Revision

Where AO has granted depreciation on aircraft owned by assessee at 40% in accordance with the provisions of the Rule, therefore, such grant of depreciation cannot be considered to be a claim not supported by law, as the department cannot straightaway show that such claim of depreciation was not in accordance with the law and, in such, circumstances, the powers under s 263 could not be invoked — as held by DelTrib in SRC Aviation (P) Ltd v DCIT — In favour of: The assessee.

Depreciation — The difference between “aeroplane” and “aircraft”, in respect of depreciation being eligible under Income-tax Rules has been omitted in respect of assessment years falling after AYs 1987–1988.

Disallowance under s 14A — Rule 8D is inapplicable prior to AY 2008–2009, but the AO is duty bound to make the disallowance under s 14A, thus the matter is remitted to AO.

Deduction under s 40A(2)(b) — The matter remitted to the AO with directions to consider the issue whether payments made by the assessee to its directors were excessive or unreasonable.

In favour of: Others.

Disallowance under s 40A(3) — The payments made by the assessee in cash to AAI in relation to flights undertaken by the assessee in the course of its regular activities as certified by AAI, case of assessee fall under the exceptions specified in Rule 6DD(k) and thus no disallowance can be made under s 40A(3).

In favour of: The assessee.

Decided on: 26 August 2011