TMI Blog2018 (1) TMI 1378X X X X Extracts X X X X X X X X Extracts X X X X ..... of filing the return of income u/s 139(1) of the Act should be allowed as deduction - Decided against the revenue. - ITA No.1653/Kol/2016 - - - Dated:- 10-1-2018 - Shri N.V.Vasudevan And Shri Waseem Ahmed, JJ. For the Appellant: Shri A.K.Tiwari, CIT For the Respondent: Shri Subash Agarwal, Advocate ORDER N.V.Vasudevan, This is an appeal by the Revenue against the order dated 23.05.2016 of C.I.T- (A)-20, Kolkata relating to A.Y.2013-14. 2. Ground no.1 raised by the revenue reads as follows :- (1) In the facts and circumstances of the case, Ld.CIT(A) is erred in deleting the disallowances as the overloading charges is nothing but a penalty as per provision of section 73 of the Indian Railway Act, 1989. 3. The Assessee is a company. It is engaged in the business of mining. In the course of assessment proceedings u/s 143(3) of the Income Tax Act, 1961 (Act) the AO noticed that under the head Freight and Transporting expenses there were certain expenses incurred by the assesee. The aforesaid expenses also included expenditure of ₹ 5,77,69,535/- which was paid by the assessee as Railway Punitive Charges . According to the AO these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or infraction of law but by way of compensation for permitting to overload the goods beyond the permissible limit; moreover, there is no provision for criminal action or prosecution or confiscation of goods for overloading. It was argued that in fact overloading was very common which was permitted by the railways on additional freight termed as punitive charges. 5. The Assessee also submitted that overloading of wagons was not a deliberate act on the part of the assessee but was basically due to the lack of infrastructural facility at the loading station. In case weighing Bridge existed at the loading station, then overloading of wagons could be easily avoided. The Assessee also relied on Notification dated the 23rd December 2005 (to be published in Gazette of India, Part- II, Section 3(i) of the Gazette of India) issued by the Ministry of Railways wherein punitive charges for overloading has been defined in para 3 as : Where the commodities are overloaded in a 8-wheeled wagon, the railway administration shall recover punitive charges as provided in parts I, II and III of the situation 'A' 'B' of the Schedule, from the consignor, the consignee or the endo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law. Following the aforesaid decision the CIT(A) took the view that payment in question was compensatory in nature and not penal and therefore the provision to Explanation to Section 37(1) of the Act will not be applicable. In the decision relied upon by CIT(A) there is also a discussion about the notification issued by the railway ministry of overloading charges and also the decision of the Hon ble Supreme Court in the case of Prakash Cotton Mills Pvt. Ltd. 201 ITR 684 (SC) and the decision of the Hon ble Punjab and Haryana High Court in the case of Hero Cycles Ltd. 178 Taxmann 484 (P H). Reference was also made to the decision of ITAT Nagpur bench in the case of Western Coalfields Ltd (2009) 124 TTJ (Nag) 659. In the decision last cited on the same nature of expenses namely compensatory charges to the railways for over loading of the wagon, it was held to be not falling within the ambit of Explanation to section 37(1) of the Act. 10. Aggrieved by the order of CIT(A) the revenue has raised ground no.1 before the Tribunal. 11. The ld. DR placed reliance on the order of AO. It was submitted by him that the act of the assessee in overloading the wagon was an act which was ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce was also made to the decision of the Hon ble Supreme Court in the case of Haji Aziz Abdul Brothers vs CIT 41 ITR 350 (SC) . In the aforesaid case fine paid to customs authorities for release of confiscated goods imported contrary to law was held to be not allowable as deduction u/s 37(1) of the Act. 13. The ld. Counsel for the assessee placed reliance on the decision of the ITAT, Kolkata Bench in the case of DCIT vs M/s. Feegrade Company Pvt. Ltd. In IT(SS) A. Nos. 36 to 38/Kol/2015 dated 05.04.2017 wherein this Tribunal took the view that railway punitive charges were not hit by Explanation to section 37(1) of the Act. 14. We have considered the rival submissions. This tribunal in the case of Feegrade Company Pvt. Ltd on an identical issue has taken the following view :- 8. At the time of hearing of the appeal it was fairly accepted by the parties that the issue raised by the revenue in this appeal is squarely covered in favour of the assessee by the decision of ITAT Mumbai bench in the case of Taurian Iron Steel Co.(P)Ltd (supra). In the aforesaid decision the Hon ble ITAT after considering the decision of the Hon ble Supreme Court in the case of Prakash Cot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The punitive charges levied by Railways, in accordance with the notification of Ministry of Railways dated 23.12.2005, for carrying goods in its rakes are not 'for any purpose which is an offense or which is prohibited by law'. As a matter of fact, the Indian Railways itself permits carrying weight load beyond the permissible carrying capacity subject to payment of higher rate of freight by 2 times or 3 times. Though the words are 'punitive charges', they are payment which are neither an offense nor is prohibited by the law rather the payment is in accordance with the law as provided in the notification of Ministry of Railways dated 23.12.2005. It is, therefore, held that Explanation to Section 37 is not applicable and the payment of ₹ 1,01,85, 788/- is allowable. Hence, the addition is deleted and Ground No. 4 is allowed. 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 regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of CIT vs AIMIL Ltd. Ors. 229 CTR 418 (Del) wherein it was held that employees contribution to PF should be allowed as deduction which is paid on or before the due date of filing the return of income u/s 139 of the Act. Aggrieved by the order of CIT(A) the revenue has raised ground no.2 before the Tribunal. 20. At the time of hearing it was brought to our notice that the Hon ble Calcutta High Court has also taken the view that employees contribution to PF paid on or before the due date of filing the return of income u/s 139(1) of the Act should be allowed as deduction. In this regard the decision of the Hon ble Calcutta High Court in the case of M/s. Akzo Nobel India Ltd. Vs CIT in ITA 110 of 2011 order dated 14.06.2016 and in the case of CIT vs Vijayshree Ltd., of the Hon ble Calcutta High Court in GA No.2607 of 2011 order dated 06.09.2011 was filed before us. In the order in the case of Vijayshree Ltd., (supra), the Hon ble Calcutta High Court held as follows : The only issue involved in this appeal is as to whether the deletion of the addition by the Assessing Officer on account of Employees Contribution to ESI and PF by invoking the provision of Section 36 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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