AIRLINE ALLIED SERVICES LTD. vs. DCIT, CIRCLE-1(1),

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ITA 15/DEL/2005Status: DisposedITAT Delhi18 March 2016AY 1997-19989 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the orders of the lower authorities, dismissing the assessee's grounds of appeal. The assessee did not produce adequate evidence to support the claimed expenses or contradict the findings of the AO and CIT(A).

What were the facts?

The assessee challenged additions made by the AO and upheld by the CIT(A) for various expenses including pay and allowances, air turbine fuel, inflight catering, staff on duty, and rent and electricity. The assessee failed to provide sufficient evidence to substantiate these claims for the relevant assessment year.

What were the issues?

Whether the provisions made for various expenses were substantiated with evidence for the relevant assessment year, and if the liabilities were genuine and not remitted.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES “E”: DELHI

Before: SHRI BHAVNESH SAINI & SHRI O.P. KANT

Hearing: 23.01.2020Pronounced: 28.01.2020

Date of Hearing : 23.01.2020 Date of Pronouncement : 28.01.2020 ORDER PER BHAVNESH SAINI, J.M.

This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-IV, New Delhi, Dated 23.11.2004, for the A.Y. 1997-1998.

2.

We have heard the Learned Representatives of both the parties.

2 ITA.No.15/Del//2005 M/s. Airline Allied Services Ltd., New Delhi. 3. The record reveals that on earlier occasions the appeal of assessee was dismissed for default. However, while allowing the M.A. of the assessee, the appeal was re- fixed for hearing on merits.

4.

Ground Nos. 1 and 6 are general, which needs no adjudication.

5.

On Ground No.2, assessee challenged the addition of Rs.10 lakhs under the Head “Pay and Allowances”. The Ld. CIT(A) noted that assessee has not filed any evidence even during the appellate proceedings that assessee’s liability to pay these pay and allowances had accrued by 31.03.1997. The liability had been worked-out on the basis of expected increase in wages under the Wage Agreement to be executed. The liability was, therefore, contingent and unascertained. The Ld. CIT(A), therefore, upheld the Order of the A.O.

6.

After considering the rival submissions, we do not find any merit in this ground of appeal of the assessee. The assessee did not file any evidence before the authorities

3 ITA.No.15/Del//2005 M/s. Airline Allied Services Ltd., New Delhi. below to substantiate this ground of appeal. Even before us no evidence have been produced to contradict the finding of fact recorded by the authorities below. We, therefore, dismiss Ground No.2 of the appeal of the assessee.

7. On Ground No.3, assessee challenged the addition of Rs.31,87,500 and Rs.56,55,300/- under the Head “Air Turbine Fuel” and “Inflight Catering”.

8. The assessee explained before the Ld. CIT(A) that provision had been made on the basis of estimated cost of fuel used by specified flights during January, 1997. The fuel bills for these flights had wrongly been made by the oil companies in the name of Indian Airlines instead of making the same in the name of the assessee. The bills indicate flight numbers also from where fuel expenses relating to the assessee can be segregated. The Ld. CIT(A) noted that such expenses totaling to Rs.37,98,947 which is more than the provision of Rs.31,87,500/- made by the assessee. Since fuel expenses incurred by Indian Airlines on behalf of assessee were rechargeable expenses, the Ld. CIT(A) was of 4 ITA.No.15/Del//2005 M/s. Airline Allied Services Ltd., New Delhi. the view that the assessee’s liability to reimburse these expenses to Indian Airlines had accrued in January, 1997 itself when Indian Airlines incurred the expenses on behalf of the assessee. The assessee had estimated this liability on the basis of fuel cost for these flights in the preceding months. However, the assessee has not filed any debit notes issued by the Indian Airlines in F.Y. 1996-97 or even subsequently till date in support of these expenses. The Ld. CIT(A), therefore, noted that it would show that assessee liability stood remitted by the Indian Airlines. The liability was, therefore, unexplained. Hence, disallowance of Rs.31,87,500/- was upheld.

