ACIT, Pune v. POONAWALLA FINVEST AND AGRO PVT LTD, Pune

ITA 529/PUN/2010 | 2006-2007
Pronouncement Date: 25-03-2011 | Result: Dismissed

Appeal Details

RSA Number 52924514 RSA 2010
Assessee PAN AAACT6842Q
Bench Pune
Appeal Number ITA 529/PUN/2010
Duration Of Justice 11 month(s) 15 day(s)
Appellant ACIT, Pune
Respondent POONAWALLA FINVEST AND AGRO PVT LTD, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 25-03-2011
Assessment Year 2006-2007
Appeal Filed On 09-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBE R AND SHRI D. KARUNAKARA RAO ACCOUNTANT MEMBER ITA NO. 529/PN/2010 (ASSESSMENT YEAR: 2006-07) ASSTT. COMMISSIONER OF INCOME-TAX CIR.4 PUNE .. APPELLANT VS. POONAWALLA FINVEST & AGRO P. LTD. .. RESPONDENT 2112/2 OFF SOLI POONAWALLA ROAD HADAPSAR PUNE PAN AAACT 6842Q ITA NO. 370/PN/2010 (ASSESSMENT YEAR: 2006-07) POONAWALLA FINVEST & AGRO P. LTD. .. APPELLANT HADAPSAR PUNE VS. ASSTT. COMMISSIONER OF INCOME-TAX CIR.4 PUNE .. RESPONDENT ASSESSEE BY: SHRI SUNIL PATHAK DEPARTMENT BY : SHRI ABHAY DAMLE ORDER PER D. KARUNAKARA RAO A.M: BOTH THE APPEAL BY THE ASSESSEE AS WELL AS REVENUE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-II PUNE DATED 13.1.2010 WHICH IN TURN ARISE FROM AN ORDER DATED 22.12.2008 PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME-TAX ACT 1961 PERTAINI NG TO THE ASSESSMENT YEAR 2006- 07. WE SHALL TAKE UP THE ASSESSEES APPEAL VIDE ITA NO 370/PN/2010. ITA NO 370/PN/2010 2. THE GROUNDS RAISED IN THE ASSESSEES APPEAL READ AS FOLLOWS: ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LA W: 1. THE LD CIT(A) ERRED IN DISALLOWING 50% OF TH E DEPRECIATION AMOUNTING TO RS 20 00 000/- IN RESPECT OF HELICOPTER CO-OWNED BY THE APPELLANT BY AFFIRMING VIEW OF THE LD AO THAT THE HELICOPTER WAS NOT USED WHOLLY & EXCLUSIVELY FOR BUSINESS PURPOSES. 1.1 THE LD CIT (A) ERRED IN NOT APPRECIATING THA T IN THE CASE OF A COMPANY SUCH DISALLOWANCE ON THE CONTENTION OF NON BUSINESS PU RPOSES CANNOT BE JUSTIFIED. ITA NOS 370 527/PN/10 POONAWAL LA FINVEST & AGRO P LTD. PUNE 2 1.2 THE LD CIT(A) RELIED UPON THE RATIO OF UNREPORT ED DECISION OF JURISDICTIONAL BENCH OF ITAT WITHOUT GIVING AN OPPORTUNITY TO THE APPEL LANT TO OFFER ITS CONTENTIONS ON THE SAME. 2. THE LD CIT (A) ERRED IN CONFIRMING THE DISALLO WANCE MADE BY THE LD AO ON THE CONTENTION THAT 50% OF THE EXPENSES INCURRED ON USAGE OF HELICOPTER AMOUNTING TO RS 96 872/- ARE FOR NON-BUSINESS PURPO SES. 2.1 THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT I N THE CASE OF A COMPANY DISALLOWANCE ON THE CONTENTION OF NON BUSINESS PURPOSES CANNOT BE JUSTIFIED. 