TMI Blog2017 (2) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of each case. In the present case, the Calcutta Bench of the Tribunal in Rajrani Exports (P) Ltd [2012 (6) TMI 62 - ITAT, Kolkata] has already decided that the payment made on account of transportation charges as admissible which cannot be disallowed on the basis of Volcker Committee report and hence penalty on such disallowance which is wrong and against the spirit of the Act cannot be sustained . Accordingly, we set aside the order of ld.CIT(A) and direct the AO to delete the penalty. - Decided in favour of assessee. - ITA NO.6695/Mum/2014 - - - Dated:- 17-2-2017 - SHRI MAHAVIR SINGH, JM AND SHRI RAJESH KUMAR, AM For The Assessee : Shri Keshav B Bhujle For The Revenue : Shri N P Singh ORDER PER RAJESH KUMAR, A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 28,16,366/- claiming it to be not allowable under section 37(1) of the Act being the kickbacks. The assessee did not prefer any appeal before any higher forum against the above said quantum disallowance by the AO. Thus, the assessment order of the AO attained finality. The AO, thereafter, initiated penalty proceedings u/s 271(1)( c) vide order dated 19.3.2013 and imposed penalty of ₹ 9,57,282/-. According to the Volcker Committee report 10% of the amount total paid to the assessee was paased on to the Govt of Iraq as kickbacks which was wrongly allowed under section 37(1) of the Act. The AO accordingly issued notice under section 271(1)( c) of the Act on 11.12.2012 calling the assessee to explain as to why the penalty should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constitute an offence prohob1ted by law. It has also been submitted that the addition made by the Assessing Officer under explanation to section 37(1) of IT. Act, 1961 was arbitrary and illegal. However, the fact remains that CIT(A), Mumbai has confirmed the additions and therefore the view held by the Assessing Officer stands vindicated In CIT(A),s order. Assessee has cited following two decisions of ITA, Kolkata and High Court of Kolkata on the Issue of disallowance of Inland transportation charges and after sales and service charges In the case of Rajrani Exports Pvt.Ltd.2012/22/taxmann.com/13/ Kol/ITAT and 2013/35/taxmann.com/644/Calcutta which are similar to the facts of assessee's case, however, the matter is already considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t kickbacks to the Iraqi Govt and therefore, the same was not allowable under section 37(1) of the Act. The ld. AR vehemently submitted that the assessee has paid the additional transportation charges to the Government of Iraq under a contractual obligation and the same were admissible under section 37(1) of the Act as not being illegal or against any statute and incurred wholly and exclusively for the purpose of business. The ld. AR also referred a number of decisions in support of his arguments as under: a) DCIT V/s Rajrani Exports (P) Ltd (2012) 22 taxmann.com 13(Kolkata); which has been upheld by the Hon ble Calcutta High Court as reported in (2014) 361ITR 152 (Cal) b) NSIL Exports Ltd V/s DCIT (2014) 44 taxman.com 246 (Mumbai Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference of Volcker Committee report was contained and it was stated that the payment were being made in the form of transportation charges by the various exporter in India to Iraq regime under Oil for Food Programme which were nothing but kickbacks and consequently was disallowed by the AO to the tune of ₹ 28,16,366/-. The quantum appeal was not filed by the assessee challenging the addition made by the AO and thus the assessment framed by the AO attained finality. Now the issue before us whether the payment of transportation charges and claiming the same as deduction constituted concealment of income or filing inaccurate particulars of income warranting imposition of penalty u/s 271(1) of the Act.In the case of Rajrani Exports (P) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween Alia and Iraqi regime over which assessee had no control and further since there was no material to indicate that assessee was aware of fact that payments were to be used as kickbacks and further since services were indeed rendered to assessee by Alia, prohibition contained in Explanation to section 37(1) could not be attracted - Held, yes - Whether, therefore, payments in question were to be allowed as deduction under section 37(1) - Held, yes [In favour of assessee ] 6. The decision of the Tribunal has upheld by the Hon ble Calcutta High Court by dismissing the appeal of the revenue by holding that there was no infirmity in the order of appellate authority and therefore the payment of commission should not be disallowed. By a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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