &8 stand dismissed. 7.Ground no.9 deals with interest income of Rs.27.62 crores that was assessed under the head income from other sources as against business income.During the assessment proceedings, the AO held that as per the provisions of section 14 of the Act various heads were provided for computation of total income, that computation of income under each had would have to be made independently and separately, that the interest income on investment of surplus funds was assess -able under the head income from other sources. He relied upon the case of Murli Investment Company Ltd. (167 ITR 368) and Godavari Sugar Mills Ltd. (191 ITR 359). Culling out various tests from legal preposition for treating interest income out of the deposits from surplus funds 933/M/15(08-09);758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- and otherwise he held that interest income earned by the assessee had to be taxed under the head income from other sources. 7.1.In the appellate proceedings,the FAA,following the order of the Tribunal for the earlier years, held that due to the interlacing of business funds and earning of interest income on short-term deposits interest income was taxable as business income. 7.2.Before us,the DR argued that there was some typographical mistake in the quantum of amount, that interest earned on temporary parking of surplus fund or unutilised money was to be treated as receipt under income from other sources, that the Tribunal had in the earlier years decided the issue in favour of the assessee, that principle of res judicata were not applicable in the income tax proceedings, that the issue was held to be covered in favour of the assessee on the basis of concession by the DR and not by verification/analysing the facts of that particular year, that the order of the FAA was nonspeaking and cryptic, that the physical business carried on by the assessee had to be considered for deciding various receipts. He further stated that while deciding the appeals for the A.Y. 1997 to 2002 the Tribunal had not considered the judgments of Pandian Chemicals Ltd.(262 ITR 278)and Liberty India (317 ITR 218) that the principal business carried out by the assessee and the Companies Act and the Act should decide the receipt under various heads. 7.2.1.The AR contended that the typographical mistake about the quantum of interest could not affect the issue, that the dispute before the Tribunal was to decide the head under which interest income was to be assessed, that in the earlier years the Tribunal had already agitated the issue against the AO, that the appeal filed by the Department in that regard before the Hon’ble Bombay High Court had been rejected, that in the cases of Pandian Chemicals Ltd. and Liberty India (supra),the issue involved was allowance of interest and duty drawback u/s. 80 HH and 80 IB of the Act, that in both the sections words used were “derived from industrial undertaking”, that the assessee had offered the interest income from deposits and margin money under the head business income as per the provisions of section 28 of the Act,that in section 28 the words used were “arising out of or in connection with …..” the business and profession, that there was no change in the facts of the current AY.as compared to earlier years, that the interest from margin money deposit and other deposits for the A.Y.s 1997-98 to 2001-02 were in nature and character same as the interest income received for the year under appeal, that except for the quantum the substance was the same, that the treatment to be given for various receipts as per Companies Act 16 933/M/15(08-09);758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- was irrelevant since the issue was pertaining to taxing of receipt under appropri-ate had and not accounting of receipts under specific schedule. 7.3.We have heard the rival submissions. We find that while deciding the appeals for the earlier AYs the Tribunal had decided the issue against the AO, that the Hon’ble divisional High Court has not admitted the substantial question of law against the order of the Tribunal in that regard, that the issue has thus attained finality, that there was no difference in facts and circumstances of the case for the year under consideration and the facts of the earlier A.Y.s.We have already held in the earlier part of our order that principles of consistency have to be followed in the subsequent AY.s if there was no difference in the facts and circumstances.Nothing was brought to our notice that could distinguish the facts of the year under appeal and the facts of the earlier years giving the justification for not assessing the interest income under the head business income. In our opinion, cases relied upon by the DR are not helpful to the decide the issue before us.The mandate of those cases is very limited,as compared to the provisions section 28 of the Act.Respectfully,following the orders of the Tribunal for the earlier years(AY.s 1997 to 2002), we dismiss Ground number 9, raised by the AO. 8.Addition of Rs.223.37 crores u/s.41(1)of the Act,on account of sale and lease back of four aircrafts under the normal provisions of the Act,is the subject matter of Ground No.10. Referring to the orders for the earlier years, the AO (Pg. 41, para 9.1 and Pg. 45, para 9.8) observed that the facts for the year under consideration were similar to the facts of previous years. Following orders of his predecessors he made an addition of Rs.2, 23, 37, 21, 091/- to the total income of the assessee, invoking the provisions of section 41 (1) of the Act. He observed that depreciation on aircraft acquired by the assessee were disallowed in all the earlier years, that the payment of instalment including principal and interest were allowed, that when the assessee received sale consideration on such aircrafts then to the extent instalment due as on the date of receipt of consideration was to be treated as cessation of liability u/s.41(1) of the Act. 8.1.The FAA,in the appellate proceedings,allowed the appeal of the assessee,following the orders of the his predecessor and of the Tribunal,for earlier years.