3. THE LD CIT (A) ERRED IN CONFIRMING THE DISALL OWANCE MADE BY THE LD AO AMOUNTING TO RS 25 300/- UNDER SECTION 14A BY REFERRING & RELYING UPON RULE 8D OF THE INCOME-TAX RULES WHICH WAS NOT APPLICABLE FOR AY 20 06-07. 3.1 THE LD CIT(A) ERRED IN CONFIRMING THE DISALLOWA NCE STATED IN GR.NO.3 ABOVE WITHOUT GIVING COGENT REASONS AGAINST EXPENSES DISA LLOWED NOTIONALLY HAVING NO DIRECT NEXUS WHILE EARNING THE EXEMPT INCOME. 3. FROM THE ABOVE LD COUNSEL SUMMED UP BY STATING THAT THERE ARE THREE ISSUES IN THIS APPEAL OF THE ASSESSEE AND THE DETAILS ARE AS FOLLOWS. (I) CLAIM RELATING TO DEPRECIATION ON HELICOPTER CO -OWNED BY THE ASSESSEE; (II) CLAIM RELATING TO CLAIM OF REVENUE EXPENSES IN CURRED ON USAGE OF HELICOPTER BY THE ASSESSEE; (III) APPLICABILITY OF SECTION 14A READ WITH RULE 8D OF THE INCOME-TAX RULES 1962. 4. THE FACTS RELATING TO THE FIRST GROUND ARE THAT THE ASSESSEE IS A BENEFICIAL OWNER OF A HELICOPTER AS EVIDENT FROM TH E PERUSAL OF AN AGREEMENT BETWEEN THE ASSESSEE AND M/S ARKI AVIATIO N THAT THE ASSESSEE IS THE 1/6 TH CO-OWNER OF THE HELICOPTER AND NOT MERELY A PARTY TO USE THE HELICOPTER. THIS ARRANGEMENT IS MADE OUT VIDE THE A GREEMENT WHICH CONTAINS THE PERCENTAGE OF CO-OWNERSHIP AS DEFINED IN THE AGREEMENT. ON FINDING THAT THE ASSESSEE IS NOT REGISTERED OWNER O F THE IMPUGNED HELICOPTER THE AO DENIED THE CLAIM OF DEPRECIATION ON HIS SHARE IN THE HELICOPTER. DURING THE FIRST APPELLATE PROCEEDING THE ASSESSEE DEMONSTRATED THE CO-OWNERSHIP/BENEFICIAL OWNERSHIP OF THE HELICOPTER RELYING ON THE HONBLE SUPREME COURT JUDGMENT IN TH E CASE OF CIT V PODDAR CEMENT LTD. 226 ITR 625 AND MYSORE MINERALS LTD V CIT 239 ITR 775 AND SUBMITTED FOR GRANT OF DEPRECIATION TO THE EXTENT OF HIS SHARE AS ALLOWED IN THE NAMES OF REST OF THE CO-OWNERS OF TH E IMPUGNED HELICOPTER. THE CIT (A) CONSIDERED THESE SUBMISSIONS OF THE ASS ESSEE AND ACCEPTED THE PROPOSITION THAT THE ASSESSEE IS ENTITLED FOR D EPRECIATION IN RESPECT OF HIS SHARE IN THE HELICOPTER. HOWEVER HE INVOKED PR OVISIONS OF SECTION 38(2) OF THE ACT AND HELD THAT 50% OF THE CLAIM ON ACCOUNT OF THE DEPRECIATION MUST BE DENIED TOWARDS NON-BUSINESS US E OF THE HELICOPTER. AGGRIEVED WITH THE DECISION OF THE CIT(A) IN NOT CO NFIRMING THE ADDITION FULLY ASSESSEE IS IN APPEAL. FURTHER AGGRIEVED WIT H 50% RELIEFS GRANTED BY ITA NOS 370 527/PN/10 POONAWAL LA FINVEST & AGRO P LTD. PUNE 3 THE CIT (A) TO THE ASSESSEE THE REVENUE IS IN APPE AL VIDE INCOME TAX APPEAL NO 529/PN/2010. 