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II. Direct Taxes Case Laws:
1. M/s. Japan Airlines Co. Ltd. Vs. CIT, Civil Appeal No. 9875 of 2013, Date of Order: 04.08.2015, Supreme Court of India
Whether
Tax is deductible u/s 194C or 194I by International airlines for
landing and parking charges in respect of its aircrafts.
The
charges which are taken from the aircrafts for landing and even for
parking of the aircrafts are not dependent upon the use of the land. On
the contrary, the protocol prescribes a detailed methodology of fixing
these charges. Chapter 4 of Airport Economics Manual issued by
International Civil Aviation Organization deals with 'Determine the cost
basis for charging purposes'. The charges on air-traffic which includes
Landing Charges, Lighting Charges, Approach and Aerodrome Control
Charges, Aircraft Parking Charges, Aerobridge Charges, Hangar Charges,
Passenger Service Charges, Cargo Charges etc. are to be fixed applying
the formulae stated therein. A reading thereof would clearly point out
the cost analysis which is to be done for fixing these charges.
Thus,
when the airlines pay for these charges, treating such charges as
charges for 'use of land' would be adopting a totally naïve and
simplistic approach which is far away from the reality. We have to keep
in mind the substance behind such charges. When matter is looked into
from this angle, keeping in view the full and larger picture in mind, it
becomes very clear that the charges are not for use of land per se and,
therefore, it cannot be treated as 'rent' within the meaning of Section
194-I of the Act.
(Please click here for judgment)
2. Stitchwell Qualitex (RF) Vs. ITO, ITA No. 346/2002, Date of Order: 16.09.2015, High Court of Delhi
Whether for claiming depreciation u/s 32, asset must be put to use or ready for put to use?
The AO
disallowed the above claim of depreciation on the ground that (i) no
sales have been made from Unit-II; (ii) purchases made for Unit-II are
only Rs. 361.70; (iii) no expenses under any head have been claimed;
(iv) all the wages payments and official documents showed that no
manufacturing activity took place; (v) no separate staff was engaged and
(vi) no power bill has been received. The AO held that the Assessee
failed to prove that it had undertaken any manufacturing activity during
the AY in question
In the
present case the context is the claim for depreciation under Section 32
of the Act. On facts, it is not in dispute that the building was
constructed in the previous year 1988-89. Further, the plant and
machinery was installed in the factory in the previous year ending 31st
March 1990. The Court in of the view that the installation of the plant
and machinery in the building would amount to use of the building so as
to justify the claim for depreciation on the building. Further, the
plant and machinery installed in the building during AY 1989-90 was
ready for use for the purpose of business of the Assessee. The
electricity connection was given on 6th February 1990. Another important
fact was that the Assessee was already conducting its business and this
was Unit II which was by way of expansion of an existing business. It
is not the Revenue's case that the building and plant and machinery were
not for the purpose of business of the Assessee. Therefore, it is
concluded that the building and machinery in Unit II were used for the
purpose of the business of the Assessee during the AY in question. The
question of law is accordingly answered in the negative, i.e. in favour
of the Assessee and against the Revenue. The impugned order of the ITAT
on the issue is set aside and the appeal is allowed with no order as to
costs.
(Please click here for judgment)
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