8.2.The DR argued that there were change of facts on account of sale of an aircraft and taking back the same aircraft on lease on four counts. He argued that the AO had held that Dominion 933/M/15(08-09);758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- control over the aircrafts was with the assessee, that it was allowed depreciation, that absolute ownership was not with the assessee, that assessee could not sell these aircrafts, that it was not known as to how the sale consideration was received by the assessee, that it was also not known as to how the money would come to the assessee i.e. from the original owner or from the new owner, that in the earlier years depreciation was allowed on the basis of registration with DCGA, that money trail was required to be examined for consideration, that defects of the transaction on the other claims of the assessee relating to provisions for obsolescence and redelivery of aircraft had to be examined, that the assessee had received sale consideration in cash in respect of loss and expenditure, that the provisions of section 41 (1) had to be considered cumulatively, that the assessee had to pay back balance involvements out of the hire purchase agreements, that the AO had rightly invoked the provisions of section 41. 8.2.1.The AR argued that submissions of the DR are factually incorrect, that no provision for obsolescence or redelivery was made on aircrafts acquired on hire purchase basis, that before selling the aircrafts all remaining instalments were paid, that interest was also paid till the date of e-payment, that depreciation was not claimed @ 60% as alleged by the DR, that it was not the case of AO/FAA. He referred to the orders of the Tribunal for the AY.s 2006-07 and 2007-08. 8.3.We have heard the rival submissions and perused the material before us. We find that the AO, in his order has stated(Pg-41,Para 9.1,Pg.-45,Para-9.8)that the facts for the year under consideration were similar to facts of previous years.Therefore, we do not agree with the DR who has stated that there was change in the facts. Following the Rule of consistency we would like to rely upon the orders of the Tribunal in earlier years. We are reproducing the relevant portion of the order dealing with identical issue, of the Tribunal for the AY.2006-07 (para-10 PB-125-129) and it reads as under: “10. Ground No.9 relates to deleting the addition of Rs.100,52,85,728/- u/s. 41(1) of the Act on account of sale and lease back of five aircrafts. 10.1 This issue has been discussed by the AO at pages 59 to 64 and by learned CIT(A) at pages 17 to 23 in their respective orders. The AO observed that the assessee was not the owner of these aircrafts as held by the Tribunal in earlier assessment years. It was further observed by the AO that the assessee was eligible to claim deduction in respect of principal payment of installments of these aircrafts as per the stand taken by the department in the earlier assessment years. The AO also observed that the amount received on sale of the said aircrafts in excess of the installment payable needs to be assessed as income u/s. 41(1) of the Act. Accordingly, the AO made an addition of Rs.100,52,85,727/- (Rs.462,24,97,188/- being sale consideration of five aircrafts – Rs.361,72,11,460/- installments payable) u/s. 41(1) of the Act being the difference 933/M/15(08-09);758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- between the sale consideration of Rs.462,24,97,188/- and installment payable Rs.361,72,11,460/- on the ground that it has resulted in a benefit to the assessee on account of cessation of trading liability. It was explained before the CIT(A) that it is pertinent to note that Section 41(1) of the Act provides for charging of certain benefits, which are obtained by the assessee as deemed profits. It was also explained that the assessee had sold five Boeing 737 aircrafts bearing tail Nos. JAS, JAT, JAR, JNC and JND to Injet 400 Aircrafts Leasing Co. Ltd., Grand Cayman, Cayman Islands for a sum of Rs.462,24,97,188/-. The said aircrafts were acquired on hire purchase from Wasington Aircraft Hire Co. Ltd. in earlier years for a sum of Rs.671,95,92,523/-. Pursuant to the sale, the said aircrafts were taken on operating lease by the assessee from Injet 400 Aircraft Leasing Co. Ltd.. In the books of accounts, the assessee reduced the sale consideration of Rs.462,24,97,188/- from the block of assets. Further depreciation for the