5. DURING THE PROCEEDINGS BEFORE US LEARNED COUNSE L FOR THE ASSESSEE DEMONSTRATED THAT THE ISSUE OF CO-OWNERSHIP OF THE HELICOPTER BY VIRTUE OF BENEFICIAL OWNERSHIP WAS DISCUSSED BY THE CIT (A) I N HIS ORDER AND THEREFORE HE RELIED ON THE SAME SUBMISSIONS. FURTH ER THE COUNSEL FILED A COPY OF THE ORDER OF THE TRIBUNAL IN THE CASE OF IN TERVALVE (INDIA) PVT. LTD. AND OTHERS DATED 16.12.2010 AND MENTIONED THAT THE SAID DECISION UPHELD THE ISSUE OF GRANTING OF DEPRECIATION IN RESPECT OF SHARE OF THE ASSESSEE IN THE AVIATION VEHICLE WHICH ARE CO-OWNED BY THAT AS SESSEE. FURTHER THE LD AR MENTIONED THAT THE ASSESSEE IS NOT ENTITLED FOR CLAIM OF DEPRECIATION TO THE EXTENT OF 1/7 TH OF THE ELIGIBLE CLAIM UNDER SECTION 32 IN RESPECT OF HIS SHARE IN THE HELICOPTER. HE HOWEVER RELIED ON THE HONBLE GUJARAT HIGH COURT JUDGMENT N THE CASE OF SAYAJI IRON & ENGINEER ING CO. LTD. 253 ITR 749 FOR THE PROPOSITION THAT THERE CANNOT BE PERSON AL ELEMENT IN CASE OF COMPANY ASSESSEES. 6. ON THE OTHER HAND LEARNED DR FOR THE REVENUE OB JECTED TO THE FINDING OF THE CIT (A) ON THE ISSUES OF BENEFICIAL OWNERSHIP AND CO- OWNERSHIP AND RESULTANT GRANT OF DEPRECIATION IN RE SPECT OF HIS SHARE IN THE HELICOPTER. AS PER THE REVENUE UNLESS THE HELI COPTER REGISTRATION DOCUMENTS BEARS THE NAME OF THE ASSESSEE THE OWNER SHIP OF THE SAID HELICOPTER REMAINS A MYSTERY AND UNCERTAIN. UNDER T HESE CIRCUMSTANCES THE ASSESSEE MUST BE PREVENTED FROM CLAIMING THE DE PRECIATION ON HIS SHARE IN THE ASSET. FURTHER HE EMPHASIZED ON THE FACTUAL MATRIX OF ABSENCE OF HIS NAME IN THE REGISTRATION OF THE HELI COPTER. ON THE ISSUE OF APPLICABILITY OF GUJARAT HIGH COURT JUDGMENT THE D R MENTIONED THAT THE ASSESSEE FAILED TO DEMONSTRATE WITH EVIDENCE THAT T HE USE OF THE VEHICLE IS EXCLUSIVELY FOR BUSINESS PURPOSES. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS OF THE REVENUE AS WELL AS THE ORDER OF THE TRIBUNAL IN THE CASE OF INTERVALVE (INDIA) P. LTD (SUPRA). FROM THE PERUSAL IT IS EVI DENT THAT GRANT OF DEPRECIATION IS ALLOWABLE SUBJECT TO THE DISALLOWAN CE TOWARDS NON-BUSINESS PURPOSES. IT IS ALSO SEEN THAT THE DECISION WAS TAK EN BY THE TRIBUNAL RELYING ON ANOTHER JUDGMENT OF THIS TRIBUNAL IN THE CASE OF AVINASH ITA NOS 370 527/PN/10 POONAWAL LA FINVEST & AGRO P LTD. PUNE 4 NIVRUTTI BHOSALE PUNE IN ITA NO1425/PN/08 DATED 24 .9.2010. PARAGRAPHS 10 TO 14 OF THE ORDER IN THE CASE OF AVINASH NIVRUT TI BHOSALE WERE REPRODUCED IN THE SAID ORDER IN THE CASE OF INTERVA LVE (INDIA) P. LTD (SUPRA)AND THE THESE PARAGRAPHS ARE REPRODUCED AS UNDER FOR THE SAKE OF COMPLETENESS. 10. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDER S AND THE PAPER BOOKS MADE AVAILABLE TO US. UNDISPUTED FACTS ARE THAT THE ASSESSEE USED BOTH BELL HELICOPTER AS WELL AS THE CESSNA AIRCRAFT FOR THE MIXED USE AND THERE FORE THERE IS NO DISPUTE ON THE INVOKING OF THE PROVISIONS OF SECTION 38(2) OF THE ACT. FURTHER THERE IS NO DISPUTE THAT THE AO RESTRICTED THE DISALLOWANCE ART 1/7 TH OF THE CLAIM. THE SAME IS EVIDENCED BY FILING THE COPIES OF THE ASSESSM ENT ORDERS FOR THE AYS 2002-03 TO AYS 2004-05. THEY ARE PLACED AT PAGES 128 TO 145 OF THE PAPER BOOK. FOR THE INSTANT YEAR THE AO ADOPTED 30% AS AGAINST 1/7 TH IN THE PAST AND THEREFORE THE ISSUE TRAVELLED TO THE TRIBUNAL FOR THE FIRST TIME FOR THE INSTANT AY. BEFORE IT IS ADEQUATELY MADE OUT THAT THE 1/7 TH IS REASONABLE. THEREFORE THE ISSUE IN DISPUTE IS WHETHER THE DISALLOWANCE ON ACCOUNTS OF AVIATION EXPENSE S AND THE DEPRECIATION OF BOTH BELL HELICOPTOR AND THE CESSNA AIRCRAFT SHOULD BE RE STRICTED TO 1/7 TH OF THE CLAIM OR NOT. 11. IN THIS REGARD WE HAVE PERUSED THE PROVISIONS OF SECTION 38(2) OF THE ACT WHICH READS AS UNDER. BUILDING ETC PARTLY US BUILDING ETC PARTLY US BUILDING ETC PARTLY US BUILDING ETC PARTLY USED FOR BUSINESS ETC OR NO T EXCLUSIVELY SO USED ED FOR BUSINESS ETC OR NOT EXCLUSIVELY SO USED ED FOR BUSINESS ETC OR NOT EXCLUSIVELY SO USED ED FOR BUSINESS ETC OR NOT EXCLUSIVELY SO USED SECTION 38(1). (2) WHERE ANY BUILDING MACHINERY PLANT OR FURNITU RE IS NOT EXCLUSIVELY USED FOR THE PURPOSES OF THE BUSINESS O R PROFESSION THE DEDUCTIONS UNDER SUB-CLAUSE (II) OF CLAUSE (A) AND CLAUSE (C) OF SECTION 30 CLAUSES (I) AND (II) OF SECTION 31 AND CLAUSE (II) OF SUB- SECTION (1) OF SECTION 32 SHALL BE RESTRICTED TO A FAIR PROPORTIONATE RESTRICTED TO A FAIR PROPORTIONATE RESTRICTED TO A FAIR PROPORTIONATE RESTRICTED TO A FAIR PROPORTIONATE PART PART PART PART THEREOF WHICH THE ASSESSING OFFICER MAY DETERM INE HAVING REGARD TO THE USER OF SUCH BUILDING MACHINERY PLA NT OR FURNITURE FOR THE PURPOSES OF THE BUSINESS OR PROFESSION. FROM THE ABOVE IT IS EVIDENT THAT THE RESTRICTION SHO ULD BE A FAIR PROPORTIONATE PART THEREOF WHICH THE ASSESSING OFFICER MAY DETERMINE HAVIN G REGARD TO THE USER OF SUCH .. MACHINERY PLANT OR .. FOR THE PURPOSES OF THE BUSINESS OR PROFESSION. 