TMI Blog2018 (10) TMI 1898X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) as the own funds of the assessee are more than the investments. Disallowance under Rule 8D(2)(iii) - CIT(A) has followed the decision of the Tribunal in the case of REI Agro Ltd.[ 2013 (9) TMI 156 - ITAT KOLKATA] and has directed the Assessing Officer to exclude the investment which do not yield tax from income while working average value of investment. That is, only dividend bearing securities are included to compute the average investment. We note that the assessee s issue is squarely covered by the judgment of the Coordinate Bench (supra) and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid finding of the ld. CIT(A) and the ld. CIT(A) has allowed the appeal of the assessee by following the decision of the Tribunal in REI Agro Ltd. (supra). We find no reason to interfere in the order of the ld. CIT(A) and the same is hereby upheld. - ITA No. 1533/Kol/2017, ITA No. 1532/Kol/2017 - - - Dated:- 10-10-2018 - SHRIA. T. VARKEY, J.M. AND DR. A.L. SAINI, A.M. For the Appellant : Shri A. Bhattacharjee, Addl. CIT For the Respondent : Shri Subash Agarwal, Advocate ORDER Per Dr. A. L. Sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18, in assessee s own case, in ITA No.1654/Kol/2016, for Assessment Year 2013-14 passed by the Division Bench of this Tribunal whereby disallowance on account of railway punitive charges were deleted by the Tribunal. The ld. Counsel for the assessee submitted that these two appeals are covered by the aforesaid order of the Tribunal, a copy of which was also placed before the Bench. 6. The ld. DR did not have much to say but he nevertheless relied upon the order of the Assessing Officer. 7. We see no reason to take any other view of the matter then the view so taken by the Division Bench of this Tribunal in assessee s own case vide order dated 10.01.2018. In this order, the Tribunal has inter alia observed as follows: 14. We have considered the rival submissions. This tribunal in the case of Feegrade Company Pvt. Ltd on an identical issue has taken the following view :- 8. At the time of hearing of the appeal it was fairly accepted by the parties that the issue raised by the revenue in this appeal is squarely covered in favour of the assessee by the decision of ITAT Mumbai bench in the case of Taurian Iron Steel Co.(P)Ltd (supra). In the aforesaid decision the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the punitive charges are computed as 2 times or 3 times of the freight rates. The punitive charges levied by Railways, in accordance with the notification of Ministry of Railways dated 23.12.2005, for carrying goods in its rakes are not 'for any purpose which is an offense or which is prohibited by law'. As a matter of fact, the Indian Railways itself permits carrying weight load beyond the permissible carrying capacity subject to payment of higher rate of freight by 2 times or 3 times. Though the words are 'punitive charges', they are payment which are neither an offense nor is prohibited by the law rather the payment is in accordance with the law as provided in the notification of Ministry of Railways dated 23.12.2005. It is, therefore, held that Explanation to Section 37 is not applicable and the payment of ₹ 1,01,85,788/- is allowable. Hence, the addition is deleted and Ground No. 4 is allowed. 16. As far as the decision of the Hon ble Delhi High Court in the case of Time Incorporated (supra) cited by the ld. DR before us is concerned that was the case of a suit for permanent injunction and damages, filed against the defendant for a passing off ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd. Vs. CIT (1998) (Supra). The relevant extract of the judgment reads as under : FACTS During the year under consideration, the assessee failed to pay advance tax equivalent to 75 per cent of estimated tax. The Assessing Officer levied interest under section 215 as well as under section 139. The assessee claimed that since taxes which were payable were delayed, the assessee's financial resources increased which were available for business purposes. Hence, the interest which was paid to the Government was interest on capital that would be borrowed by the assessee otherwise. Hence, the amounts should be allowed as deduction. The revenue did not allow such deduction. The High Court affirmed the view. On appeal to the Supreme Court : HELD When interest is paid for committing a default in respect of a statutory liability to pay advance tax, the amount paid and the expenditure incurred in that connection is in no way connected with preserving or promoting the business of the assessee. This is not expenditure which is incurred and which has to be taken into account before the profits of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est on arrears of sales tax is penal in nature and has rejected the contention of the assessee that it is compensatory in nature. In taking the said view the High Court has placed reliance on its Full Bench's decision in Saraya Sugar Mills (P.) Ltd. v. CIT [1979] 116 ITR 387 (All.) The learned counsel appearing for the appellant-assessee states that the said judgment of the Full Bench has been reversed by the larger Bench of the High Court in Triveni Engg. Works Ltd. v. CIT [1983] 144 ITR 732 (All.) (FB), wherein it has been held that interest on arrears of tax is compensatory in nature and not penal. This question has also been considered by this Court in Civil Appeal No. 830 of 1979 titled Saraya Sugar Mills (P.) Ltd. v. CIT decided on 29-2-1996. In that view of the matter, the appeal is allowed and question Nos. 1 and 2 are answered in favour of the assessee and against the revenue. In view of the above judgment, there remains no doubt that the interest expense on the delayed payment of service tax is allowable deduction. The above principles can be applied to the interest expenses levied on account of delayed payment of TDS as it relates to the expenses claimed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance u/s 14A r.w. Rule 8D(2)(iii) of ₹ 3,69,866/-. 9. At the outset itself, the ld. Counsel for the assessee stated that this issue is squarely covered by the decision of the Coordinate Bench on identical issues in assessee s own case in ITA No.1654/Kol/2016, for Assessment Year 2013-14 wherein it was held as follows: 20.As far as disallowance of other expenses under Rule 8D(2)(iii) viz. other expenses are concerned the plea of the assessee was to exclude investments which did not yield dividend exempt income during the previous year while working out the average value of investments for application of Rule 8D(2)(ii) of the Rules. In this regard the assessee placed reliance on the decision of ITAT, Kolkata Bench in the case of REI Agro Ltd vs DCIT 144 ITD 141 (Kol) wherein it was held that while making disallowance under Rule 8D(2)(iii) of the Rules and while computing Average value of investments only investments which yielded during the relevant previous year should be considered. 21. The CIT(A) agreed with the submissions of the assessee and deleted the addition of interest expenses of ₹ 2,05,685/-/- made by the AO under Rule 8D(2)(ii) of the Rules. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A). As far as disallowance under Rule 8D(2)(III) of the Rules is concerned the CIT(A) has followed the decision of the Tribunal in the case of REI Agro Ltd.(supra) and has directed the AO to exclude investments which did not yield tax free income while working out the average value of investment. We find no grounds to interfere with the order of CIT(A). Ground no.2 raised by the revenue is accordingly dismissed. 24. In the result the appeal by the revenue is dismissed. 10. As the issue is squarely covered in favour of the assessee by the decision of the Coordinate Bench in assessee s own case wherein the Coordinate bench held that disallowance of interest expenses in terms of Rule 8D(2)(ii) was originally deleted by ld. CIT(A) as the own funds of the assessee are more than the investments. As far as disallowance under Rule 8D(2)(iii) is concerned, the Ld. CIT(A) has followed the decision of the Tribunal in the case of REI Agro Ltd. in ITA No.1331/Kol/2011 and has directed the Assessing Officer to exclude the investment which do not yield tax from income while working average value of investment. That is, only dividend bearing securities are included to compute the average ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
