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TMI Blog2012 (9) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... landlord being the assessee - in favour of assessee. Disallowance u/s. 43B - Outstanding entry tax payable - Held that:- Favor in the contention of the assessee to the extent that the amount which has not been claimed as deduction cannot be disallowed u/s.43B because it pertains to a liability created being a tax, cess or duty already subjected to tax. Therefore, the said disallowance is also directed to be deleted - in favour of assessee. - IT APPEAL NO. 43 (CTK) OF 2012 - - - Dated:- 25-6-2012 - K.K. GUPTA AND K.S.S. PRASAD RAO, JJ. S.C. Bhadra for the Appellant. Smt. Paramita Tripathy for the Respondent. ORDER K.K. Gupta, Accountant Member - This appeal is by the assessee raised the following grounds of appeal. "1. That the Assessment is arbitrary, without appreciating the facts of the case, by wrongful application of law and hence bad in Law and illegal. 2. That the Learned A.O. erred in disallowing and the CIT(A) wrongly confirmed the application of section 40(a)(ia) to the case of the appellant in regard to a sum of Rs. 1,14,00,000 being the Wagon Facilitation Charges paid. 3. That the Learned A.O. and the CIT(A) wrongly assumed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim of the assessee for the allowance u/s. 40(a)(ia) in spite of the assessee bringing on record the case laws on the issue in the case of Vodafone Essar Ltd. v. Dy. CIT (TDS) [2011] 45 SOT 82 (Mum.). He held that the assessee had acquired the railway rakes and claimed depreciation, therefore, the payment to the two companies was on account of hiring their space being an arrangement as was in assessee's own case ought to have been subjected to deduction of tax at source. He held the disallowance as proper. With respect to the entry tax payable, he required the assessee to file the evidence which obviously was not to be furnished being a liability and not income for the disallowance u/s.43B was confirmed. 4. The learned Counsel for the assessee initiating his arguments submitted that the assessee had entered into an agreement with Indian Railways to invest under Wagon Investment Scheme as public private partnership which implies the private party can use a public property provided certain specified investment are made and the public party can also use the private property on certain prescribed facilities. The salient feature of the scheme is as under: (Ref : pages 14 to 20 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppearing in the Profit and Loss account under the head other income and wagon facilitation charges. (Ref: pages 8 and 9 of the Paper Book). The assessee has used the entitlement of the Free Grade and Co. Ltd. and also Rungta Sons (P) Ltd. by making payment of Rs. 42,00,000 and Rs. 72,00,000, respectively. Beside this, usual freight is paid to Railways for transportation. Payment for the use of the entitlement known as 'Wagon Facilitation Charges' is purely a business expenditure to acquire the entitlement for allotment of wagon on priority basis. Reference on this issue is made in the case of M.S. Kandappa Mudaliar v. CIT [1957] 32 ITR 313 (Mad.), where it was held that payment made for users quota would qualify as business expenditure. (Ref: case decision contained in pages 35 to 38 of the Paper Book). In the context of the above submission, it is clear that investment made in the Wagon Investment Scheme, by way of providing wagons to railway to avail rakes on priority basis is different from payment made to outsiders to use their entitlement known as Wagon Facilitation Charges. The same payment of Wagon Facilitation Charges cannot be treated as hire charges for use of wagons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gement remains the same and it is akin to hiring out the plant and machinery as defined u/s. 194-I was to be subjected to deduction of tax at source u/s. 194-I was therefore ripe for disallowance u/s. 40(a)(ia). She supported the order of the learned CIT(A) for her part of submissions. 7. With respect to the second issue she proposed that the matter be restored to the file of the Assessing Officer for verification in the light of facts as of now brought on record by the learned Counsel for the assessee. 8. We have heard the rival contentions of the parties and perused the material available on record. Considering the facts and circumstances of the case, we are inclined to hold that the facts of the assessee's case are squarely applicable as was considered by the ITAT, Mumbai Bench in the case of Vodafone Essar Ltd. ( supra ). The learned CIT(A) has tried to give a meaning to the definition as given in the Statute u/s. 194-I vis- -vis the agreement for wagons investment scheme as has been perused in his order. Having reproduced the agreement and the definition of rent, he has not been to correlate the same for the simple reason that rent or arrangement has to be understo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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