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TMI Blog2014 (2) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... e a prudent businessman - As the assessee has taken a business decision the demurrage charges and cancellation charges are allowable as business expenditure – the order of the CIT(A) upheld – Decided against Revenue. Security charges, warehouse maintenance charges and supervision charges allowed – Held that:- The assessee has maintained the security staff to maintain its warehouse and debited the expenditure in the operating expenses - it has incurred warehouse maintenance charges and supervision charges - The assessee company's main source of income is from letting out of warehouse in Kolkata Dock Area and these warehouses were taken from M/s. Williamson Magor & Co. Ltd. - As these are paid for the purpose of earning this income they ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for Assessment Year 2006-07 vide his order dated 30.12.2008. 2. The first issue in this appeal of revenue is against the order of CIT(A) allowing the claim of demurrage charges. For this, revenue has raised following ground no.1: "1.That the Ld. CIT(A) has erred in law and on facts by allowing the appeal of the assessee company under the head demurrage charge amounting to Rs.31,00,000/-." 3. We have heard rival submissions and gone through facts and circumstances of the case. We find that the AO disallowed this demurrage charges claimed at Rs.15 lac and Rs.16 lac being payment on account of cancellation of joint development project of OASIS of Fort Project Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further time and ultimately it was agreed between the assessee and Fort Projects Pvt. Ltd. that subject to interest and demurrage charges in case of termination of the contract time was extended. The assessee paid this sum of Rs.31 lac vide cheque drawn on Standard Chartered Bank on 25.06.2006 but ultimately failed to fulfill the contract and vendor asked for total demurrage charges of Rs.40 lacs but finally demurrage charges were settled at Rs.15 lac and further cancellation of this booking amounting to Rs.16 lacs was forfeited. In view of the correspondence produced before the lower authorities and even now before us, we are of the view that due to cash crunch the assessee has not been able to pay the amount of Rs.1.2 cr. within the stip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le- Profit Loss a/c.). The warehouse as taken from M/s. Williamson Magor in the Calcutta Dock Area for which rent of Rs.4,80,000/- was paid and it was let out to M/s. R. Piyarilal Import Export Pvt. Ltd. for the gross composite receipts of Rs.16,85,400/-. The security staff and maintenance staff worked in three shifts and were paid Rs.4,000/- per month for which details and evidences were produced before the Assessing Officer which is evident from the assessment order itself. And these persons could not be produced before assessing officer since they have left long back. Keeping in view above circumstances, the addition of Rs.7,53,970/- is deleted. Therefore, ground no.2 is allowed." 7. We find that the assessee has maintained the sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subletting was accepted by AO. Even the TDS was deducted in the last month of the accounting year even though the provisions of section 194-I of the Act will not apply to the present case for the reason that the tenancy is a sub-tenancy under leave and licence agreement for every 11 months and this has been continuing from earlier years. Once assessee is receiving licence fee under leave and licence agreement, it is not rent. It is also a fact that assessee has deducted TDS on rent paid but only on the last date of the Financial Year and paid to the Govt. account on 05.04.2006 i.e. on or before the due date of filing of return u/s. 139(1) of the Act. Once the assessee has paid the tax on or before the due date of filing of return, the same ..... X X X X Extracts X X X X X X X X Extracts X X X X
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