year was claimed only on the reduced block of assets. Accordingly, it was submitted that this is not a case of cessation of liability and the AO was totally misguided himself in understanding the facts of the case. Reliance was placed on various case laws. It was also submitted that in order to invoke the provision of Section 41(1) of the Act, the assessee should have claimed deduction in respect of expenditure in earlier years and subsequently there has been remission/cessation of liability as a result of which some benefit accrues to the assessee. In the instant case, the assessee had capitalized the cost of the said aircrafts acquired on hire purchase and claimed depreciation thereon. Further the sale of aircrafts in any way does not result in remission or cessation of liability of the assessee to pay the balance amount to the entity from whom the aircrafts were purchased on hire-purchase basis. Thus, the conditions for invoking the provisions of Section 41(1) of the Act are not present in case in hand. In respect to contention of the AO that the assessee has not considered the view taken by the department in earlier years regarding the liability of the depreciation and lease rent, is erroneous. It was submitted that in preceding assessment year, the issue has been decided for assessment year 1997-98 to 2005-06 in favour of the assessee by holding that the assessee was an owner of the aircraft acquired under hire purchase basis and allowed the depreciation on the aircrafts and engines acquired under the hire purchase basis. Accordingly, it was pointed out that question of ownership of these aircrafts has been settled inasmuch as the assessee is the owner of these aircrafts and the claim of depreciation has also been upheld by the CIT(A) as well as by the Tribunal. After considering the submission and perusing the material on record, learned CIT(A) found that the AO was not correct in making any addition u/s. 41(1) of the Act. It was seen that the assessee has been declared as owner of these aircrafts. The issue has been decided by the Tribunal in favour of the assessee in earlier years and depreciation has been allowed. It is seen that on sale of these aircrafts, the assessee has reduced the block of assets by sale consideration and accordingly claimed lesser depreciation. This fact was in conformity with the finding of the Tribunal in earlier year. Accordingly, the addition made u/s. 41(1) was deleted by the learned CIT(A). 10.2 Learned placed reliance on the order of AO. On the other hand, learned counsel of the assessee placed reliance on the order of CIT(A). 10.3 After considering the order of AO and CIT(A), we found no infirmity in the finding of the learned CIT(A). Learned CIT(A) has noted that in earlier year, the issue in respect of ownership of these aircrafts have been settled by the Tribunal by declaring that the assessee is the owner of these aircrafts. Accordingly, depreciation disallowed by the AO was allowed by the CIT(A) and the order of CIT(A) has been affirmed by the Tribunal upto the assessment year 2005-06. It was further noticed by the learned CIT(A) that the cost of these aircrafts have been shown in the block of assets and sale consideration received by the assessee has been reduced from the block of assets and on reduced value, the assessee has claimed lesser depreciation. Therefore, this is not a case of cessation of liability and accordingly, provisions of Section 41(1) are not applicable on the facts of this issue. Finding of the CIT(A) remained uncontroverted as learned DR has placed 933/M/15(08-09);758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- heavy reliance on the order of AO only. Therefore, we confirm the order of the learned CIT(A) on this issue also.”

Respectfully following the above,we dismiss Ground No.10. 9.Next ground pertains to addition of Rs.1.17 crores out of repair of premises,furniture and fixture.During the assessment proceedings,the AO found that the assessee had claimed an expen -diture of Rs.1.91 crores under the head repair and maintenance of furniture and fixture. As the ownership of those assets did not belong to the assessee , he directed it to file explanation in that regard.After considering the same,he held that the expenditure was not in the nature of current repair, that it resulted in enduring benefits to the assessee .He held that expenditure to the tune of Rs.1.17 crores has to be treated as capital expenditure.

