2010 (7) TMI 1243

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

..... 1 & 4 are general in nature and needs no adjudication, while as the other two grounds culminates into one issue; ld. CIT(A) has erred in deleting the disallowance of speed money amounting to Rs.67,59,784, when the facts indicate that the payments were made to sub-contractors for disbursement to New Mangalore Port Trust (NMPTRCH) workers. 3. The facts of the case are that the appellant had engaged labour from NMPTRCHW for loading and unloading of export and import cargo. There was an oral understanding between C&F Agents Association and NMPTRCHW for paying incentive wages at an interval of a year or two. Such incentive payments are required for speedy handling of cargo in order to avoid other penal expenditures such as demurrage etc. Du....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....rers at the port would not carry on the work promptly and speedily, thereby causing heavy financial losses and irreparable damage to the agent's reputation. In such circumstances, it had become customary to acceded to the labourers' demand and pay certain amounts as speed money. It was explained that payment of speed money had very much become an essential fact of business at every port in India and the Courts had also accepted the genuineness and need for such payments and treated them as business expenses. 9. The Hon'ble High Court of Karnataka has held in the case cited that, taking into consideration the assessee's business and the prevailing practice in the trade, whereby payments had to be made to firms such as the assessee i....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ugh sub-contractor entailed higher expenditure is not borne out by the facts. As pointed out in paragraph 6 above, the net income offered to tax by the appellant is only higher. Further, once the genuineness of payment is established and its necessity is upheld by courts, the method of making payments, whether through sub-contractors or directly to port workers, is entirely a matter of the appellant's choice and discretion. No case has been made out here that payments made to sub-contracts were fraudulent or bogus. On the contrary, the appellant has made deduction of tax at source on all payment of speed money as per law and the sub-contractors have, in turn, accounted for such receipts. Details of TDS made and of the sub-contractors' incom....