12. IN THIS REGARD WE HAVE PERUSED EXISTING JUDICIAL PR ONOUNCEMENTS AND FOUND THAT THE SPECIAL BENCH DECISION IN THE CASE OF GULATHI SAR EE CENTRE (71 ITD 73)(CHD)(SB) WAS IN FAVOUR OF 1/5 TH DISALLAWOANCE IN RESPECT OF THE CAR AND COORDINATE BENCH DECISION IN THE CASE OF MAYUR KOTHARI ( 10 SOT 338)(MUM) IS IN FAVOUR OF 1/6 TH AGAIN IN THE CONTEXT OF A CAR AS DISCUSSED IN PARA 8 OF THE DECISION AND RELEVANT PARA 8 OF THE DECISION IN THE CASE OF MAYUR KO THARI (SUPRA) READS AS UNDER:- WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH SIDES MATERIAL ON RECORD AND ORDERS OF AUTHORITIES BELOW. ADMITTEDLY THE ASSESSEE HAS NOT MAINTAINED THE LOG BOOK. THE POSSIBILITY O F PERSONAL USER OF THE CAR CANNOT BE RULED OUT. IN THE CASE OF GULATI SAREE CENTRE VS ASSTT CIT [1999] 71 ITD 73 (CHD)(SB) [ITAT CHANDIGA RH BENCH] THE TRIBUNAL HELD THAT EVEN AFTER THE INCORPORATION OF THE CONCEPT OF BLOCK ASSET THE PROVISIONS OF SECTION 38(2) WERE A PPLICABLE AND THE ASSESSING OFFICER WAS EMPOWERED TO RESTRICT THE DEP RECIATION TO A FAIR PART THEREOF HAVING REGARD TO THE USER OF ASSE T FOR THE PURPOSES OF BUSINESS. IN THIS VIEW OF THE MATTER WE HOLD T HAT ORDER OF THE REVENUE AUTHORITIES IS CORRECT IN LAW. AS FAR AS T HE PROPORTION OF DISALLOWANCE FOR PERSONAL USE IS CONCERNED WE FIND THAT THE REVENUE AUTHORITIES HAVE MADE A REASONABLE PROPORTIONATE DI SALLOWANCE AT DISALLOWANCE AT DISALLOWANCE AT DISALLOWANCE AT ITA NOS 370 527/PN/10 POONAWAL LA FINVEST & AGRO P LTD. PUNE 5 THE RATE OF 1/6 THE RATE OF 1/6 THE RATE OF 1/6 THE RATE OF 1/6 TH THTH TH OF THE TOTAL EXPENSES INCLUDING DEPRECIATION OF THE TOTAL EXPENSES INCLUDING DEPRECIATION OF THE TOTAL EXPENSES INCLUDING DEPRECIATION OF THE TOTAL EXPENSES INCLUDING DEPRECIATION. ACCORDINGLY WE DECLINE TO INTERFERE IN THE MATTER. FURTHER IT HAS COME TO OUR NOTICE THAT THE PUNE BENC H HAS TAKEN DECISION IN THE CASE OF M/S KIRLOSKAR OIL ENGINES LTD VIDE ITA NO 1039 AND 104 0 FOR THE AY 1995-96 AND 1996-97 IN CONNECTION WITH THE DISALLOWANCE OF AIRCRAFT EX PENDITURE AND HELD THAT THE DISALLOWANCES AT THE RATE OF 15% (NEARLY 1/7 TH ) OF THE CLAIM IS FAIR AND REASONABLE. RELEVANT PARA 12 AND 13 OF THE SAID DECISION IS AS FOLLOWS . 12. GROUND NO 4 IS DIRECTED AGAINST THE CIT(A)S ORDE R IN CONFIRMING AIRCRAFT EXPENSES AMOUNTING TO RS 10 28 179/-. 