9.1.During the appellate proceedings the FAA,following the ratio of earlier years allowed the claim of the assessee . 9.2.The DR argued that, the assessee itself had admitted that it had altered the furniture existing in the leased office premises and airport,, that it had to substantiate its claim, that it was not clear as to whether the premises were furnished/unfurnished, that onus was on the assessee to prove that expenditure was of revenue nature,that apart from the front office at airports, security check, lounges and other internal space/buildings were common for other airlines, that same did not require specific look, that even the front office was having specified designated design as far as look was concerned. 9.2.1.The AR relied upon the order of the Tribunal for the AY.s 1997-98 to 2001-02 and subsequent AY.s. .He further stated that the appeal filed by the department in that regard has not been admitted by the Hon'ble High Court in the earlier AY.s.We find that while deciding the identical issue Tribunal has dismissed the appeal filed by AO in earlier years. Respectfully following the order of the Tribunal from 1997-98 to 2007-08 & (ITA.s.3865/4200/7383/7317/ 7316/7312/6690/6594/M/11dtd.05/04/2013),we decide Ground of appeal -11 against the AO. 10.Ground no.12 deals with disallowance of Rs.15.63 crores made by the AO,u/s. 40(a)(ia)of the Act.During the assessment proceedings the AO found that the assessee had paid tax deducted at source ,amounting to Rs.15.63 crores after the due date . He held that tax was deposited after lapse of relevant FY.,that there was delay in payment of tax .Invoking the provisions of section 933/M/15(08-09);758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- 40(a) (ia) of the Act. He made a disallowance of Rs.15,63,04,882/-. The FAA allowed the appeal filed by the assessee. 10.1.Before us, the DR stated that matter could be decided on merits.The AR stated that payment was made before due date of filing of return . 10.2.In our opinion there is no factual or legal infirmity in the order of FAA,as he had deleted the deletion after considering the fact that tax deducted at source was paid before due date of filing of return.Confirming his order,we decide 12th Ground against the AO. 11.In Ground No.13 the AO has agitated the deletion of disallowance made during assessment proceedings,u/s.14A of the Act,amounting to Rs.3.66 lakhs.During the assessment proceedings, the AO found that the assessee had made investment in shares of subsidiary companies. Referring to the provisions of section 14A of the Act,he made disallowance of Rs.3,66,25,000/-. In the appellate proceedings,the assessee stated that it had acquired equity shares and non cumulative convertible preference shares of its subsidiary company for strategical purposes, that investment was not made to earn any exempt income from the investment. In the appellate proceedings, the assessee made elaborate submissions .Relying upon the decision of the Tribunal in the case of Garware Ropes India Ltd. (ITA/5408/Mum/2012),he decided the issue in favour of the assessee in respect of old investment in its subsidiary entity.However,he upheld part disallowance holding that notional expenditure was incurred to earn exempt income. 11.1.The DR left the issue to the discretion of the Bench.The AR stated that the entire investment was made in its subsidiary company, same should not be considered for disallowance u/s. 14A of the Act, that the purpose of the investment was to gain control in stake. He relied upon the cases of Chem Invest Ltd. (378ITR33); Holcim India (P) Ltd.(272CTR282); Shiva Motors P. Ltd. , that the assessee had not earned any exempt income during the year, that the AO had not recorded any satisfaction before invoking the provisions of section 14A of the Act. 11.2.After hearing the rival submissions, we are of the opinion that for making any disallowance u/s.14A the AO has to prove that the assessee had incurred expenses for earning exempt income. If exempt income is not there or no expenditure is claimed by the assessee towards earning exempt income,then there is no justification for making any disallowance.In the case under consideration, the assessee had not earned any exempt income during the year,therefore, we hold that even partial disallowance was not justifiable.Ground No.13 is decided against AO.

933/M/15(08-09);758/M/15(08-09;759/M/15(10-11);760/M/15(11-12)- 11.3.Solitary Ground,raised by the assessee ,in ITA 933/Mum/2015 is allowed, 12.Last two Grounds(GOA-14 &15)of appeal are about deletion of the additions made by the AO on account of provision for leave encashment(Rs.21.43 crores)and provision for gratuity (Rs. 13.14 crores).While computing the income of the assessee as per provisions of section 115JB of the Act.The AO disallowed above mentioned sums under the head provision for leave encashment and provisions for gratuity respectively.The FAA following the earlier years order allowed the appeal of the assessee. 12.1We find that while deciding the appeal for AY .2005-06 the Tribunal had dealt with the issue for provision for leave encashment while computing income as per section 115JB of the Act as under : “19. Now, we will take the appeal of the assessee filed for the assessment year 2005-06, which has been listed under ITA No.7383/Mum/2011. 19.1 In the appeal of the assessee only issue is against confirming the addition of Rs.3,49,38,827/-, being provision for leave encashment in computing the book profit u/s. 115JB of the Act. 19.2 This issue was involved in appeal of the assessee for assessment year 2006-07, listed under which we have already disposed of and we have allowed the issue in favour of the assessee. For the same reasoning, this ground of the assessee is allowed.” Similarly,while deciding the appeal for AY.2006-07,the Tribunal has dealt with the issue of provision of Gratuity (para-16, pg-135 to 137-PB).

ITA/933/Mum/15,AY.2008-09: As stated earlier,the only issue filed by assessee is about disallowance made u/s. 14A of the Act while calculating income under the normal provisions and MAT provisions. While deciding the appeal of the AO at para No.s 11 -11.3,we have mentioned the facts about the case and decided the issue in favour of the assessee.