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The Commissioner of Income tax-I Versus Western Coalfields Ltd.

2016 (1) TMI 1033 - BOMBAY HIGH COURT

Provision for increment - Held that:- As the provision was made for known liability and therefore the approach by ITAT cannot be said to be unjust.

Overloading charges - Held that:- The overloading charges or under loading charges are payable in terms of contract between the parties and it is not an offence. It is purely a commercial transaction. In this situation, we do not find any substantial question of law arising as the ITAT has allowed payment of overloading charges as expendi .....

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corelation with area or extent of land acquired. The company, as a prudent measure, has evolved the policy to pay a lump sum consideration to such land oustees in lieu of employment. If the company is not in a position to provide employment, then only the subsistence allowance at the rate of ₹ 2,500/was/ is being paid. Thus, this subsistence allowance is a liability which arises only after the land is acquired if employment cannot be offered. Therefore, the ITAT has rightly accepted it as .....

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by the assessee as the employer and the provisions made to honour the commitment in terms of the National Coal Wage Agreement [NCWA] has been already accepted by this Court and the challenge of Revenue thereto is rejected. We find that after expiry of the earlier NCWA when the negotiations were going on, the assessee made the provision for increments on estimate basis. It was certain that as per the NCWA under negotiations, the wage rise was inevitable. Hence, in corresponding previous year, the .....

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e and learned Advocate Shri Dewani for the assessee, we find that the percentage of overloading charges paid by the assessee to the railways as compared to the normal loading charges is minuscule. The overloading charges do not appear to have been paid deliberately. Learned Advocate Shri Dewani attempted to explain that on account of mechanical process of loading coal into railway wagons, some times the extra coal is overloaded. He submits that all these are the contingencies in the course of bu .....

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s purely a commercial transaction. In this situation, we do not find any substantial question of law arising as the ITAT has allowed payment of overloading charges as expenditure which can be deducted under Section 37 of the Income Tax Act, 1961. 5] The last question raised is about the compensation expenditure. The learned Counsel for the Revenue contends that the said expenditure is capital in nature because it is incurred for procuring a capital asset. The assessee has submitted that it is su .....

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