TMI Blog2018 (10) TMI 672X X X X Extracts X X X X X X X X Extracts X X X X ..... -01-2018 of Co-ordinate Bench, ITAT, Bench-D in assessee s own case, ITA Nos. 1652 1653/Kol/2016 for the A.Y 2013-14, copy of the same is on record and referred to para 16 of the said order. 4. After hearing both the parties and on perusal of record including the order dt. 10-01-2018 as relied on by the ld. AR of assesse, we find that the facts and circumstances of the case for A.Y 2013-14 are similar and identical with the facts and circumstances of the case in hand. We also find that the Co-ordinate Bench, ITAT, D Bench, Kolkata in the case of supra discussed the issue thoroughly with various facts of various case laws. Relevant portion of said order dt. 10-01-2018 is reproduced herein below for the sake of clarity:- 16. As far as the decision of the Hon'ble Delhi High Court in the case of Time Incorporated (supra) cited by the ld. DR before us is concerned that was the case of a suit for permanent injunction and damages, filed against the defendant for a passing off action and in the course of it's judgement the Hon'ble court made a reference regarding purpose of awarding punitive damages. The said decision is not of any application whatsoever be the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carrying capacity, then the railways recover additional freight which in its terminology is called punitive charges. It appears from the Notification issued by the Ministry of Railways that the punitive charges for overloading are actually in the nature of additional freight permissible carrying capacity which cannot be categorised as punishment for any offence or infringement of law. In case there was absence of Weightment Bridge at the loading station and the goods were loaded by estimate, then overloading of wagons cannot possibly by avoided and such overloading being apparently common is actually permitted by the railways on overloading charges termed in its terminology as 'punitive charges. I therefore find merit in the contention of the Ld AR that the punitive charges are compensatory in nature for transporting goods beyond .permissible carrying capacity and such charges may in the terminology of the railways be called punitive charges but in commercial parlance it is not in the nature of penalty for infraction of ]aw. The overloading charges paid to the railways may in its terminology be termed as punitive charges but such payments appeal to be routine payments in the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he overloading charges were essentially commercial in nature and cannot be characterized as penalty irrespective of the nomenclature given to such charges by the Railways. The Hon ble ITAT has held that As regards overloading charges, we have to take into consideration the environment in which the companies are operating. Railway is the only mode of transportation if the person wishes to transport its product through railway. This fact is important because such activities of railways are of commercial in nature and freights are fixed on commercial basis. If we look the issue in its perspective, then, what emerges is that if there were private carriers also and if the assesse would have paid identical charges to them, the same would have been allowed as a normal business expenditure especially when there is no dispute that these expenses have been incurred in the course of business operations and, therefore, merely because the railways is a government owned Institution and works under an Act of Parliament, and nature of overloading charges which are essentially of commercial nature cannot be characterized as of penal nature irrespective of nomenclature given to such charges by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re on the facts of the case the addition of ₹ 6,55,30,392/- is deleted. 6. In view of above, we find no infirmity in the impugned order of the CIT-A and it is justified. Thus, ground no. 1 raised by the revenue is dismissed. 7. Ground no. 2 is relating to deletion of addition/disallowance made by the AO on account of belated interest deposit on TDS of ₹ 77,176/- in the facts and circumstances of the case. 8. The ld. DR relied on the order of AO. On the other hand, the ld.AR submits that the issue in hand is covered in favour of assesse on identical facts and issue by the order dt. 06-04-2018 of this Coordinate Bench, ITAT, Bench-D in assessee s own case, ITA No. 1887/Kol/2016 for the A.Y 2011-12, copy of the same is on record and referred to paras 12 13 of the said order. 9. After hearing both the parties and on perusal of record including the order dt. 06-04-2018 as relied on by the ld. AR of assesse. We find that the facts and circumstances of the case as relied on by the ld.AR are similar and identical with the facts and circumstances of the case in hand. We also find that the Co-ordinate Bench, ITAT, D Bench, Kolkata in the case of supra has discu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Nos. 1 and 2 are answered in favour of the assessee and against the revenue . In view of the above judgment, there remains no doubt that the interest expense on the delayed payment of service tax is allowable deduction. The above principles can be applied to the interest expenses levied on account of delayed payment of TDS as it relates to the expenses claimed by the assessee which are subject to the TDS provisions. The assessee claims the specified expenses of certain amount in its profit loss account and thereafter the assessee from the payment to the party deducts certain percentage