8.1. As regards addition of Rs.56,55,300/- assessee has admitted that no supporting evidence has been provided on account of provision for in-flight catering, but, has argued that no flights are flown without food and snacks in the flights. The invoices made by the caterer in the name of Indian Airlines have not been produced. No evidence has been produced that Indian Airlines ever claimed

5 ITA.No.15/Del//2005 M/s. Airline Allied Services Ltd., New Delhi. reimbursement of any such expenses from the assessee. Thus, there is no material to hold that the assessee has ever incurred any liability on account of catering. Even if the liability was incurred, the same was remitted by Indian Airlines because they never made any claim on the assessee. The Ld. CIT(A), therefore, found that the said liability was non-existent and addition was upheld.

9.

After considering the rival submissions, we are of the view that no interference is called for in the matter. The Ld. CIT(A) on the basis of the material before him found that the fuel expenses liability as accrued atleast in January, 1997, which, did not pertain to assessment year under appeal. Further assessee has not produced any debit note issued by Indian Airlines for the assessment year under appeal till passing of the appellate order. The liability was thus found non-existent. The assessee did not produce any evidence before the Tribunal also to contradict the finding of fact recorded by the Ld. CIT(A). As regards in-flight catering expenses, the assessee made general statement that flight

6 ITA.No.15/Del//2005 M/s. Airline Allied Services Ltd., New Delhi. cannot be flown without food and snacks. No evidence have been produced by assessee to show that these were liability of the assessee to incur the expenditure. In the absence of any evidence, the authorities below found the liability of the assessee was non-existent. The assessee again did not produce any evidence before us to substantiate the ground of appeal or contradict the finding of fact recorded by the authorities below. In the absence of any evidence on both these issues, no interference is called for in the matter. We uphold the Orders of the authorities below and dismiss Ground No.3 of the appeal of the assessee.

10. On Ground No.4, assessee challenged the addition of Rs.15 lakhs under the Head “Staff on Duty” [“SOD”] expenses.

11. The assessee has claimed SOD expenses i.e., travel taxes etc., of pilots, engineers etc. Such provision was found relating to February and March, 1997, but, assessee has not produced any evidence before the authorities below. The same is the position before us that assessee did not 7 ITA.No.15/Del//2005 M/s. Airline Allied Services Ltd., New Delhi. produce any evidence to support the claim of expenditure. In the absence of any evidence, no interference is called for in the matter. Ground No.4 of the appeal of the Assessee is dismissed.

12. On Ground No.5, assessee challenged the addition of Rs.9,50,000/- under the Head “Rent and Electricity”.

13.

The assessee stated that same provision for rent is made on estimate basis keeping in view the area of Office space occupied by assessee at NTB and NDTC and estimated the electricity charges. The Ld. CIT(A) on the basis of the debit note found that an amount of Rs.5,39,722/- only had been issued by Indian Airlines on 09.12.1997 and 29.08.2000, therefore, it would not be pertain to assessment year under appeal. The A.O. also noted that it is not known that the Airline is not paying to the Airport Authority of India. Therefore, there is no question of making provision to rent etc., The Ld. CIT(A) upheld the addition and dismissed this ground of appeal of assessee.

8 ITA.No.15/Del//2005 M/s. Airline Allied Services Ltd., New Delhi.

14.

After considering the rival submissions, we are of the view that no interference is called for in the matter. The evidence produced by the assessee before the Ld. CIT(A) shows that these expenses did not pertain to assessment year under appeal and further assessee did not satisfy as to how the expenses have been claimed and the basis thereof. Therefore, in the absence of any evidence, we do not find any merit in this ground of appeal of the assessee and Ground No.5 of the appeal of the assessee is accordingly dismissed.

15.

In the result, appeal of the Assessee dismissed.

Order pronounced in the open Court.

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