13. WE HAVE HEARD BOTH THE PARTIES. IN THE ASSESSME NT YEAR 90-91 THIS ISSUE WAS DECIDED AGAINST THE ASSESSEE BY THE TRIBUNAL VIDE ORDER DT 20.7.2005 IN ITA NO. 916/PN/95. HOWEVER IN ASSESSMEN T YEAR 92-93 THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY OBSERVIN G THAT THE MATTER STANDS COVERED IN FAVOUR OF THE ASSESSEE IN ASSESSMEN T ASSESSMENT YEAR 90- 91 THOUGH ACTUALLY IN AY 90-91 THE MATTER WAS DECIDED AGAINST THE ASSESSEE. THEREFORE THERE WAS A MISTAKE IN THE TRIBUNALS ORDER IN ASSESSMENT YEAR 92- 93. WHILE DECIDING THIS ISSUE IN ASSESSMENT YEAR 93-94 IN ITA NO 429/PN/97 THIS POSITION HAS BEEN CLARIFIED AND THE ISSUE WAS DECIDE D AGAINST THE ASSESSEE IN THE LIGHT OF THE TRIBUNALS DECISION FOR ASSES SMENT YEAR 90-91. IN ASSESSMENT YEAR 94-95 VIDE ITA NO 606/PN/99 THE ISSUE WAS ALSO DECIDED AGAINST THE ASSESSEE. IN THE COURSE OF HEARING OF TH IS APPEAL THE ASSESSEE HAS RELIED ON THE TRIBUNALS DECISION IN AY 92-93 WHICH IN OUR CONSIDERED VIEW IS NOT ACTUALLY IN FAVOUR OF THE ASSESSEE BUT IS A GAINST THE ASSESSEE. THE CASE OF OTHER ASSESSES WHO SHARED THE AIRCRAFT E XPENSES IS ON DIFFERENT FOOTING INASMUCH AS IN THE PRESENT CASE THE ASSESSEE HAS NOT BEEN ABLE TO PROVE AND ESTABLISH THAT THE AIRCRAFT WAS USED FOR THE PURPOSE OF THE ASSESSEES BUSINESS. IN THIS VIEW OF THE MATTER THE ORDER OF THE CIT(A) IS UPHELD IN CONFIRMING THE DISALLOWANCE OF RS 10 28 179/- ( I.E. 15% OF THE CLAIM ) ON ACCOUNT OF AIRCRAFT EXPENSES. (EMPHASIS SUPPLIED) 13. FROM THE ABOVE IT IS CLEAR THAT SPECIAL BENCH DECIS ION IN THE CASE OF GULATHI SAREE CENTRE (SUPRA) OR THE DECISION IN THE CASE OF MA YUR KOTHARI (SUPRA) ARE IN THE CONTEXT OF THE PERSONAL CARS; WHEREAS THE PUNE BENCH DECISION IN THE CASE OF M/S KIRLOSKAR OIL ENGINES LTD (SUPRA) RELATES TO THE AVIATION VEHICLES WHICH IS ALSO THE CASE OF THE ASSESSEE AN WHETHER IT IS THE CASE OF A H ELICOPTER OR AIRCRAFT SHOULD NOT MAKE ANY DIFFERENCE. THUS THE DECISION IN THE CASE OF GULATHI SAREE CENTRE (SUPRA) OR THE DECISION IN THE CASE OF MAYUR KOTHARI (SUPRA) AR E DISTINGUISHABLE AS THE SUBJECT MATTER OF THESE APPEALS ARE THE DISALLOWANCE OUT OF TH E CLAIMS INVOLVING THE PERSONAL CARS . FURTHER WE MAY MENTIONED THAT THE REVENUE IS NO FA IR IN ADOPTING 20% (1/5 TH OF THE CLAIM) IN RESPECT OF THE BELL HELICOPTOR AND IN AD OPTING 30% (NEARLY 1/3 TH OF THE CLAIM) IN RESPECT OF THE CESSNA AIRCRAFT AND IN O UR OPINION IT CONSTITUTES AN ARTIFICIAL DIFFERENCE. IT IS ALSO RELEVANT TO MENTION THA T THE SECTION 38(2) REFERS TO THE EXPRESSION FAIR AND NEITHER OF THE IT AUTHORITIES IE AO OR CIT(A) HAVE UNDERTAKEN ANY EXERCISE TO ESTABLISH THE SAID FAIRNESS IN ADOPTING TH E SAID PERCENTAGES. IT IS TRUE THAT THE ONUS IS ON