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2015 (10) TMI 2553 - AT - Income TaxDenial of TCS credit u/s 206C(1C) - Held that:- The fact that State Govt. has collected TDS and paid it to Govt. treasury is undisputed. It is abundantly clear that assessee's case is covered under the TCS provisions and that is why the TCS is collected in this behalf u/s 206C. It is undisputed fact that that TCS payment is duly certified by payer Rajasthan Govt. in prescribed Form No. 27D; consequently the credit of TCS has to be given to assessee as a matter of right, more so, when the corresponding income from contracted activities as per Rajasthan Minor Minerals Concession Rules, 1986, is included in assessee's income. In these facts and circumstances, I find merit in the arguments of the ld. Counsel for the assessee that denial of credit tantamount to confiscating assessee's tax for which corresponding income is included in its taxable income. Such confiscation amounts to unjust enrichment on the part of the Govt. which is not permissible. In view of the entirety of the facts and circumstances of the case, the assessee claim of credit of TCS amount as mentioned above is justified and deserves to be allowed. This ground of the assessee in both the years is allowed. Interest charged by the Govt. on late deposit of royalty installments under the head royalty expenses - allowable expenditure u/s 31(1) - Held that:- Interest @ 12% paid to Govt. for late deposit of monthly royalty instalemnts for delay in payment is clearly compensatory in nature and not penal in nature as held by the lower authorities. My view is fortified by above judgments. The contentions about the business expediency and allowability of interest in the view of the decision of Hon'ble Apex Court in the case of S.A. Builders vs. CIT (2006 (12) TMI 82 - SUPREME COURT) is well placed and deserves to be accepted. These being the Govt. payments, find no merit in the findings of the ld. CIT(A) that no evidence was produced in this behalf as the payments are demonstrated by the assessee's account in assessment year 2007-08. In view of thee facts and circumstances of the case, the payment of royalty expense is compensatory in nature and is an allowable expenditure u/s 31(1) of the Act.
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