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2014 (2) TMI 569 - AT - Income TaxClaim of demurrage charges - whether allowable as business expenditure – Held that:- The assessee failed to pay the amount and he asked for further time and ultimately it was agreed between the assessee and Fort Projects Pvt. Ltd. that subject to interest and demurrage charges in case of termination of the contract time was extended - due to cash crunch the assessee has not been able to pay the amount within the stipulated period - During this period there was slump in property deals and as a prudent decision the assessee settled by paying some compensation and demurrages - The assessee has taken a conscious business decision like a prudent businessman - As the assessee has taken a business decision the demurrage charges and cancellation charges are allowable as business expenditure – the order of the CIT(A) upheld – Decided against Revenue. Security charges, warehouse maintenance charges and supervision charges allowed – Held that:- The assessee has maintained the security staff to maintain its warehouse and debited the expenditure in the operating expenses - it has incurred warehouse maintenance charges and supervision charges - The assessee company's main source of income is from letting out of warehouse in Kolkata Dock Area and these warehouses were taken from M/s. Williamson Magor & Co. Ltd. - As these are paid for the purpose of earning this income they have direct co-relation and nexus, the same should have been allowed - The CIT(A) has rightly allowed the expenses – Decided against Revenue. TDS u/s 194I on subletting warehouses - Deletion made u/s 40(a)(ia) of the Act - Held that:- The assessee's major source of income is from subletting warehouses to R. Piyarilal Import & Export Pvt. Ltd. -The income from subletting was accepted by AO - Even the TDS was deducted in the last month of the accounting year even though the provisions of section 194-I of the Act will not apply for the reason that the tenancy is a sub-tenancy under leave and licence agreement for every 11 months and this has been continuing from earlier years – the assessee has deducted TDS on rent paid but only on the last date of the Financial Year on or before the due date of filing of return u/s. 139(1) of the Act – the decision in CIT Vs. Virgin Creations, 2011 (11) TMI 348 - CALCUTTA HIGH COURT] followed – there was no infirmity in the order of CIT(A) - Decided against Revenue.
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