THE ASSESSEE TO SUBSTA NTIATE THE CLAIM OF THE ASSESSEE. CONSIDERING THE PECULIAR CIRCUMSTANCES BETTER KNOWN TO THE ASSESSEE THERE IS SURRENDER OF CLAIM TO THE EXTENT OF 1/7 TH OF THE TOTAL CLAIMS RS 93 96 771/- (IE RS 66 04 980/- ON ACCOUNT OF DEPR ECIATION OF VEHICLES AND RS 27 91 791/- ON ACCOUNT OF AVIATION EXPENSES). AT T HIS POINT OF TIME IN OUR OPINION THE ONUS HAS SHIFTED TO THE REVENUE TO DEMONS TRATE THAT THE SAID SURRENDER IS INCORRECT AND ESTIMATIONS MADE BY THE AO A RE FAIR WITHIN THE MEANING OF SECTION 38(2) OF THE ACT. FAIRNESS IS AN IMPO RTANT FACTOR IN MATTERS OF QUANTIFICATION OF THE DISALLOWANCES WHEN SECTION 38(2) OF THE ACT IS INVOKED. THE REVENUE HAS NOT DONE ANY PROBE INDEPEND ENTLY TO DEMONSTRATE THAT ASSESSEES OFFER IS UNFAIR AND HIS ESTIMATIONS ARE FAIR. HENCE WE ARE OF THE OPINION THAT THE ESTIMATIONS MADE BY THE AO WHICH ARE CONFIRMED IN CASE ITA NOS 370 527/PN/10 POONAWAL LA FINVEST & AGRO P LTD. PUNE 6 OF THE CESSNA AIRCRAFT AND ALTERTED IN CASE OF BELL HELICO PTOR ARE HEREBY SET ASIDE. 14. IN VIEW OF THE EXISTENCE OF THE PUNE BENCH DECISION WHICH IS BINDING WE ARE OF THE OPINION THAT THE OFFER OF THE ASSESSEE TO RES TRICT THE DISALLOWANCE TO 1/7 TH OF THE CLAIMS IN RESPECT OF BOTH BELL HELICOPTOR AND THE CESS NA AIRCRAFT IS REASONABLE AND FAIR. ACCORDINGLY THE AO IS DIRECTED. THUS THE ORIG INAL GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED . 8. ESSENTIALLY THE GROUND 1 RELATES TO OBJECTIONS ON THE OWNERSHIP OF THE HELICOPTOR. REGARDING THE CO-OWNERSHIP AND THE BENEFICIAL OWNERSHIP WE FIND THAT THE ORDER OF THE CIT(A) IS SELF EXPLAN ATORY AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY GROUND NO.1 IS RE FERRED TO THE FILES OF THE AO TO GIVE EFFECT TO OUR ORDERS IN THE CASE OF INTERVALVE (INDIA) P. LTD AND AVINASH NIVRUTTI BHOSALE (SUPRA) AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE SHALL FILE COPIES OF THE ORDERS OF THE TRIBUNAL BEFORE THE AO DURING THE SET ASIDE PROCEEDINGS. ACCORDINGLY GROUND NO.1 IS ALLOWED PRO TANTO . 9. GROUND NO 2 RELATES TO THE DISALLOWANCES OUT OF EXPENSES CLAIMED BY THE ASSESSEE TOWARDS USAGE OF HELICOPTER FOR NON -BUSINESS PURPOSES. BOTH THE PARTIES ARE OF THE OPINION THAT THIS ISSUE SHOULD ALSO BE DECIDED IN LINE WITH THE PUNE BENCH DECISIONS IN THE CASES OF INTERVALVE (INDIA) P. LTD AND AVINASH NIVRUTTI BHOSALE (SUPRA). THEY MENT IONED THAT THE ABOVE- SAID ORDERS ARE IN FAVOUR OF RESTRICTING DISALLOWAN CE TO 1/7 TH OF THE CLAIM. THEREFORE WE ARE OF THE OPINION HAT THIS ISSUE MUS T BE ALLOWED IN FAVOUR OF THE ASSESSEE IN PRINCIPLE SUBJECT TO THE RESTRI CTIONS DISCUSSED IN THE SAID DECISIONS OF THE TRIBUNAL. GROUND NO.2 IS ALLO WED PRO TANTO . 