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TMI Blog2012 (2) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... yaprabha, Jr. DR O R D E R Per B.R.Baskaran AM: The appeal of the assessee is directed against the Order dated 28.10.2009 passed by the CIT(A)-I, Kochi and it relates to the assessment year 2006-07. The assessee is aggrieved by the decision of the ld. CIT(A) in sustaining the addition of Rs.23,19,547/- on the ground that the said payment is not related to the business of the assessee. 2. The facts relating to the same are stated in brief. The assessee-company was formed with the business objective of manufacturing wheat products. It was noted that the assessee has not commenced commercial production during the year under consideration. However, the assessee indulged in the activity of trading in wheat during the year by p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia Pvt Ltd. The assessee herein has accordingly claimed the said amount of Rs.23,19,547/- as expenditure. 3. The assessing officer noticed that the goods purchased from Cargill India Pvt. Ltd by M/s. PEIPL was sold to the other sister concerns, which were functioning in the same address. He also noticed that the assessee did not enter into any agreement with M/s. PEIPL in connection with the impugned purchase transaction.. Accordingly, the AO concluded that the impugned penal charges of Rs.23.19 lakhs was not a liability relatable to the business of the assessee and accordingly, disallowed the same. The ld. CIT(A) also upheld the view of the assessing officer. Hence, the assessee is in appeal before us. 4. We have heard the rival conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. According to the assessee, it was under an obligation to honour the debit note so raised and hence the same was claimed as expenditure. However, the claim of the Department is that there is no contractual agreement between M/s. PEIPL and the assessee, which would compel the assessee to meet the impugned liability. 6. We find merit in the contention of the Revenue. There cannot be any dispute that the trading transaction is an independent transaction. The liability to pay penal charges, if any, is governed by the agreement entered into between two parties. There is no dispute that M/s PEIPL was having a contractual obligation to pay the penal charges in view of the agreement; however no such agreement existed between M/s PEIPL an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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