TaxTMI 
TaxTMI 
2018 (12) TMI 51
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....ion of Rs. 1,38,54,151/- made by the AO on account of punitive charges paid to railway as over-loading charges. 2. That on the fact & in circumstances of the case & in law, the Ld.CIT(A) is erred in restricting the addition from Rs. 2,55,000/- to Rs. 1,27,500/- made by AO on account of water supply expenses. 3. That on facts & circumstance of the case & in law, the Ld. CIT (A) is erred in deleting the addition of Rs. 16,07,900/- made by AO on account of hiring charges and rack loading charges paid to parties covered u/s 40A(2)(b) of the Income Tax Act, 1961. 4. That the order of the Ld. CIT (A) is erroneous and is not tenable on facts and in law. 5. The grounds of appeal are without prejudice to each othe....
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....pinion that, expenses incurred by assessee under the head 'punitive charges' not an allowable expenditure being penal in nature, and are also not incidental to business activities being carried on by assessee. He accordingly disallowed claim amounting to Rs. 1,38,54,151/-. 3.2. Ld.AO made addition in respect of water expenses incurred amounting to Rs. 2,55,000/-, and amount paid to certain parties on account of hiring charges and rack loading charges to be covered under section 40A(2)(b) amounting to Rs. 16,07,900/-. 4. Aggrieved by order of Ld.AO, assessee preferred appeal before Ld.CIT (A) who deleted entire addition. 5. Aggrieved by order of Ld.CIT (A) revenue is in appeal before us now. 6. We find that Rakesh Kumar Singh & C....
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.... recovered from assessee. Ld.CIT(A) further observed that Clause 51 of agreement with Odisha Mining Corporation Ltd. says that overloading charges levied by Railway on account of wagon loading charges will be borne by assessee. Further assessee had also placed reliance upon following decisions: 1. Hon'ble Supreme Court in case of CIT vs. Ahmedabad Cotton Manufacturing Co.Ltd. (1993) 71 Taxman 56. 2. Western Coal Fields Ltd. vs. ACIT, 2009 (124 TTJ 659) ITAT Bench. 3. Tuarian Iron & Steel Co. Pvt. Ltd. vs. ACIT in ITA no.847/Mum/2010, ITAT, Mumbai. 11.1. It is observed that Ld.CIT(A) allowed claim of assessee by observing ratios laid down in afore stated decisions, wherein it has been held that punitive charges ....
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....tion being deleted by Ld.CIT(A) on account of hiring charges and rack loading charges paid to parties amounting to Rs. 16, 07, 900/-. 16.1. Ld.Sr.DR submitted that assessee paid monies to third parties in violation of section 40 A (2) (b) of the Act. He placed reliance upon order passed by Ld.AO. 17. We have perused observations of authorities below. 17.1 It is observed that Ld.CIT(A) deleted addition by observing as under: "The appellant had paid Rs. 1,60,79,000/- to one of its relatives who had supplied 4 Hyava trucks or dumpers. The company incurred expenditure of Rs. 2,16,98,250/- as hiring charges and rake loading charges. The expenditure was incurred for hiring of machinery like excavators, dumpers and trucks. Althou....
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....and its justification was never disputed by the AO. Nor the payment made to the said party is in dispute. The only point of contention raised by the AO is the reasonableness of the expenses paid to related parties vis a vis the prevailing rates applicable for similar nature of work. It is worth mentioning here that all expenditure was subject to TDS and TDS was deducted by the appellant company. The appellant company had made TDS on the payment related to Faridabad Gurgaon Minerals, a proprietorship of Mr. Aman Sethi who is one of the Directors of the appellant company. The payment made of outside parties was Rs. 96 per ton whereas payments related to is Rs. 95 per ton. The appellant company took 4 trucks and one excavator on hire ....