Bombay H.C : the aircraft owned by the assessee falls under item E(1) of the Depreciation Table

High Court Of Bombay

CIT vs. Kirloskar Oil Engines

Section 32(1)

Asst. Year 1978-79, 1981-82

Dr. B.P. Saraf & Dr. Pratibha Upasani, JJ.

IT Ref. Nos. 18 & 26 of 1992

1st August, 1997

Counsel Appeared : Dr. V. Balasubramanian with J.P. Deodhar, for the Revenue : S.M. Inamdar with K.B. Bhujle, for the Assessee

JUDGMENT

DR. B.P. SARAF, J. :

In IT Ref. No. 18 of 1992 made under s. 256(1) of the IT Act, 1961, the Tribunal has referred the following question of law to this Court for opinion at the instance of the Revenue:

“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the aircraft owned by the assessee falls under item E(1) of the Depreciation Table?”

In IT Ref. No. 26 of 1992, the following question has been referred:

“Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in granting the depreciation at 40 per cent on the aircraft jointly owned by the assessee holding that this item of machinery falls under item E(1) of Part I of Appendix I of the IT Rules, 1962, when in fact the said machinery falls under item D(1) “Aeroplane—Aircraft” of Part I of Appendix I, entitled to depreciation at 30 per cent only?”

Both these references pertain to the very same assessee. IT Ref. No. 18 of 1992 relates to the asst. yr. 1978-79 and IT Ref. No. 26 of 1992 to the asst. yr. 1981-82. The controversy in both the references is whether the aircraft owned by the assessee falls under item D(1) of the Depreciation Table appended to the IT Rules, 1962 (Part I of Appendix I), and entitled to depreciation at the rate of 30 per cent or under item E(1) thereof and eligible to depreciation at the rate of 40 per cent. Both these references are, therefore, taken up together for hearing and disposal.

2. The material facts giving rise to these references are as follows: The assessee is a public limited company engaged in the manufacture of diesel engines. During the previous year relevant to the assessment years under reference, the assessee owned an aircraft and used the same for its business. The assessee claimed depreciation thereon at the rate of 40 per cent on the ground that it fell within item E(1) of the Depreciation Table. The AO rejected the claim of the assessee and held that “aircraft” fell under item D(1) of the Depreciation Table and not under item E(1). On appeal by the assessee, the CIT(A) reversed the order of the AO and held that the aircraft owned by the assessee was covered by item E(1) of the Depreciation Table and the assessee was, therefore, entitled to depreciation in respect thereof at the rate of 40 per cent. The order of the CIT(A) having been affirmed by the Tribunal, the Revenue is before us by way of these references.

3. Dr. V. Balasubramanian, learned counsel for the Revenue, submits that “aircraft” having been specifically mentioned in item D(1) of the Depreciation Table, the assessee is entitled to depreciation at the rate of 30 per cent only. According to him, item E(1) was applicable only to “aero-engines” and not to “aircrafts”. Mr. S.M. Inamdar, learned counsel for the assessee, on the other hand, submits that the aircraft owned by the assessee cannot be brought under item D(1) of the Depreciation Table because it was “heavier-than-air”. According to him, the aircraft mentioned in item D(1) means only aircrafts like helicopters, gliders or balloons. His submission is that an aircraft which is heavier-than-air has to be treated as “aeroplane-aero-engine” which falls under item E(1).

4. We have carefully considered the rival submissions. To appreciate the same, it may be expedient to set out items D(1) and E(1) of the Depreciation Table which, at the material time, stood as follows: D(1) Aeroplanes— Aircraft, aerial photographic apparatus (NESA) E(1) Aeroplanes—Aero-engines (NESA) A conjoint reading of these items makes it clear that the subject-matter of the two items is quite different and distinct. Though both items are given under the heading “Aeroplanes”, item D(1) prescribes the rates of depreciation on “Aircraft and aerial photographic apparatus”, whereas item E(1) prescribes the rate of depreciation on “Aero-engines”.”Aircraft” and “aero-engines” are two quite different and distinct machineries. An aircraft is a machine capable of flight, whereas an aero-engine is only the power unit of an aircraft. An aeroengine, therefore, cannot be termed as an aircraft or, to put it differently, an aircraft can never be described as an aero-engine even if it is heavier-than-air. An aircraft which is heavier-than-air is also an “aircraft”. There is no basis or justification for the contention of the assessee that “aircraft” means only machines like helicopter, glider or balloon capable of flight in the air and not aircrafts which were heavier-than-air. Reference may be made in this connection to the definition of “aircraft” in the Aircraft Act, 1934, which says: “’Aircraft’ means any machine which can derive support in the atmosphere from reactions of the air (other than reactions of the air against the earth’s surface) and includes balloons, whether fixed or free, airships, kites, gliders and flying machines.” In fact, aircraft is a word of wide import. It includes any mechanically driven flying machine. According to Encyclopaedia Britannica (Macropaedia) Vol. I: “All aircraft fall into two general categories—lighter-than-air or heavier-than-air. Several distinct types are recognised within each group. Each may perform a variety of missions calling for modifications for special usage.

Lighter-than-air crafts rise and float because they displace a volume of air the weight of which is equal to or greater than the total weight of the aircraft. Such aircraft include balloons and airships….. Heavier-than-air crafts derive their flight capability (lift) from the dynamic reaction of air flowing around suitably shaped surfaces (wings or airfoils). Such craft include gliders and sailplanes, conventional air-planes, short take-off and landing (STOL) air-planes, and vertical take-off and landing (VTOL) aircraft.” In Chambers’ Science and Technology Dictionary, the word “aircraft” has been described only as a “mechanically driven heavier-than-air flying machine with wings of fixed or variable sweep angle”. It has not been described to mean gliders, balloons and other flying machines. Similarly, in the definition of “aircraft” in the Aircraft Act, 1934, “balloons, airships, kites, gliders and flying machines” have been added by specific inclusion. It is, therefore, not correct to say that aircraft which are heavier- than-air are not “aircrafts” but are “aero-engines”. All aircrafts whether lighterthan-air or heavier-than-air, are “aircrafts”. No aircrafts can ever be termed as an “aero-engine” because an “aero-engine” is not an aircraft or aero- plane at all. It is only the power unit of an aircraft. It is thus clear from the above discussion that “aircraft” does not mean only crafts like balloons, airships, helicopters but also means aircrafts heavier-than-air.

5. In the instant case, the admitted position is that the machinery in respect of which depreciation is claimed is an aircraft. That being so, it would fall under item D(1) of the Depreciation Table and not item E(1) thereof. Item E(1) covers only aero-engines and not aircrafts. In that view of the matter, we are of the clear opinion that the Tribunal was wrong in holding that the aircraft owned by the assessee fell under item E(1) of the Depreciation Table and not under item D(1). Accordingly, we answer the questions referred to us in both these references in the negative, i.e., in favour of the Revenue and against the assessee.

No order as to costs.

[Citation: 230 ITR 88]

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