ITAT allows Depreciation claims on Aircraft put to use for a period less than 180 days [Read Order]

The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) allowed depreciation claims on the aircraft put to use for a period less than 180 days.

The Assessee, India Flysafe Aviation Ltd is engaged in the business of providing aircrafts on charter basis to the VVIPs, State governments, corporate houses, travel agents, etc.In the return of income Assessee had claimed that this aircraft was purchased during the year and put to use while the ld. AO taking into consideration the certificate of airworthiness, issued by the Director General of Civil Aviation, concluded that the aircraft was put to use for a period of less than 180 days and, thus, instead of depreciation @ 40%, the assessee was allowed depreciation @ 20% only.

Aggrieved, the assessee filed an appeal before the CIT(A) who upheld the addition made by the AO  . Therefore the assessee filed another appeal before the tribunal.

During the proceedings the Salil Kapoor, counsel for assessee submitted that aircraft was acquired by the assessee company in July, 2012 and it was brought to India at the owner’s base at New Delhi, after due clearances and a ferry flight in this regard was arranged for which even insurance cover was taken from the New India Assurance Company Ltd., on 06.08.2012

Meenakshi Dohare, Counsel for Revenue, supported the order of lower authorities.

It was observed that even before the certificate of airworthiness was issued by the Director General of Civil Aviation on 21.09.2012 for a period from 18.10.2012 to 17.10.2015, the assessee was de facto and de jure owner of the aircraft.

Accordingly the aircraft certainly was not allowed to fly to carry passengers or cargo in the absence of this certification by the competent authority, but, that did not stop the assessee from holding it in its own name for the purpose of its business.

Therefore the bench relied upon the decision in the case of Capital Bus Service (P.) Ltd. v. CIT observed that  where an assessee puts assets ready for use that amounts to passive users and in such a case depreciation must be allowed.

After reviewing the submissions of both parties the two-member bench Of M. Balaganesh ( Accountant Member ) and Anubhav Sharma, ( Judicial Member ) allowed depreciation claims  on aircraft put to use for a period less than 180 days.

To Read the full text of the Order CLICK HERE

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