TMI Blog2015 (10) TMI 2553X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 month ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovt. on late deposit of royalty installments under the head royalty expenses of ₹ 49,706 (A.Y. 2006-07) and ₹ 2,64,889/- (A.Y. 2007-08) alleging it to be penal interest whereas the interest is compensatory in nature. 2.2 During the course of hearing, the. Assessee s AR contends that the assessee was appointed as a contractor under Rajasthan Minor Mineral Concession Rules, 1986 by proper tendering process followed by a duly executed agreement in this behalf. As per Section 206C(1C) of the I T Act TCS is collectible from assessee which is prepaid tax to be given credit at the time of assessment of tax liability. During the course of assessment lower authorities misinterpreted Section 206C(1C) of the Act in arbitrary manner deny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s royalty from the lessees of mines. Therefore, rightfully the credit for such taxes belong to the lessees of mines and not to the contractor, who has been engaged only for collection of royalty alongwith tax by the State Govt. The State Govt. in this process is saved from the botheration of deploying its manpower for this collection work. 4.7 In view of the above discussion, I find that the AO was justified in not allowing the credit of taxes collected by the appellant of ₹ 6,05,336/- from the lessees under the provisions of Section 206C of the I.T. Act. Further the total receipts are understated to the extent of this amount and therefore, an addition of ₹ 6,05,336/- was made by the AO to the income of the appellant. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest is paid to State Govt. under Rajasthan Mining Deptt. pursuant to above contract for belated payments of monthly royalty instalments. The interest is thus compensatory in nature and governed by valid contract under statutory provisions. By no stretch of imagination it cannot be treated as penal in nature for which following case laws have been relied on . 1. Jamna Auto Industries vs. CIT 299 ITR 92 (P H) 2. CIT vs. Carbon Industries (P) Ltd.259 ITR 373 (Mad) 3. ACIT vs. Niko Resources Ltd. 123 TTJ 310(Ahd. C) Besides the interest payment is governed by the business expediency also, as due to shortage o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lear 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 unj ..... X X X X Extracts X X X X X X X X Extracts X X X X
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