10. THE THIRD ISSUE RELATES TO APPLICABILITY OF SEC TION 14A OF THE ACT READ WITH RULE 8D OF THE INCOME-TAX RULES 1962. AT THE V ERY OUTSET BOTH THE PARTIES MENTIONED BEFORE US THAT THE ISSUE HAS TO REFE RRED TO THE FILES OF THE A.O FOR DECIDING THE ISSUE AFRESH IN THE LIGHT OF THE BOMBAY HIGH COURT JUDGMENT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. VS. DCIT ITX A NO. 626/10 AND WRIT PETITION NO. 758/10 REPORTED IN 328 ITR 81 (MUM). FURT HER THEY MENTIONED THAT SAID BINDING HIGH COURT JUDGMENT CONSIDERED THE SPECIAL BE NCH DECISIONS IN THE CASE OF DAGA CAPITAL MANAGEMENT PVT. LTD. [2009] 117 ITD 16 9 (MUM)(SB). THEY ALSO MADE A MENTION OF THE MANNER IN WHICH THE RULE 8D IS REQUIR ED TO BE IMPLEMENTED TO THE AY PRIOR TO THE AMENDMENT. CONSIDERING THE ABOVE SUBMI SSIONS OF THE PARTIES WE ARE OF THE OPINION THE MATTER SHOULD BE SET ASIDE FO R REEXAMINING THE ISSUE AFRESH IN ITA NOS 370 527/PN/10 POONAWAL LA FINVEST & AGRO P LTD. PUNE 7 THE LIGHT OF THE ABOVE REFERRED DECISIONS AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD. ACCORDINGLY THE GROUNDS ARE SET ASIDE. 11. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . ITA NO 529/PN/2010 12. THE ONLY ISSUE RAISED BY THE REVENUE IN THIS AP PEAL RELATES TO THE RELIEF GIVEN BY THE CIT(A) TO THE ASSESSEE ON ACCOU NT OF DEPRECIATION ON THE HELICOPTER WHEN THE ASSESSEE IS NOT ITS REGIST ERED OWNER. THIS ISSUE DIRECTLY AND INTRICATELY LINKED TO THE GROUND RAISE D IN GROUND 1 OF THE ASSESSEES APPEAL AND THIS ISSUE WAS ADJUDICATED AS GIVEN IN THE PRECEDING PARAGRAPHS. CONSIDERING THE SAID ADJUDICATION AND T HE COMMONALITY OF THE ISSUE WE FIND OUR DECISION IS DIRECTLY RELEVANT FO R THE GROUND RAISED IN THIS APPEAL TOO. ACCORDINGLY THEY ARE DISMISSED . 13. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED . PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF MARCH 2011. SD/- SD/- (SHAILENDRA KUMAR YADAV) (D. KARUNAKAR A RAO) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE DATED: 25TH MARCH 2011 COPY TO:- 1) POONAWALLA FINVEST & AGRO P. LTD. PUNE 2) THE ACIT CIR.4 PUNE 3) THE CIT (A)-II PUNE 4) THE CIT-II PUNE 5) THE DEPARTMENTAL REPRESENTATIVE A BENCH I.T .A.T. PUNE. BY ORDER TRUE COPY ASST. REGISTRAR I.T.A.T. PUNE ITA NOS 370 527/PN/10 POONAWAL LA FINVEST & AGRO P LTD. PUNE 8