as specified under the Act as TDS and pays to the Government Exchequer. The amount of TDS represents the amount of income tax of the party on whose behalf the payment was deducted paid to the Government Exchequer. Thus the TDS amount does not represent the tax of the assessee but it is the tax of the party which has been paid by the assessee. Thus any delay in the payment of TDS by the assessee cannot be linked to the income tax of the assessee and consequently the principles laid down by the Hon ble Apex Court in the case of Bharat Commerce Industries Ltd. Vs. CIT (1998) repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of March 2014 by M/s. CESC Limited. But, it was adjusted in the electricity bill for the month of April 2014. The CIT-A examined the copy of electricity bill and held no concealment of income. The ld.AR relied on the order of the CIT-A. 14. Heard both the parties and perused the record. It is noted that CESC Limited deducting TDS paid interest to assessee in the month of March 2014 relevant to A.Y 2014-15 i.e. under consideration. But, however, claim of adjustment of said interest was made in the next F.Y 2014-15 relevant to A.Y 2015-16. It shows that the assessee claimed TDS credit in the A.Y (2014-15) i.e. under consideration and again claimed the same for the next A.Y 2015-16. The assessee claimed the same for two A.Ys, which is not permissible as per law. Relevant finding of the CIT-A is reproduced herein below:- I have considered findings of the AO on this issue in the assessment order and the written submission filed by the AR. Facts of these issues are that the assesse has made some security deposit with the CESC on which every year CESC makes payment of interest in the form of adjustment in the electricity bill. In the assessment year 2014-15 the CESC paid inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cutta dismissed the substantial question of law raised by the revenue and confirmed the finding of Tribunal in ITAT 220 of 2013 in GA No.3581 of 2013 and referred to para 8.1 of the said order. On the other hand, the ld.DR did not controvert the same. 19. We find that the issue in question is covered in favour of assesse by the judgment of the Hon ble High Court of Calcutta in the case of REI Agro Ltd supra. Relevant portion of such order is reproduced herein below:- 6. We have considered the rival submissions. A perusal of the provisions of section 14A, more specifically subsection (2), shows that if the AO is not satisfied with the correctness of the claim of the assessee, then the AO shall determine the ITA No.1331 1423/Kol/2011 Assessment Year: 2008-09 amount of expenditure incurred in relation to such income, which does not form part of total income under the Act. For this the method is prescribed in rule 8D. The provision of section 14A, sub-section (3) specifies the provision of 14A(2) would also apply where the assessee makes a claim that there is no expenditure incurred. This is because if the assessee does not make a disallowance under section 14A in its compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to any particular income or receipt, such interest expenditure is not to be considered under rule 8D(2)(ii). In the assessee's case here the interest has been paid by the assessee on the loans taken from the banks for its business purpose. There is no allegation from the banks nor the AO that the loan funds have been diverted for making the investment in shares or for non-business purposes. Further rule 8D(2)(ii) clearly is worded in the negative with the words not directly attributable . Thus for bringing any interest expenditure, claimed by the assessee, under the ambit of rule 8D(2)(ii) it will have to be shown by the AO that the said interest is not directly attributable to any particular income or receipt. Why we say here that it is to be shown by the AO is on account of the words in Rule 8D(1) being where the Assessing Officer, ...... is not satisfied with. ( a) ........ ( b) ........ in relation to income......., he shall determine the amount of expenditure in relation to such income in accordance with the provisions of sub-rule (2). In the assessee's case, admittedly, the assessee has substantial capital. The increase in the capital i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal filed by the Revenue stands dismissed. 8. In respect of provisions of rule 8D(2)(iii), which is the subject-matter of the appeal in the assessee's hand, a perusal of the said provision shows that what is disallowable under rule 8D(2)(iii) is the amount equal to percentage of the average value of investment the income from which does not or shall not form part of the total income. Thus, under sub-clause (iii), what is disallowed is percentage of the numerator B in rule 8D(2)(ii). Again this is to be calculated in the same line as mentioned earlier in respect of Numerator B in rule 8D(2)(ii) of the Act. 8.1 Thus, not all investments become the subject-matter of consideration when computing disallowance under section 14A read with rule 8D. The disallowance under section 14A read with rule 8D is to be in relation to the income which does not form part of the total income and this can be done only by taking into consideration the investment which has given rise to this income which does not form part of the total income. Under the circumstances, the computation of the disallowance under section 14A read with rule 8D(2)(iii), which is issue in the assessee&# ..... X X X X Extracts X X X X X X X X Extracts X X X X
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