ASIA AVIATION LTD Vs. ACIT
INCOME TAX APPELLATE TRIBUNAL
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N.V. Vasudevan, Judicial Member -
(1.) THIS is an appeal by the assessee against the Order dt. 19.3.2004 of CIT(A)-V, New Delhi relating to the A.Y. 2001-2002.
(2.) The facts and circumstances giving raise to the present appeal are as follows. The assessee is a company. It is in the business of operation of air craft for carriage of passengers. It possesses the necessary certificate granted by the Director General of Civil Aviation under the Air Crafts Act, 1934 to operate the air craft. The permission so granted specifically mentions that the assessee shall comply with the provisions of the Air Craft Act, 1934, Air craft Rules, 1937 and orders, directions, requirements issued under the aforesaid Act and rules from time to time. The assessee purchased a Second hand Cessna citation air craft in September, 1997.
The assessee filed a return of income for the A.Y. 2001-2002 declaring a loss of Rs. 49,21,329/=. In arriving at this loss the assessee had made deduction of Rs. 39,67,99/= as provision for overhauling and hot section inspection charges for the engine of the air craft. According to the recommendations of the manufacturers of the air craft the assessee was required to carry out overhauling and hot section inspection of the air craft. if the air craft completes flying of 3500 hours and 750 hours respectively. At the time when the assessee purchased the air craft it had already completed 2700 hours and 5 minutes of flying time.
(3.) THE Air Crafts Act, 1934 was enacted with a view to make better provision for the control of manufacture, possession, use, operation, sale, import and export of the air craft. Section 5 of the said Act empowers making of rules for regulating the purpose for which the Act was enacted. Pursuant to such rule making power, the Air Crafts Rules, 1937 were framed. Rule 50 Part IV of the said Rules provides for provisions with regard to Air worthiness. An Air Worthiness certificate has to be obtained from the Director General. Rule 52 provides that an operator of air craft should follow the repair schemes issued by the manufacturer of an air craft. Rule 53 provides as follows.
Rule 53. Use of materials, processes, parts and periodical overhaul of aircraft.
(1) Every air craft required under these rules to be provided with a certificate of airworthiness and items of equipment on such aircraft shall periodically be inspected, overhauled and certified on completion of the prescribed flight time or calendar time or on the basis of any other stipulated condition in accordance with the approved maintenance schedules or approved maintenance system. Such inspection and certification shall be effected by appropriately licensed engineers or authorised persons, as may be specified by the Director General.
(2) A certificate to be issued in pursuance of Sub-rule (1) shall not be issued unless the materials, processes, parts, method comply with such designs, drawings, specifications or instructions as may be issued by the manufacturers or as may be specified or approved by the Director General THE method and workmanship shall be in accordance with standard aeronautical practice or as may be approved by the Director General.;
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