TMI Blog2010 (8) TMI 1075X X X X Extracts X X X X X X X X Extracts X X X X ..... directed against the order dated 23.12.2008 of CIT(A)-III for the assessment year 2003-04. 2. Only ground raised by the assessee is reproduced below: 1. The ld. CIT(A) erred in confirming the disallowance of demurrage paid amounting to ₹ 81,84,925/- made by the AO on the ground that it is in the nature of penalty paid for infraction of law and hence not allowed by virtue of explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to which any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure. 4. On appeal, the CIT(A) confirmed the disallowance made by the AO. 5. Before us, the learned AR of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inimum loading rate is 150 MT per hour was granted and in case failure to do so demurrage charges were payable to Peter Cremer GMBH. Therefore, the assessee had to pay demurrage charges which is contractual and not a penalty for any offence which is prohibited by law. He has relied upon the decision of the Hon ble Allahabad High Court in the case of Nanhoomal Jyoti Prasad. v. Commissioner of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r infraction of law. In the case of Nanhoomal Jyoti Prasad. v. Commissioner of Income-tax. (supra), the Hon. Allahabad High Court had an opportunity to consider and decide an identical issue. The Hon. Allahabad High Court has held that the demurrage charges paid to release the goods from the port authorities is not fine for infraction of law, it is by way of compensation for use of the port facili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction for the money paid by way of demurrage to the railway. 8. Respectfully following the above decisions of the Hon. Delhi High Court and Allahabad High Court, we decide this issue in favour of the assessee and against the revenue. The assessee is entitled for deduction for expenditure in payment of demurrage charges in question. The orders of the lower authorities qua this issue are set a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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